Benefits Of ARCredit Management Automation
Ar Credit Management Automation
In this era of digital transformation, business are often bombarded with urgent demands for change due to advancing technologies in the market. Process automation has become one of the key sponsors of modern organization. Therefore, it is no surprise that the importance for automation of AR credit management processes to streamline Order to Cash processes has grown over time. According to report by the Global Credit Exchange, organizations have invested an additional 10% in their Order to Cash processes over the last five years with greater emphasis on automation of collection and credit management tasks.
Organizations must reap the possible benefits of automation by adopting solution that provides the right set of tools and capabilities to manage the entire lifecycle of the account receivable process, starting from credit decision to invoicing and collections from customers or third-party administrators. However, it is important to choose strategy to achieve the objectives. This guide is designed to provide comprehensive overview of the important steps for successful AR credit management automation.
Step 1: Evaluate the organizations needs and goals
Prior to automating your AR credit management processes, an exhaustive assessment of the organizations existing system needs to be carried out. It is essential to consider the organizations short and long-term goals in order to select the right solution. The organizationshould identify key indicators that include current processes and procedures, internal controls, payment terms, customer review protocols, workforce utilization, legal requirements, and the impact of changes on overall financial performance.
Step 2: Choose the right automation approach
Choosing an appropriate automation strategy depends on the organizations internal needs and the size of the operations. Organizations must conduct thorough assessment of the best approach to automation based on the frequency of usage, integration capabilities, scalability, cost of implementation, and the maintenance costs. Organizations may choose between single integrated platform or built-in system that has the capacity to be modularized. However, as technology has evolved, single integrated platform enables organizations to achieve better scalability and flexibility.
Step 3: Understand the workflow and documentations needed
Organizations should create detailed workflow map for their AR credit management processes including invoice management, payment processing and credit control activities. This process should also involve an authorization process for each step. Once the workflow is documented, organizations must prepare the required documents and data that will be needed to be automated such as customer data and invoice documents.
Step 4: Employ predictive analytics
The objective of predictive analytics is to anticipate future trends and issue warnings before any issue arises. With predictive analytics, organizations can better manage the risk of default in their accounts receivables. Predictive analytics can also help to identify existing trends in the data and suggest improvements with respect to credit policies, payment cycle, and risk management.
Step 5: Automate key functions
Once the processes and procedures are defined and the documentations are gathered, organizations must leverage solutions that allow them to automate their core credit management functions and processes. Organizations must evaluate the solutions available in terms of functionality, technology, and cost to make an informed decision.
Step 6: Monitor and measure performance
Organizations must continually monitor and measure the performance of their AR credit management solution and track key performance metrics. This process should identify any problems, opportunities, and areas of improvement. Additionally, organizations should be able track and report day-to-day activities such as customer payment history, summary of accounts, and current outstanding balance, as well as drilldown reports.
Step 7: Drive better customer experiences
AR credit automation solutions should be capable of delivering the highest customerservice possible. The real-time visibility of customers? financial status and payment history should be coupled with customizable invoices to enhance customer experience. Automated payment processes should be enabled, allowing customers to find the best payment options for them.
Conclusion
Automating AR credit management processes can provide long-term growth and generate cost savings for organizations. Organizations must carefully assess the available solutions in the market and carefully consider the organizations needs and objectives. This guide has provided clear roadmap for organizations to understand and implement an effective AR credit management automation solution to achieve their desired outcomes.
