Accounts receivable teams are either drowning in data or thirsting for better data

Corporate Payments And Payables

Jill McFarland Headshot

Jill McFarland

Mar 24, 2021

In too many cases, accounts receivable (AR) teams are sending an invoice to a payer, waiting for payment with limited visibility on arrival date, and then either sifting through inconsistent information attached to that payment or dealing with having none of the data they actually need. At its heart, this is a complex problem that leaves AR team members with a lack of control and confidence in incoming payments, as well as inefficient and ineffective operational processes and significant team member burnout. These are big problems organizations are struggling right now to solve.

In today’s environment, data is everything. The difference between now and even 10 years ago is that there are better ways to manage data and allow AR teams to process consolidated information in a streamlined way, even though it remains a tough nut to crack. After all, receivables aren’t new—someone had to invoice the Wright Brothers for canvas--and if the problems were easy to solve, they would have been solved a long time ago.

So that’s the challenge: finding the balance between payment and remittance data coming in the door in a way that fosters confidence, control, predictability and efficiency in an AR department.

What does a winning solution to that challenge look like?

  • Embrace better workflows. With your largest and most strategic accounts, there is likely to be sensitivity about leaning too hard on customer accounts payable for favorable terms. The problem is that unless you’re a little bit persistent, those terms are never going to change.

    You should start by automating your invoicing, as trimming down the time it takes for you to deliver invoices can also trim down the time it takes for your company to get paid. If you’re wary about collections calls—which are time-consuming and frustrating, even when they’re absolutely necessary—setting up automated text and email reminders for customers can provide a softer touch and a smoother process. Finally, flexibility in payment types and terms is a must these days, but be aware of how you are getting paid and by whom. Knowing payer patterns and behaviors will provide a level of consistency, but more importantly, intelligence. 

    These actions add up to time saved and carry real benefits in streamlining data in and out of your AR team, which should reduce your DSO. A team freeing up significant time by automating invoicing and reconciliation can now engage in more impactful work, like understanding who is not paying them or building relationships with customers that increase confidence in payment terms.
  • Think big picture. If you can make managing incoming payments and remittance data for your organization easier, it’s time to figure out what you’re going to do with the additional time you’re saving. Job one ought to be expanding the scope of what your AR team is providing the larger business.

    I’ve seen the heads-down, tactics-focused approach carry the day for AP and AR teams for a long time now, and it means you never truly catch up to the circumstances that are evolving both inside and outside your walls. Backing up and thinking more strategically can allow you to better manage the cash that comes in the door, but also help make larger decisions about how you access that cash, the business decisions you make with it, and what solutions you’ll invest in down the line to make things even easier.
  • Partner up. At the enterprise level, homegrown AR solutions and workflows just aren’t cutting the mustard in today’s environment. The more paper-intensive your process is, the more slowdown there is and the more data potentially ends up being fragmented or dropped accidentally.

    The answer is finding the right solution. Scrutinize providers that will help you streamline the number of payment portals you need to log into—a key source of headaches and fragmented data—and ask them to show you the tangible benefits in terms of combating DSO and ART (AR turnover), streamlining remittance, and otherwise making life easier on your undoubtedly strained AR team.

Transforming the way your business handles incoming payment and remittance data isn’t an overnight operation, but it’s both necessary and very possible with the right tools, right data, right partners and right mindset.

While it may seem like all the attention is on accounts payable in the B2B payments revolution we’re living through, the time is right for accounts receivable to embrace the road to better data and operational infrastructure because having control, confidence and predictability in cash coming in the door is certainly worth the time and effort.


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Related topics

Accounts Receivable
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Jill McFarland

Jill McFarland is the general manager of accounts receivable solutions for Bottomline and has spent over 20 years working in the payments and financial technology space, including in both accounts payable and accounts receivable for Bottomline and Paymode-X.
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