We are thrilled to announce that Esker has been named a Leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Accounts Receivable Automation Applications for Midmarket 2020–2021 Vendor Assessment.
This is the first time that our Accounts Receivable solution has been recognized by IDC, validating our successful product and sales development strategy over the past few years, as well as our customer-focused mindset.
Esker began the AR journey with its Invoice Delivery solution, automating the delivery and archiving of customer invoices via any media (e.g., paper, e-invoices, EDI, etc.), while complying with local regulations. It quickly became clear that we needed to go further and help our customers recover the cash tied up in those invoices. This is why Esker extended its AR capabilities with a Collections Management solution and the acquisition of TermSync, to provide a collaborative tool to streamline the entire collections process and help businesses get paid faster.
More recently, Esker launched two new solutions to enrich its AR suite and address additional AR-related issues. And with cash playing such a central role for businesses today, the timing couldn’t be better. Our Credit Management solution helps customers better manage their credit risk and secure the credit approval process and sales revenue. As it wouldn’t make any sense to have an excellent credit and collections process and leave cash unapplied, our Cash Application solution accelerates customer payment allocations. With cash allocated faster and more accurately, AR teams can focus on more strategic tasks and control cash flow in real-time.
We believe that our comprehensive AR suite can help tackle any obstacles preventing cash from being collected in a timely manner, no matter where those obstacles are in the process. And we’re not done yet!
Despite 2020’s COVID-related chaos, the continued growth of our “cash” solutions (Credit, Collections Management, and Cash Application) validates our efforts to enhance our solution suite and provide our customers with the best possible tools to navigate hard times so that they can focus on growing their business and keeping their employees happy and dedicated.
Stay tuned for our blog covering Esker being named a major player for Accounts Payable in the IDC Marketscape!
Chasing customers for payment can create stress and a heavy workload for everyone involved. Receivables remain the lifeblood for most companies, so ideally, this critical collection function is as efficient and systematic as possible. As a sales leader for over 20 years, I can tell you that it becomes especially painful when your sales team is required to step in and help out because:
Reps get pulled away from their sales activities to make collections calls, and that time could have been spent bringing in new accounts that pay their bills on time.
Reps have to find a way to not burn any customer bridges while still conveying the urgency of paying up.
As a sales leader, you might feel the collections process has little to do with your sales team — not so. Sales, especially in B2B, is all about relationship building. Nothing can cause a tear in a carefully created relationship like a collection call demanding money, especially from a customer who has already paid and the cash hasn’t been applied correctly yet, or are still withholding payment because the invoice is incorrect. For many organizations, the sale hasn’t really been made until payment is received. No payment means no sale, which means no commission or recognition for the salesperson’s effort that went into closing the deal.
Here are four options sales leaders can suggest to credit and finance teams to help prevent delinquent accounts and minimize the amount of time sales reps are required to assist with collections:
If your company requires credit checks before bringing new customers on board, have your sales reps send a link to an online credit application. Make it easy for the customer to complete the application and provide supporting documentation to your Finance Department, and don’t wait until after the sale — the credit-approval and onboarding process can slow down customer momentum. Investigate credit automation for ongoing customer credit checks to determine if a customer qualifies for an increase in available credit, or if accounting needs to be more proactive and set up a payment plan.
Suggest to your controller that automated payment reminders be sent out to customers. On average, customers pay three times faster when they’re reminded to do so. If this cannot be easily set up in your ERP, there are low-cost options for this.
Ask your Finance or Treasury Department if they will consider accepting credit card as a payment method, if not currently accepted. The more payment methods offered, the easier you are to do business with. If the concern is paying the merchant processing fees, an option is to pass a surcharge or convenience fee to the customer at time of payment for the option of utilizing credit card.
If you’re working within tight margins or will have a lot of upfront costs to get a customer’s service started, have the ability to easily accept online payment and get a deposit up front. Having an easy means to accept a deposit means your company can start fulfilling the order faster. The same payment portal offering should have ability to easily set up payment plans and auto-payment for your customers.
