5 Tips To Light Up Your AR Performance When the Outlook Is Gloomy

Adapting to the “new normal” of supply chain disruptions, inflation and the predictions of economic slowdowns doesn’t have to be complicated. Read on for 5 tips to light up your AR performance.

In the ever-changing landscape of business, characterised by disruptions like supply chain challenges, inflation, and economic uncertainty, finance leaders find themselves grappling with a daunting reality. What keeps them awake at night are not transitory obstacles, but a “new normal” that demands adaptability and innovative strategies.

In the face of these trials, one fundamental human trait comes to the forefront: hope. This isn’t just wishful thinking; it’s a beacon that guides us toward a better future, however faint that vision may be. Hope acts as a catalyst, motivating us to set goals and chart a path towards progress. As we implement these goals step by step, we witness small successes that fuel our determination and spur us to establish new milestones.

Doing Nothing is Not An Option

The Cost of Inaction:
The consequences of maintaining the status quo are stark. When Finance teams cling to traditional practices, a sequence of adverse outcomes unfolds: difficulties in collections, heightened credit risks, talent attrition, and mounting customer frustration. Collectively, these factors lead to dwindling profit margins. To flourish amidst these challenges, proactive measures, strategic shifts, and an embrace of change are essential.

Navigating the New Normal:
Adapting to the “new normal” necessitates a multi-faceted approach. A key aspect is optimising operations to curtail and mitigate credit risk. This entails streamlining the invoice-to-cash (I2C) process and establishing robust collections mechanisms. Notably, involving various departments such as Sales, Finance, and Logistics amplifies the impact. Faced with market indicators, businesses are turning to automation solutions that enhance credit risk assessment and cash collections processes. The push for these solutions, which bridge the gap between internal silos (such as multiple ERPs and CRMs) and external connections (AP/customers and regulatory portals), is evident.

Addressing Labour Market Challenges:
In the current labour landscape, securing qualified talent for roles laden with repetitive, manual tasks is a growing struggle. Read on for five pivotal tips aimed at empowering AR managers to evaluate their firm’s cash collections process and prepare for impending uncertainties.

Adapting to the New Normal: 5 Tips to Light Up Your AR Process

1. Reinforce Your Credit Risk Management:
A recent European Payment report underscores that late payments hinder growth for 41% of businesses interviewed, while 26% state that late payments imperil their very survival. Continuously assessing customer credit risk empowers dynamic adjustments to the collections process and informs broader business decisions. This entails simplifying customer onboarding processes and staying attuned to risk statuses via alerts and regular assessments.

2. Be Pragmatic with Payment Collection:
With global analyses revealing that 43% of invoices are paid late, and 7% of invoice balances are entirely written off, a pragmatic approach to collections is imperative. Aligning strategies with fact-based, measured figures enables flexibility in response to shifting customer circumstances or receivables situations. Key factors include monitoring customer credit risk status, payment behaviours, and the adaptability of collections procedures.

3. Connect Your AR Team to the Business Environment:
Prioritising consistent cash flow requires a cross-departmental collaboration that demands the right infrastructure. Ensuring alignment necessitates connecting all information flows—from internal teams involved in the I2C process to external stakeholders such as credit bureaus, insurers, and the broader business ecosystem. This fosters seamless collaboration and enhances internal visibility.

4. Pay Attention to Details: Small Things Matter:
While small discrepancies might seem trivial, their cumulative impact can be substantial. Recognising that habits can take root, it’s crucial to proactively address minor issues, particularly in the context of market volatility and inflation. This includes tracking invalid deductions, carefully managing small receivables amounts, and observing payment trends.

5. Keep Your Staff Happy:
Undoubtedly, employees are a company’s most valuable asset. To foster employee satisfaction and retention, provide tools that optimise visibility, efficiency, and morale. By removing disorganisation and monotonous tasks, businesses can better attract and retain talent, fostering a positive feedback loop that reduces turnover and underscores the company’s core mission.

Hope for a Resilient Future

As the world shifts into the digital age, it’s clear that antiquated methods—like relying on spreadsheets and phone calls—are inadequate. Just as we’ve left behind hourglasses in favour of digital timekeeping, embracing modern tools is paramount for efficient cash collections. Strategic investments in digital infrastructure, particularly AI-boosted I2C automation solutions, enable businesses to navigate evolving landscapes with agility. In a landscape of uncertainty, it’s those willing to innovate, adapt, and invest in the right tools who will thrive. So, despite the challenges that lie ahead, embracing hope and implementing solid steps will help illuminate the path toward a resilient future.

Esker’s Accounts Receivable solution suite is ideal for AR leaders wanting to accelerate cash collection and revenue recognition. Powered by Esker Synergy AI, it can be easily scaled to optimise and connect each step of the invoice-to-cash (I2C) process — improving overall efficiency, visibility and collaboration. The result is not only reduced DSO, but an enhanced experience for every user.
Contact us today and request a demo!