A new vision for the accounts receivable department

Published On : 12/30/2020

By Colin Sanders, Senior Business Executive, Onguard

The need to maintain the smallest possible DSO levels has risen to prominence in order for businesses to sustain cash flow in these uncertain times. During such challenging periods we often find a renewed focus on the accounts receivable departments, just as we are seeing now. The last time we saw this was the 2008 recession, but the focus has faded away during the period of relative stability since then.

It is important to understand that the previous almost-decade of cash-rich stability was a window of opportunity to reinvest into the business, especially in the often-overlooked area of innovating and increasing the efficiency of the accounts receivable department. However, it is only now that many businesses are coming to this realisation.

New challenges require new priorities

In times of need it is the accounts receivable department which can play the biggest role in ensuring the reliable flow of cash into the business. Other areas inside companies have been undergoing digital innovations, but the accounts receivable department has often been left standing still, held back by a multitude of repetitive, manual tasks. With fresh challenges facing global economies, now is the time for businesses to prioritise the accounts receivable department.

Transformation through technology

Colin Sanders

Ensuring greater cashflow will benefit the entire business. Accordingly, supplying the accounts receivable team with the right technology can provide many benefits, including reduced debtor days and time spent on disputes and customer segmentation, plus a decreased impact on margins.

In addition, the use of systems which offer greater visibility across the business as a whole can help to bring the credit controllers and sales teams together to work in parallel, which can offer better opportunities for business development and the maintaining of client relations.

The impact of reducing the amount of repetitive, manual tasks for those within the accounts receivable department goes far beyond the fiscal opportunities. Not only will doing so speed up processes and reduce the risk of human error, but it also frees up time for finance professionals to spend doing more value adding tasks, such as considering deeper analysis and strategies for improvement.

Aligning departments

Negative perceptions that the wider organisation may have of the team can potentially be changed by applying new technologies to bring them in line with the rest of the business. Automating the reporting process makes delivering crucial insights to the senior management team a more seamless process for both parties. Consequently, key business decisions can be made quicker.

Although the accounts payable and accounts receivable departments typically work separately, benefits can be achieved by aligning the technology used by both. For delicate contra accounts that both buy and sell from organisations, ensuring greater visibility between the two sides of the account can avoid any embarrassing instances of chasing a customer for payment when the business itself might owe a large sum to the same customer. Harmonising both departments using similar technologies can create a more transparent strategy across the business for the long term.

Moving forward, learning the lessons of the past

Forward-thinking businesses have long been gradually moving towards digitisation in all areas, with automation now a crucial part of many finance departments. The next step is to put the focus on ensuring that the benefits of this technology are being enjoyed by all. In terms of talent retention and development, embracing the right specialist credit management solution will not only assist those finance professionals in the accounts receivable team in their typical working day, but also streamline costs for the business as a whole.

By applying the lessons of previous recessions and times of difficulty organisations will be in the best position to reach success in the current environment. Not only must we consider the crucial role of the accounts receivable department in uncertain times, but it should also be prioritised in periods of stability. By doing so, the business will be one step closer to ensuring a sustainable and well-managed cash flow, enabling much-needed innovation and investment in the technology to future proof their operations and ensure success for years to come.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.