There are multiple reasons why a customer might be late on payment, but if your AR team is putting precautions in place, such as sending an online credit application and automating ongoing credit reviews, sending automatic payment reminders, providing an online payment portal to accept pre-payment, and accept additional methods of payment, your finance team can ensure more of your customers pay on time and reduce the amount of interaction sales reps will need to have with delinquent accounts.
In an increasingly uncertain world, getting everyone to maintain sustainability and cash flow is essential. Most companies face a wait time receiving customer payments that could range anywhere from 30 to 90 days to even longer. Payment delays not only cause anxiety for the collections management team, but they impact your cash flow. The bottom line is simple — the more quickly you collect your accounts receivable (AR), the better your cash flow situation will be.
You have undoubtedly heard about or have automated certain business processes already. By automating wherever possible, you’re looking where you can leverage technology to compliment your existing ERP or finance solution, and reduce labor-intensive administrative tasks, thus operating much more efficiently in the process. AR automation transfers invoicing to a digital process that sets you up to receive multiple forms of payment and handles what is usually labor-intensive deductions, accurately applies cash, and captures and prioritizes collections efforts. In addition, AR automation allows you to:
Create customer invoices based on your company’s data or simply upload an ERP-created file of invoice PDFs to send and track electronically or via postal mail.
Invoices and other AR documents can be delivered on-demand according to the customer’s preferences.
Customers can access a convenient online portal to view invoices, pay their bills, get support, and more.
Managing post-sale collections is made easier with tools such as task escalation, root cause analysis, and more.
Finally, AR automation also supports numerous types of collections strategies and is set up for internal collectors based on the collections rules and approach unique to your company.
The benefits of AR automation are numerous and impossible to ignore after you have experienced them firsthand. Here are the main reasons to consider implementing this year:
Faster Payments If you’re accustomed to dealing with clients who tend to pay your invoices at their leisure, then you’re not alone. This is just one of many reasons to consider automating your AR processes as soon as possible. The enormous benefit of automation is that e-invoices are made available for customers to pay immediately. This eliminates delays in payment that might have previously been common. AR automation can help you speed up your invoicing so you get paid faster.
Improved Customer Experience A benefit of AR automation is an enhanced customer experience. Your team is better able to focus on more strategic and detail-oriented tasks. When it comes to AR-related customer data, you know the more you can do to merge things for greater visibility, the better customer service you can provide. When it comes to inaccurate invoices or collections issues, AR automation technology allows you to quickly address any issues that may arise. By implementing technology in your AR processes, you are giving yourself a valuable tool that allows you to provide stronger customer service. Because of this enhanced customer experience, you can expect improved customer retention and a decrease in customer service-related problems.
Cost Savings Studies have shown that e-invoicing saves approximately $8 per invoice sent. This cost reduction might come as a surprise. However, the decrease reflects cost savings in several areas, such as postage costs, manual handling of paper invoices, cost of paper, envelopes, and equipment used in the printing and posting process. By implementing invoice delivery automation, your company can cut costs where you never could before. In time, the sizeable cost savings will be worthwhile to leverage technology to your benefit.
More Control & Visibility Another benefit of AR automation is the added control and visibility you and your team will gain. Invoicing and international e-invoice compliance, automated payment reminders, online customer payment, automatic cash application, collectors outreach and workflow, and capturing dispute reasons are just a few of the AR automation functions that allow real-time visibility and reporting. Improved visibility provides the insight you and your team can act on.
You may still have reservations about making the switch from the manual processes you’ve always known and feel comfortable and familiar with. Change can sometimes be scary. Look at automation technology as something that can easily be adapted to your business needs. Opt for software that’s simple, intuitive and closely matches how you already do business. Consider automating your AR and collections process — it’s a more predictable and repetitive sequence of activities that provides benefits from end to end.
Want to learn more about automating your AR processes? Check out this whitepaper for more information or visit our website, www.esker.com.
Diana Eagen, Esker’s Director of Sales for Order-to-Cash sat down with Kim Cole, Director of Collections, at LocumTenens.com to talk about their past year during the pandemic.
