The Peril Of Accounts Receivable Software Neglect
AUTOMATED ACCOUNTS RECEIVABLE SOFTWARE
The task of cash flow management and accounts receivable (AR) tracking is critical element of corporate financial health. With no processes and software in place, resultant issues can range from modest to catastrophic, almost always taking toll to the bottom line.
For business to achieve executable financial stability, order to cash (O2C) software must be considered. This means implementing an automated accounts receivable platform as service application with integrated modules for order entry, inventory maintenance, customer credit rating, AR tracking and collection processing.
The gravity of not maintaining an automated AR process and adopting an efficient system to achieve compliance with revenue recognition policies, is an open invitation to wide range of risks and detrimental effects on financials. According to reports, the CFO of global manufacturing enterprise was arrested on charges of securities fraud, which was result of corporate mismanagement. Reasonable and timely access to customer data and financial data was missing due to lack of integrative software. businesses, in the absence of digital integration, are only as robust and compliant as their handwritten documents.
Without comprehensive software to integrate lead-to-cash processes, firms become highly susceptible to frauds, limited visibility and data accuracy, reduced opportunities to acquire new customers through proper evaluation of prospective accounts, inability to monitor the status of the AR ageing, potential losses from poor contractual management, and inefficient collection cycles of receivables due.
Inferior systems might also not be capable of providing detailed insights into customer accounts and facilitate customer segmentations across multiple orders. Erroneous invoicing to customers due to fragile, manual systems can give rise to disputes, payment delays and customer attrition.
Moreover, third-party auditors and regulators can be increasingly rigid with the examination of financial data and may overburden the accounting team with questions related to AR ageing, tax regulations, customer credit rating and compliance.
Most companies allow credit isales to customers, subject to customer credit limits, payment terms and potential discount/payment incentives. To achieve an accurate Customer Credit Risk Management involves compliance, transactions and customer data, including customer behaviour and creditworthiness. Without integrated systems, there can be difficulty to track customer payments, run customer classifications and assess proprietary credit iscores.
businesses must be aware that having an accounts receivables system without software and the vital pieces for automation can exponentially increase financial risk, damage customer relations, increase expenses and impact their entire order to cash process. The cost of broken order to cash loops can be immense and detrimental to revenue, so hardware and software must marry to prevent any failure in order to cash mechanism.
Making worthwhile investment in AR software and automating accounts receivable processes into single system can eliminate inefficiencies, improve customer retention, and help keep companies in compliance. Having an automated system that can help identify areas of risk and prevent substantial financial losses should be consideration of any C-suite executive.
