Without Back-Office A/R Innovation, the Payments Experience and Working Capital Are at Risk

Ready or not, the financial industry is entering a new era of digitalization and automation — and A/R teams are no exception. In fact, according to a recent report from TreviPay, reducing manual processes is a top priority for just under a third of B2B finance departments.

However, accounts receivables (A/R) teams still rely on a startling amount of manual processes — tasks essential to extending terms, like sending and receiving invoices, collections and even onboarding. In fact, our report found that nearly allof the A/R managers surveyed (94%) admit to manually inputting at least some invoice, bill or statement information into their A/R systems.

Manual processes are putting customer loyalty and capital — both human and financial — at risk. Without adequate capital, organizations are limited in their ability to further invest in the future of the business, i.e., prioritizing innovation and the customer experience. Perhaps more pressing, A/R teams forced to rely on outdated manual processes are often inefficient, overworked and incapable of reaching departmental goals.

The bottom line: Manual processes are preventing your organization from reaching its full potential.

Key findings from the report: Manual processes affect capital and the customer experience

A reliance on outdated back-office processes restricts capital, access to which can be life or death for businesses, especially in a challenging economy. Even more, manual invoice data entry processes lead to invoicing mistakes and further payment delays, which create an increase in days sales outstanding (DSO). Lengthy DSO restricts available working capital, but bad debt from late or unpaid invoices reduces the A/R businesses can use for alternative lending solutions — further restraining capital on hand and preventing growth.

Findings also revealed that collections are consuming a large portion of A/R human capital: 51% of A/R managers have six to 10 employees working on collections each week. Of those respondents, three-quarters say each full-time employee spends 18 or more hours each week working collections. When outdated A/R processes prevent teams from completing core tasks (like collections), teams feel overworked and unsupported — and may look elsewhere in the organization for assistance, further burdening your organization’s human capital.

Outside of internal impacts, the customer experience suffers without back-office innovation. Take, for example, the 27% of respondents who use an in-house credit assessment to screen for creditworthiness when extending payments terms. When compared to the efficiency and reliability of third-party credit screening services (i.e., Experian, TransUnion, CreditWise and others), in-house assessments can significantly delay onboarding. Add these onboarding delays to already inefficient back-office A/R processes, and the entire customer experience begins to deteriorate.

Organizations must leverage innovation in the back office

Today’s B2B organizations are ill-equipped to tackle the future of payments. Only by applying strategic digital transformation to manual A/R processes can they hope to keep pace with customer purchasing expectations and support the growing demand for online sales. Whether through the automation of manual A/R tasks, outsourcing A/R processes or taking a hybrid approach, finding the most effective, long-term solution for future-proofing the payments experience is critical to maintaining access to capital and your organization’s long-term success.

Originally posted on PaymentsJournal.