Healthcare staffing is critical not just for businesses, but for the country as a whole given some of the obstacles we’ve faced – namely, a shortage of healthcare workers. Esker customer LocumTenens.com specializes in the temporary placement of physicians, CRNAs, physician assistants, nurse practitioners and psychologists at healthcare facilities across the U.S. As the industry’s most-visited job board, LocumTenens.com helps healthcare organizations connect with the professionals they need to ensure patients have access to quality care, and it’s been a busy 14 months for the company.
It’s the collections team’s responsibility to stay ahead of bad debt and apply strategies to ensure outstanding debt is recovered in the most time- and cost-effective way. That hill has been a steep one to climb for most credit and collections leaders the past year. Kim Cole, the Director of Collections at LocumTenens.com, has kept her cool during a challenging year and has focused on keeping track of outstanding receivables, collecting payments and guiding customers through the payment process. I had the opportunity to ask Kim about the Locumtenens.com AR team and how she’s been able to effectively manage collections efforts like a well-oiled machine with Esker automation.
Diana Eagen: Kim, thank you so much for taking the time to provide insights into your cash collections. First, how is your team? With the vaccine and some restrictions now lifting, are employees (still) working remote or in the office?
Kim Cole: We were remote at the start of the pandemic for several months. It is critically important to our company to ensure the health and wellbeing of our associates. At this point in time, we have many associates back in the office half of the week and several associates that continue to work remote.
Diana Eagen: We both know that inefficient accounts receivable management can unnecessarily tie up your company’s working capital, so effectiveness is critical. Has your organization adjusted its collections strategy or done anything different to meet your business objectives since the COVID-19 pandemic?
Kim Cole: LocumTenens.com is a staffing agency in the healthcare industry. Our mission is to improve healthcare by providing patients with access to quality medical care through innovative staffing solutions. Like many other healthcare organizations this past year, we felt a significant impact as customers reacted to the pandemic environment. We reached out via Esker messaging to communicate to our customers that as valued partners, we would assist them any way we could to help them get through this difficult time.
Diana Eagen: I’m sure your customers were very thankful for that. Have you found that your business has been resilient enough to recover from any impact the crisis has made on LocumTenens.com?
Kim Cole: Our resilience and purpose has helped us navigate through this pandemic, and Esker has helped us achieve our collection goals and mitigate risk. We were able to quickly add new data fields that assisted us in looking at our aging through diverse segmentations, which really helped us prioritize.
Diana Eagen: Was your DSO or customers’ average time to pay impacted?
Kim Cole: We found little impact on our DSO or ADP despite the challenging times.
Diana Eagen: Wow, that’s fantastic! Not every company made the adjustments needed to thrive – some are still struggling. How have you factored in the historical relationship with your customers when planning collections follow up and credit decision?
Kim Cole: We have worked with both existing customers and new customers to staff the front lines of this pandemic. Our locum providers have staffed in all areas of the U.S., working tirelessly to support the hospitals and clinics through this unprecedented time. We always look at credit risk in our decision making for new business and follow the credit reporting for all of our customers.
Diana Eagen: What guidelines do you provide to help “good” customers remain in good standing, and what makes a good customer to you?
Kim Cole: A good customer communicates effectively with us to resolve disputes and eventually resolve the outstanding invoices for payment. We have strategized with several customers in order to help them make payments and reduce their outstanding receivables.
Diana Eagen: Over the past 14 months did your organization have to institute or remove penalty fees for late payment or offer early payment discounts as a standard practice?
Kim Cole: We worked with our customers at the beginning of the pandemic to help them with the financial impact they felt as a result in the reduction of normal health maintenance procedures due to COVID-19 by not assessing finance fees.
Diana Eagen: From a customer experience perspective, did you implement anything new or make it any easier for your customers to do business with you or get paid faster?
Kim Cole: We did! In April, we began the process of contracting through Wind River Financial for credit card processing. Our goal was to provide our customers with every resource for payment during these challenging times in healthcare. Our customers love that they have different ways to pay their outstanding receivables now in their customer portal.
