Why CFOs are Betting on AR Automation for Survival

Mar 17, 2021 by Mark Fisher

For most CFOs, the COVID-19 crises caused a shift in priorities, leaning towards employee safety and cutting down expenses to survive the unexpected economic shock that unfolded. In this environment, Accounts Receivable automation became more than wishful thinking and turned imperative for continuing operations in remote situations. But more broadly, last year's events ushered in an acceleration of digital transformation across the Finance organization in companies of all sizes.

Automation and digital tools have now become the DNA of the enterprise. But finance and revenue teams, the lifeblood of the organization, still spend a bulk of their time manually processing transactions, sending payments, collecting paper checks, reconciling financial data from different sources, and matching an ever-increasing volume of transactions.

This manual process is not only costly and inefficient, but it also creates layers of risk. For example, errors can quickly happen when you need to reconcile hundreds of thousands of transactions (bank records vs. GL, invoice vs. PO, credit cards, company data, and more). If you're dealing with multiple systems (ERPs, PoS, inventory, etc.), this problem will only get worse.

This is where an Accounts Receivable Automation tool can help.

What does AR automation mean for finance teams?

CFOs spend 90% of their time on financial closing duties and a mere 10% on analysis. Automation can reverse those numbers. When robots and workflows do the number-crunching, finance staff can focus on providing high-level insights that drive business decisions and enable growth.

Automation can help reduce human errors in an AR process and optimize the way your company approaches collections, reconciliation, and the entire enterprise cash cycle. Robotic Process Automation increases efficiency by 44% by automating manually repetitive tasks. (Digital Workforce, 2019)

What can AR automation solve

The data doesn't lie: payment automation can help businesses realize increased ROI and overall growth. More specifically, how can payment automation benefit your business?

  • Faster time to cash (cash conversion cycle): The more automated and efficient a process is, the faster payments will be collected and suppliers will get paid.
  • Lower payment costs: Digital payments are far cheaper and easier to collect than paper checks. Recent research from Ardent Partners shows that automation can contribute to up to 80 percent cost-reductions compared with manual and paper-based methods.
  • Reduced errors: Errors in the payment process eat up valuable time, damage customer and supplier relationships, and can result in duplicate payments.
  • Quick financial close: Payment automation tools can help you streamline your financial close with instant three-way reconciliation.
  • Increased visibility: By moving to automated digital payments, you can capture more data to support advanced payment analytics and improve reconciliation. Payment automation is becoming a strategic focus area to help finance executives better manage and forecast their cash flow.
  • Centralized data: Using a comprehensive payment platform helps you avoid investing in multiple applications. Instead, your dashboard becomes the headquarters for your payment lifecycle, allowing you to access revenue insights and keep a close watch on customer lifetime value, average revenue per customer, and active recurring revenue.

How CFOs are implementing AR automation in their teams

Nowadays, most companies trust Enterprise Resource Planning (ERP) systems to act as the backbone of accounting process and financial health. Many businesses think that investing in ERP software means they've optimized the payment process as far as they can.

Yet, most ERP systems only give a finance team "full visibility" of their data operations two or more weeks after the month's end, limiting the CFO's visibility for planning and forecasting. And almost none have embedded payment functionality to tie invoices to payment options.

Luckily, some top-of-the-market AR automation solutions offer plugins and integrations for the most popular ERPs, such as Netsuite, Sage Intacct, and Xero. 

From small improvements to a financial revamp

Small changes indeed pile up to significant transformations; in that same way, we see how automation is a tool for financial growth straight from the core. How can you completely transform your finance department using automation?

  1. You will give your team more time for strategic thought and initiatives. Automation can provide better data to work with and free up the time to create significant changes from a well-informed perspective.
  2. You will manage your payment cycle and get a better view of your cash flow, all from one source of truth.
  3. Optimize financial close with instanced reconciliation with instant three-way reconciliation features, verifies against ERP records.

The benefits of this financial revamp are significant and can save companies millions of dollars a year in transaction fees, human capital, and errors or delays.

AR Automation is the CFO's key to unlocking growth and improving both the predictability and scalability of the business. More insight into cashflow means more ability to forecast and plan for what's to come. That's why now, more than ever, we're seeing forward-thinking CFOs and companies turning to process automation in Finance to help steer the business forward with confidence.