Four key ingredients to transform the accounts receivable recipe

Businesses have long lived by the mantra that cash is king. But can a single staple feed an entire business ecosystem and satisfy its appetite for growth?

In the language of food, when you perfectly balance the five taste elements – sweet, salty, sour, bitter, and umami – you create not just a meal, but a memorable experience. Accounts receivable (AR) needs that same delicate balance.

For many companies, the invoice-to-cash (I2C) process is manually intensive and overly complex. But combining the right measures of functional expertise, digital technology, and data is an effective recipe for transforming I2C and unlocking value for your business.

1. Cash flow – Managing cash and optimizing revenue are core AR ingredients. When faced with disruption, businesses with automated AR generate fast, accurate data and predictive analytics. These insights empower I2C teams to make smarter decisions to reduce past dues, identify and eliminate disputes, and recover invalid claims. AR drives cash back into the business and sweetens the business' palate to focus on customer experience and growing market share.

2. Customer and user experience – I2C teams are customer-facing. They connect with customers every day. In a competitive environment, where consumers have choices, ease of doing business builds loyalty and market share.

The secret is to create digital-first user experiences for employees as well as customers. To smooth the customer journey and soothe the process pain points away. Frictionless user experiences make AR less labor intensive; customer inquiries are either self-served or personalized to meet needs the first time. Digital solutions make transactional I2C processes, such as credit-risk assessments, cash applications, and billing, touchless. And interventions – such as voice-based collections, credit-risk exceptions, analysis and resolution of disputes and claims – benefit from a personal touch enhanced by machine-generated customer insights.

3. Cost evaluation – A cost-heavy AR function is counterproductive and dilutes the value it brings. The good news is that automating and eliminating transactional AR with streamlined process frameworks and an AI-powered integrated receivables platform is not costly. But costs go beyond initial platform implementation. Invest in building an adaptive I2C workforce, attracting new talent, and upskilling your existing team. People that champion your vision for transformation embrace digital and data culture and adapt to new ways of working. They have the capability and desire to deliver value to your organization and transform the AR function. Adopt the right approach to AR transformation and change management practices to avoid costly delays and mistakes further down the line.

4. Compliance and controllership – This intrinsic ingredient often goes unnoticed. Yet its absence would have disastrous results for the enterprise. Compliance within receivables cuts across data, systems, regions, markets, and industries. And complexities such as different invoice formats, data privacy and protection, and tax rules across countries alongside adherence to dunning schedules, access controls, and audit requirements require exacting internal controllership to mitigate external risk and maintain enterprise goodwill. Compliance expertise must be sought early in the design efforts of any digital transformation journey.

As with any recipe, a great chef continually refines their ingredients, measures, and methods to perfect a dish over time. And for the office of the CFO, AR must tailor the 4Cs recipe to reflect its own business needs and I2C process maturity. When AR automates transactional AR processes, embeds analytics and a data culture, and benchmarks I2C processes against best in class, it continually improves business outcomes. That is when AR transforms into an instinctive function that unlocks value beyond cost and cash alone.

Read more about Straight Through Accounts Receivables.