Conclusion
With the help of AR automation and the efficiency-boosting tools it provides, LocumTenens.com was able to quickly adjust to unprecedented circumstances and work with customers being impacted by the pandemic to continue collecting payments, while seamlessly transitioning to a remote workplace and providing great customer service. If the COVID-19 pandemic has taught businesses anything, it’s that there’s no predicting what will happen in the future. The best way companies can be prepared for whatever comes their way is to have the proper tools in place that promote efficiency, flexibility and business continuity — tools like AI-driven automation.
As many organizations focus on maximizing efficiencies of business processes. Business executives, consultants and technical leaders are tasked to seek out technology advances to improve respective business processes. There are a few technology options in particular that get a lot of attention. Though they are often confused as competing technologies, they are all different and provide different benefits and outcomes. The three main technology advances to help companies automate and streamline processes are robotic process automation (RPA), artificial intelligence (AI) and machine learning.
Let’s dig into what they are, how they can help and where processes fall short.
Robotic Process Automation
Often seen as a stand-alone solution, RPA is a “robot” that is programed to push or pull information from one place to another. RPA has strong benefits for simple business processes because it can eliminate repetitive, manual steps. In short, if you can draw a virtual line from one point of a process to the other, RPA may be a good fit for it. An example of this would be: logging into a portal, downloading a document, then pushing the document to a folder for someone else to review. Sometimes, if the data is perfect, that data can be pushed reliably into a database/system of record after it has been downloaded by the RPA/robot.
There are even some cases where a robot can be programed to read the data it’s pulling and make a simple determination about where that information goes. These are often times referred to as “if statements.” “If statements” are variables that determine where information should go but not necessarily validate if that information is correct. Changes occur on either end of the process where the RPA identifies any weakness. What happens if login information for a portal expires or the process changes on the other end? Consider the downstream effects of these changes and ask yourself, “Are there some areas in my business that would benefit from a simple and effective automation process?”
Artificial Intelligence
AI is considered a technological “brain.” Often construed as
a technology for extracting data, AI is really just a technology that assists in
handling data and information. In other words, it’s a group of technologies and
algorithms that help solutions make accurate decisions based on trends and past
decisions. But not all AI is the same — some AI technologies are complex and
others are rather simple. Overall, if a technology is helping to make a
decision — without a user forcing or programing it to — it can be classified as
artificial intelligence.
So, what is AI most useful for? Most experiences suggest
that AI “decisioning” technologies are best used to cut down on time-consuming,
manual tasks. AI mimics decisions that otherwise take additional time for
humans to make. The ROI calculation is a simple equation. Here’s an example: if
one step in a process takes 10 seconds to complete and is repeated 100 times
per day, AI intervention can save 16.6 minutes a day on that single step. It’s
easy to see how ROI can grow to be substantial as these seconds can turn into
minutes (or even hours) of time savings. Complex processes seem to benefit the
most from this technology.
Machine Learning
In its truest form, machine learning is a variation of robotics
in which the solution is manually told what to do. These are forced or programmed
decisions based on what a user recommends. Despite all the promises that
technologies like RPA and AI make, there are still situations where specifically
telling a solution how to handle a piece of an example is necessary. Think of
this as the technology that will handle the “details” of a business process.
Let’s say, for instance, you have a customer that consistently changes a material number when placing an order. As a CSR, you know what the customer is trying to order, but the change happens far too often for the cognitive functions of AI to intervene. In this example, machine learning can step in and force the system to defer to the correct change — just as a human would do given a manual process.
Think about your business process and ask, “Is my process complex or is it simple? Does the business process have variables that require constant change? If changes aren’t corrected in a timely manner, will it negatively affect my customer or supplier relationships?” In answering these questions, you may be able to determine what technology is best for your business process.
When it comes to customers and suppliers, leveraging all of these technologies has proven to produce the best outcomes. Solutions tied to these areas of focus should be flexible and retain the ability to grow and change with a business. Customers and suppliers are arguably the lifelines within a business and should be treated with the utmost care.
