The AR Collections Gambit – What’s your first move?

The world was taken by storm by The Queen’s Gambit in the past year and that got me thinking around my experiences in Accounts Receivable (AR) automation technology and how sometimes it’s easy to be overwhelmed by the number of options to drive improvement and success.

So…. What’s your opening move?

Don’t spend all your time preparing to play. Research by Paystream Advisors shows that companies who use traditional accounting methods such as Excel, or basic ERP functionality in AR do the following;

  • Spend 15% of their time prioritising their activities,
  • Spend 15% of their time gathering information to make collections
  • Spend 20% of their time actually communicating with their customers about payment

In contrast, companies using automated AR solutions do the following;

  • Need to spend only as little as 6% of their time prioritising their activities
  • Only 6% of their time gathering information for collections calls
  • Benefit from spending 62% of their time communicating with their customers about payment.

See all your moves ahead

The receivables ledger is a goldmine of un-tapped opportunity. With the right platform in place, the insight it can give around your customers and their performance will enable businesses to make better decisions. For example;

  • External risk and credit limit advice data can often be out of date
  • The insight gathered from using a collections platform gives you real-time information on customer payment performance and credit worthiness
  • This in turn can enable you to increase credit to customers backed by your own performance statistics, not an external provider
  • This enables a closer relationship between sales and credit as well as results in revenue increases to existing customers

Boston Consulting’s research shows that;
‘Companies that deploy Order-to-Cash platforms and re-engineer the process boost revenues by 1% to 3% a year.

Be A Credit Grandmaster!

AR Collections platforms allow credit managers to do what they do best – give them the data to make better decisions and increase revenues whilst managing risk.
Multi-ERP environments are becoming more common with M&A activities. This has resulted in siloed data and increased risk through over exposure to the same customer in multiple systems. Automation platforms help solve this issue by;

  • Becoming a single source of truth for AR data – fed by multiple ERP systems
  • Allowing processes to be standardised across different systems, regions, shared service centres and GBS function
  • Ensuring that debtor performance and risk are combined in the same platform and not in disparate systems
  • Allowing credit insurance compliance by providing a full audit trial on dunning activities
  • Reducing attrition through removal of mundane manual tasks and increased focus on value added activities

The Results

The results from AR automation speak for themselves.

  • 15-30% savings in cost
  • 30% reduction in Days Sales Outstanding
  • Increase in customer satisfaction
  • Up to 90% reduction in un-applied cash

Checkmate To Manual AR Processing

At a time where cash is more vital than ever for organisations, AR automation can unlock cash tied up in receivables, create a stronger balance sheet and make better decisions in un-certain times.

Matt Tipper

Matt Tipper is Partner Manager for Esker UK. He has been part of the Esker family since 2020.

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