Companies say AR automation speeds processing

While much progress has been made, the fact remains that many companies still rely on manual Accounts Receivable (AR) processes. But new data, reflecting a growing list of benefits businesses are experiencing from automating AR, shows far-reaching positive effects on business collections processes.

In fact, the B2B Payments Innovation Readiness Playbook found that the companies surveyed stated that they had realized seven different benefits by digitizing their AR. At the top of the list was the faster processing speed. 87% of the companies stated that they recognized this advantage.

In addition, several other steps in the AR process can be automated, including cash applications, collections, payment acceptance, invoice delivery and customer credit checks.

A growing list of AR benefits

Of the companies surveyed by PYMNTS that have implemented automated AR processes, 80% cited improved team efficiency and three quarters of those surveyed said that their overall customer experience had improved.

Companies also reported saving money on operating costs (72%), with around 60% of companies seeing an improvement in their days outstanding (DSO) and a reduction in headcount, while half reported improving their overall collections.

Industry insights

The AR insights come from over 500 US companies in five different industries, including advertising, technology, construction, energy, and healthcare.

For example, respondents from the energy sector were most likely to report speed gains from automation, where 95% saw this benefit.

At the same time, energy and advertising companies were more likely than those in other sectors to report that they had seen AR automation improve DSO. While 61.8% of all companies cited this as a benefit, 87.9% of energy companies and 87.1% of advertising companies did so. Both rated this as their 2nd advantage of AR automation.

Plant strains

There are a variety of reasons for businesses to prioritize AR automation.

Healthcare companies, for example, faced particularly stressful operational stresses during the pandemic as they struggled to offer remote services and traditionally negotiate manual payment processes while many of their employees started working from home. When managing these cash flows, healthcare companies also have to meet numerous payment obligations to suppliers.

The B2B Payments Innovation Readiness Playbook provides a checklist on how finance managers need to approach AR automation to improve their organizations’ collections processes.

First, the C-Suite Checklist suggests that you evaluate AR painpoints. Companies have to assess which important weaknesses in receivables affect their collection cycles. This enables a modular approach.

Then reduce DSO. Minimizing DSO cycles can help companies get paid earlier and improve their overall cash flow. This requires companies to adopt technological solutions to facilitate payment acceptance and optimize their collection process.

Third, prioritize automation. Organizations that rely on manual processes face high costs and challenges with their collections, but automation can help solve these problems.

With automated AR technologies in place, companies can save time, reduce redundancies, improve cash flows, reduce payment defaults, offer customers better experiences and improve business relationships.