Mission: Release Cash Flow Trapped In AR

By Nick Roquefort-Villeneuve, Global Marketing Director – Amalto Technologies 

Amalto-Cash-Flow-TrappedHow much cash flow is currently trapped in your receivables? If your organization were to lower its DSO by 5 days, how much cash flow would then be released?

But, an essential question to ask is… How do you get to lower your DSO by 5 days? Now, I must warn you. To write this down on your New Year’s resolutions list won’t cut it. A bit more is required, like making sure you select a potent AR automation solution that not only will release trapped cash flow from your accounts receivable but will also provide you with additional savings associated to the elimination of a few head-counts (AR Clerks, IT) allocated to collection.

Step 1: Overcome Your Fear(s)

Golden rule: What feels familiar certainly doesn’t mean it’s good for you and your ecosystem. So, if you’ve already automated your accounts receivable and your DSO has not dramatically improved, there is a problem. Moreover, if manual tasks are still involved in the processing of purchase orders and invoices, there is an even greater problem. Let’s do a quick recap: Your DSO is not up to par and/or processes are still (partly) manually handled, and you haven’t looked into a state-of-the-art automation solution yet?

What are you afraid of exactly?

Could it be a control issue? Does the fear of losing control to an automation solution deter you and your organization from changing durably? Reality check: To breathe over a clerk who processes a PO manually is not being in control. To find out later that the same clerk made a typo while processing the same PO, and the mistake ends up delaying payment due to an arising dispute is not being in control either. It’s just bad business. Automation eliminates such risks.

Are you fearful that you do not have the proper IT resources to implement and maintain the AR automation application fully functional? Let me reassure you. The best solutions do not need the intervention of your IT department, once the application is in production. So, you can sleep soundly at night and your IT folks can work on IT projects that truly matter to them and the company. Furthermore, those same AR solutions top-vendors store all your data inside private, dedicated clouds, which ensures enhanced security and agility.

Or maybe is it a price issue? Fact: The cheapest solutions are never the best ones. A robust tool is an investment. Having said that, it represents an investment that’s only a small fraction of the cash flow you’ll release from your AR once it’s up and running. The ROI is undeniable. 

Step 2: Choose the Right Solution

Anything less than the few features below wouldn’t be acceptable…

  • User-Friendly Processes. Automated accounts receivable technology allows both employees and customers to easily view bill closing dates and payment amounts.
  • Invoicing. All statements and bills should be housed in a secure online portal. Users receive a notification when there is a new invoice, which they can view conveniently in digital form.
  • Increased Data Security. Paper invoices are actually far less secure than automated digital solutions. They are at risk of being stolen and viewed by unauthorized third parties, whereas robust accounts receivable solutions feature stringent security measures to protect data from theft or fraud.
  • Fast, Easy Payments. Electronic payment allows all invoices to be settled via numerous convenient options including e-check, bank transfers, credit card, debit card and more.
  • Effective Reporting. Accounts receivable solutions need to include a full suite of reporting features to give you insights into customer payment patterns, past-due account and much more.
  • Seamless Integration. An accounts receivable solution must integrate seamlessly with legacy systems, enterprise resource platforms, and other existing technologies for easy adoption.

Mission… Possible?

A 2-step decision process is not that complex to manage. Like with anything else, the goal first lies in eliminating whichever pre-conceived ideas you have around what AR automation is like or supposed to look like. Only then are you truly able to assess which product will optimally work for your organization.

If you’re an insomniac, the infomercial tagline "Set it, and forget it!” must ring a bell. It’s actually the same with a potent AR automation solution. If you don’t have to interact with the application, it means you’ve made the right choice.