Risk Of Not Using ARManagement Software
AR MANAGEMENT SOFTWARE
When it comes to order-to-cash operations, comprehensive Accounts Receivable (AR) management system is essential for success. Without such system in place, business may find itself exposed to various risks, ranging from operational inefficiencies to financial losses.
Given the magnitude and seriousness of this threat, any finance executive worth their salt should seriously consider the risk of not utilizing an advanced AR software solution. Below, we’ll evaluate the risks of not leveraging such solution, along with an overview of how properly installed and utilized AR management system can effectively mitigate them.
Operational Inefficiencies
Without an AR software system in place, most of the order-to-cash process will have to be conducted manually. This leads to copious amounts of time wasted on cumbersome, administrative tasks such as reconciliation of chargebacks and disputes, collection of receipts, and verifying whether customers have made payments on time. This increased time expenditure leads to diminished productivity, inefficiency, and missed opportunities. Moreover, manual processes are vulnerable to errors, and attempts to decipher payment discrepancies can add immense cost burdens.
Financial Losses
Additionally, an AR software system offers an array of tools to ensure that the cash flow is streamlined and optimized. This includes credit risk analysis and automated customer segmentation, both of which allow businesses to identify customers with high potential of financial loss and swiftly take preventative measures. Furthermore, notifications can be sent to customers regarding payment deadlines or overdue payments. Such system can also help organizations map out their credit control fund limits and automate the credit control process.
Non-Payment
Absent of sophisticated software to automate cash flow operations, organizations may find themselves ill-prepared to tackle risk of non-payment by their customers. This could lead to large-scale losses in revenues and profits. With an AR system in place, however, the organization can easily track customer account balances and take preemptive action to seize any incoming payments as soon as they occur. Furthermore, metrics such as Days Sales Outstanding (DSO) and credit controls can also be established to protect the organization from any customer defaults on payment.
Conclusion
The consequences of not using AR software to strengthen companies order-to-cash process can be dire. From operational inefficiencies to financial losses, the risks are real and tangible. reliable AR management system can not only optimize the cash flow but also offer numerous tools for mitigating against non-payment risk. In light of this, any prudent finance executive must look into embracing such solution for the betterment of their organization.