Despite Will Smith’s recent declaration that the 1999 movie “Wild Wild West”: “[is] a thorn in my side” and in addition to the fact that it is universally considered to be both a critical and commercial failure, I admit that I enjoyed it a lot. Granted, the story line is all over the place, but, nonetheless, I found the movie very entertaining.
What does this have to do with deductions and margin preservation? I guess not much, but the first analogy that comes to mind when thinking about deductions is actually the Wild West with its lone rangers, vigilantes and this Wild Wild West movie: very few rules and pretty disorganized.
Food, beverage and consumer goods manufacturers and distributors often face enormous hurdles to getting paid on time and in full by big retailers. It almost seems as if retailers follow John Wayne’s advice to “shoot first, ask questions later”: short pay an invoice first, explain why later — and often only when vendors make a request to do so.
Many deductions actually turn out to have a valid reason, either by being linked to promotions or previously arranged trade agreements. Resembling the lawlessness of the Wild West, the practices in the deductions space are only loosely delineated and rarely properly defined. This can open the floodgates for questionable or even completely baseless deductions that retailers push onto their suppliers. The vendors then end up struggling to keep up with all the various claims, oftentimes drowning in investigative processes that can include people from different services such as finance, customer service, sales and anyone up and down the supply chains.
Some companies simply abandon claims reviews for small amounts, because they calculated that it would cost them more to spend time and resources verifying each claim then starting a disputed payment resolution process with their customer. One Esker customer told us they actually had a threshold of $250, at which dispute resolution proceedings started, simply writing off any amounts below that. This aligns with research from a 2018 IOFM report on the costs of researching and resolving unauthorized customer deductions. It is important to note, however, that deduction write-offs dilute the company profits and can have a big impact on the bottom line. This becomes even more obvious for businesses working on a limited margin: operating on a 5% margin, for example, $1M of prevented or recovered deductions have the same impact as an additional $20M in revenue!
As I said in Esker’s recent press release — albeit in a more grandiloquent tone than here: “Every penny counts! We want to help businesses keep deductions under control by enabling them to easily track and investigate deduction claims.” Retail suppliers should not consider deductions to be a lost battle, but should rather try to improve their order-to-cash process. Adding automation technology will facilitate claims research and collaboration, both within the company and with customers. AI-based processes automatically capture data from supporting documents and connect the dots between these and the associated payment deduction. An electronic workflow based on claim type and amount ensures that all checks and approvals are handled quickly by gathering all the evidence and making a decision about whether the deduction is valid or needs to be disputed easy.
At Esker, we work to inspire positive sum-growth. This is a fancy way of saying that customers and suppliers should generate value together rather than at one another’s expense. Unfortunately, this is not always the case in the wholesale distribution world, as retailers tend to take advantage of the power imbalance with vendors, evidenced by those wild deductions that are often forced on the vendor unilaterally. Luckily we do not live in the Wild West of the movies, and similarly, the wild horses of deduction claims processing can be tamed with organized processes and improved communications. And there’s a happy ending, too: one where mutually beneficial customer-supplier relationships can be achieved.
So go and watch that old Will Smith movie, and maybe you, too, will be inspired to bring some organization to a somewhat lawless landscape. And, speaking of wild — spoiler alert ahead! — the bad guy’s giant steam-powered tarantula is really something…
Days Sales Outstanding (DSO) is a common measure for how long it takes a company to collect on an invoice. And after years of supplier shortages, drastic demand fluctuations, increased operating costs and liquidity pinches, finance leaders are prioritizing goals associated with reaching the lowest DSO possible and quickly recovering payment on accounts receivable (AR). The goal is to reduce DSO to have the lowest DSO possible and quickly recover payment on accounts receivable (AR). A high DSO value means it takes a company a lot longer to collect and could lead to cash flow problems due to the longer time between the sale and the time the payment is received.
For example, if your net credit sales (sales that aren’t paid immediately) are $950,000 and your AR balance is $125,000 for a year-long period, it takes you an average of 48 days to collect from your customers. If you have 30-day payment terms, this number means you need to speed up the rate at which you receive payment.
DSO = ($125,000 / $950,000) × 365 days = 48
A high DSO has a tremendous impact on cash flow and revenue and can prohibit you from investing in your company’s growth. Reducing DSO, even slightly, can go a long way toward improving financial health. There are several strategies to reduce DSO and improve an organization’s cash flow, such as:
Make it easier for your customer to do business with you Offering multiple payment methods — such as credit cards and automatic payments, or an online option for customers to view invoices and statements — provides greater flexibility for the customer and improved cash flow for you. Are you making it easy for your customers to pay and communicate with you? Check out Esker’s payment portal.
Stricter credit approval Are you performing credit evaluations on all new customers? Are your credit terms appropriate and followed by your sales department? Does your customer service department flag new orders that do not have a completed credit app? Do you have a procedure in place for updating credit information on a regular basis?
Invoicing Are your invoices accurate and sent out on time? Are payment terms and due dates clearly written on invoices and any other communication sent out to the customer? Have billing addresses and accounts payable email addresses verified before bills are sent out? Do you provide incentives for early pay? Are you sending out automated payment reminders?
Receivables managementstrategy Do you consistently follow up on customer disputes and late payments? Are you measuring performance against goals? Do you regularly review aging reports? Are you reporting on collections forecasting? Do you have an understanding as to why customers are paying late (e.g., invoice discrepancies, product issues, etc.)?
Collections Do you have a collections process in place? Do employees have the tools they need to prioritize, call and email collection efforts? Are they well trained? Do they have enough time to follow up on all past-due accounts? Are they able to efficiently keep sales and customer service in the loop on disputed invoices?
Incentives Are you offering discounts? Do you offer incentives to customers to receive quicker payments, such as early payment discounts? For example, you could offer a discount for paying within a week or 10 days when your payment terms are net 30. This discount can be easily offset by speeding up cash flow, savings on loan fees and better discounts from creditors.
Customer purge No one wants to walk away from a customer, but do you know which customers are routinely inconsistent, unresponsive or continually paying invoices late despite offering outstanding services? Has your company considered dropping bad customers from your business list? DSO increases are often driven by a few large customers. Has your collection staff worked closely with those customers to understand what is driving the slippage?
Going beyond DSO to optimize cashflow
Improving DSO is imperative to cash management; however, there are two sides to the cashflow coin: AR and accounts payable (AP). Both play equally integral parts in establishing cashflow, and when it comes to improving it, addressing only one of these processes simply isn’t enough to create real change. The only way to do that is by strengthening both muscles: the one bringing cash in (AR) and the one sending cash out (AP).
On the flipside of DSO is DPO (Days Payable Outstanding), and like DSO it can pack a major punch when it comes to cashflow performance. DPO can also be the determining factor between suppliers considering your company a “good client” or a “bad client”. There’s currently no benchmark for a “healthy” DPO due to the variability of industry, competitive positioning and bargaining power of organizations. That’s why keeping a close eye on your DPO and your competitors’ DPO is important for gauging your payables performance.
Addressing both sides of the cashflow coin
Automating just one side of the cashflow equation can actually create new inefficiencies. Because AR and AP processes are inextricably intertwined, automating just one can result in departmental silos and ultimately hinder your ability to optimize working capital.
The secret sauce to a better DSO and DPO is automating both AR and AP through a single interface that simplifies and standardizes you organization’s finance function as a whole. Want to learn more about end-to-end financial transformation? Check out this ebook!
The world of accounts receivable (AR) is still evolving as some companies transition back to office life, while many continue to operate in a new hybrid environment. What skills and technology do AR teams need to deliver strategic value?
CFOs’ changing priorities and navigating the new normal
In the wake of the pandemic, CFOs found themselves with a new batch of supply chain and finance challenges — ones that have made it increasingly difficult to manage AR processes and collect cash. As finance leaders’ shift priorities from “tactical” to “strategic”, they’re now focusing their efforts on preserving cashflow and providing better service to customers. Today we will go through seven tips we’ve found that allow companies to adapt collections strategies, collect cash faster, empower AR teams and achieve growth, no matter the business situation.
We’ve found that by working to achieve these seven AR goals, your organization can better adapt collections strategies, collect cash faster, empower AR teams and achieve growth, no matter the business situation.
Tip 1. Reassess receivables
Historically, the processes within collections, cash application and credit management are highly manual. With collections, this could look like manually sorting and filtering through AR aging reports or searching for follow-ups in Outlook calendars and even sticky notes. This often leaves customers without noticeably high balances or long past-due invoices receiving limited collections touches, forcing collectors to be more reactive than proactive.
With cash application, this could look like multiple AR clerks spending 70% (or more) of their days on manually reconciling cash, making it impossible to dedicate the time needed for claims and deductions and other responsibilities.
Overall, reassessing receivables is a matter of identifying opportunities for improvement and adopting best practices to help you accomplish your goals.
Take the pulse of your business with leading metrics
Like any competitive landscape, business is a game of strategy, and few things offer a greater value than analytics. While lagging metrics take a look back at what has already happened, leading metrics identify future opportunities, or look out for future issues before they become bigger problems.
Despite being well into the 21st century, most finance executives wish they had greater visibility into some of these leading metrics, but don’t have the time or resources to obtain them consistently. Fortunately, AI-driven AR solutions can provide full transparency into both lagging and leading metrics.
Tip 2. Tailor collections
As much as one-third of an AR representative’s time can be spent prioritizing who to call and searching for contact and account information. Not exactly time well spent for a department that should be focused on getting the money your company is owed.
Considering the manual grunt work involved in getting slow-paying customers to be proactive, most companies don’t have enough time or staff to make contact as early and often as they’d like. Enter automation. By taking human involvement out of the areas that aren’t actually necessary to make AR function, you can accelerate payment times and free up your staff using tools like payment reminder emails, scheduled reports, self-service portal and more.
Adjust your collections strategy
It’s vital to continually make sure your collections strategy is up-to-date and effective. Customers are likely in all different stages of recovery, so one blanket strategy for all customers probably isn’t going to be as effective as customizing a strategy based on priorities:
Focus on collecting all the cash that can be collected
Suspend your usual activity and prioritize activities according to your business’s needs
Target the highest amounts to be collected and at-risk customers
Tip 3. Deliver invoices intelligently
The ideal AR automation solution should include all of the necessary technologies to automate the sending and archiving of both paper and electronic invoices according to customer preferences. The result is end-to-end efficiency, from delivery to archival.
Compared to manual AR methods, the advantages of electronic invoicing (e-invoicing) is clear: It’s faster, less expensive, more reliable and eliminates inefficiencies caused by handling paper. Making the change to e-invoicing can seem daunting, though. The goal is to make the move as seamless as possible.
Delivering AR invoices more rapidly, accurately and efficiently is one thing, but satisfying varying customer preferences for receiving them is another — many are simply not ready to change. Automated AR solutions give companies an option they never had before, making billing 100% electronic on their end without requiring change on the part of the customer.
Tip 4. Be easy to pay
According to recent industry research, when customers need support for a product or service, 55% are most likely to try self-service options first versus using chat (20%), email (16%) or phone (8%).
Automated AR solutions step up where ERPs fall short — offering an online portal for customers to do everything from viewing invoices and statements to making payments and communicating with their suppliers, which leads to happier customers and payments being received sooner.
Tip 5. Manage customer relationships
Managing relationships starts with having a centralized location for all customer data and demands open lines of communication. Based on the staff you have in place and your level of activity, you can choose to talk to certain priority customers, send bulk messages to quickly reach out to a large customer base, or give customers access to a portal to access invoices, payment plans, and messages in real time.
If you want to properly manage your customer relationship, you need to have permanent and up-to-date access to customer related data, documents and actions that are visible to all departments involved in the necessary actions.
Leveraging a single platform allows to centralize data and make it easier for management and end users to easily access the data they need, synchronize messaging to customers, and get more granular with what can be reported on.
Tip 6. Coordinate and collaborate
Collaboration is key — and with so many working from home, being on top of your internal communication has never been more important. You must ensure business continuity and provide the same level of service to customers, including making sure questions are answered in a timely manner, disputes are addressed quickly and tasks are offloaded to the right team members.
It’s crucial to continue collaborating with your team, share information and resolve issues. Teams working in silos from home with paper-based processes (e.g., Excel spreadsheets and ERP reports, printed invoices sent via postal mail, etc.) are struggling to focus on the activities that really matter — building customer relationships and getting paid faster.
Tip 7. Take care of your team
Taking care of your cash and customers must be a top priority, but taking care of your employees should not be overlooked. By empowering them and acknowledging their work, particularly in difficult times, you are strengthening morale, purpose and team spirit
Maintaining positivity and engagement within the team is not easy with some people still working remotely or in different locations. Why not motivate your team with small challenges on cash collected? Reaching a goal as a team can be a great way to keep them motivated and feeling more important to the bigger picture.
Start up business team meeting working on digital tablet new business project
With the New Year right around the corner, it’s an opportune time for finance leaders to review, reassess and rethink their accounts receivable (AR) strategies.
But this prompt is not simply some end-of-the-year contrivance. A shift in mindset is arguably necessary for organizations to maintain a healthy cashflow and resilient business model.
Despite being years removed from the acute phase of the COVID pandemic, many of the challenges created and/or inflamed during that time persist — making it difficult for AR to be the strategic, proactive department required for sustainable growth. These challenges include:
Externally
Ongoing pandemic
Increasing inflation
Supply chain slowdowns
Geopolitical concerns
Internally
Talent attraction & retention
Pace of digitalization & innovation
Security risks & data breaches
Increasing bad debt
Where should AR leaders focus their attention?
Within the invoice-to-cash (I2C) process, there are many areas that AR leaders could focus on. However, sticking to the following four strategies is the simplest, most effective way to adopt a more modern AR mindset.
Rethink processes. Be a detective. Is your DSO longer than the industry average? Are partial payments a regular occurrence? Do your team members lack engagement and/or struggle to stay on top of late-payment reminders? These are all tell-tale signs that your AR performance is lacking and cashflow issues might be in store in 2023 or beyond.
Rethink collaboration. Collaboration within AR and across other departments (e.g., sales, IT, customer service, etc.) is one of the most overlooked yet all-important factors in minimizing cashflow risk and maximizing the value to the business. Can your current people, processes and technologies do the following:
• Collaborate with others anytime, anywhere? • Easily start & save conversations? • Support multi-solution scenarios?
If not, your AR operation might be a prime candidate for modernization, particularly as we enter into yet another year of uncertainty.
Rethink analytics. As CFOs and other finance leaders play a more strategic and value-driving role within organizations, access to analytics has become even more important in day-to-day decision-making and long-term forecasting.
That’s why it’s essential to rethink data’s role within your AR department, aiming for an environment where users can instantly view data related to performance monitoring (DSO, BPDSO, CEI, disputes, etc.), customer insights (business history, payer performances, credit risk management, etc.), and even predictive analytics (payment predictions, collections forecast, etc.).
Rethink customer experience. The business impact of building loyalty among existing customers and differentiating your company from competitors is undeniable. That’s why it’s essential that finance and AR teams are doing everything in their power to address some of the core desires of today’s customers, which includes:
• Letting them pay you however they prefer (cards, direct debit, etc.) • Increasing transparency & data accessibility by offering them a convenient portal to track invoices, make payments, view statements and more • Becoming a business that’s easy to do business with (rapid onboarding, timely payment allocation, etc.)
Stayed tuned for Part 2 of the Rethinking Receivables blog series, as we explore the impact of AI-driven automation solutions on AP performance and what it means to the stakeholders throughout your company.
In the meantime, read Esker’s latest white paper, Rethinking Receivables to learn more about how to use AI technology to retain talent, secure revenue and realize your digital potential.
