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Getting paid is not new technology, companies have been billing people since they were first formed, but issues arise in the number of different payment types, business areas and accounting systems that are used today. Industry leader reported the pandemic has contributed to a major shift in payments—it accelerated the move to digital by 2.5 years in a one-year period. With an increase in new payment forms, businesses are now handling paper, digital and electronic payments. This continued digitalization push has led to even more changes in accounts receivable (AR) processing.

Automation in every stage of the payment lifecycle

Businesses understand that manual processes are often costly and time-consuming. In 2020, PYMNTS.com reported 67% of corporations build in additional time to compensate for manual processing. And of course, the larger the volume of payments, the more time and money a business must consider for manual payments. Imagine if a business could streamline their operations by 67% instead of hindering their progress with slow, manual processes and negative customer experiences.

Recent PYMNTS.com research finds businesses plan to automate their processes:

  • 50% of companies report high operating costs are a significant pain point.
  • 60% of respondents are preparing to automate their AR systems to unlock potential cost savings
  • 83% of businesses have changed their AR processes since the COVID-19 pandemic’s onset

While most companies are using some type of automation in their receivables processes, Deluxe’s Receivables Product Manager Beth Bourgoin explains that they need to use an end-to-end approach to capture every step of the payment lifecycle, not just certain areas.

Bourgoin says one method we’re seeing today is companies taking all their different payment types—paper, electronic and digital—and treating them all the same. This process leads to even more headaches down the line, for both coworkers in different departments and the end customer.

“It doesn’t mean that your AR process has to be more complex because your payment types are different, it just means taking the time to understand them,” adds Bourgoin. “By understanding the different payment type’s strengths and weaknesses, you can identify the best places you have for automation.”

However, automation that seeks to solve just one area can still leave gaps in the payment lifecycle that will cause problems with incomplete data and slow cash flow. For example, a company may use a lockbox provider to scan checks, make deposits electronically and standardize data for straight-through processing, but other payment methods will still cause issues and exceptions.

One example of pin-point automation: One Deluxe customer processed thousands of electronic payments and were looking for a way to improve their overall processing ability. The challenge was the remittance data (which allowed them to apply the payments and get the information to post in their ERP system) was typically emailed separately from the electronic payment. Prior to using Deluxe, the business had printed out their ACH payments to match them to printed emails with the remittance data, and then passed the documents along to their lockbox team to capture the remittance data. If the remittance data couldn’t be matched, or information was missing, the complete data was handed off and became a larger problem for the accounting department to handle. Overall, this process led to a very low straight-through processing rate and poor customer experience.

Opportunities for optimization

Common process

Businesses must use automation throughout the order-to-cash lifecycle as a common process to leverage straight-through processing vs. having multiple solutions for each payment type.

Automation

Companies need to analyze their payment lifecycle to see where they can automate their tasks. They see the same issues every time a company makes a payment, AI machine-learning technology and automation give them the tools to solve those issues before they become bigger problems.

  • How can you make these steps as efficient as possible?
  • How can you add value to the overall payment lifecycle?

Accuracy

Use the tools provided by automation to support your internal resources, so that your data can be more accurate. Ask yourself: Where is there an opportunity to make my data more accurate? The answer is automation. The bottom line? There’s a definite correlation between accuracy and scalability. For your business to grow, you need accurate data and support to scale internally.

Support remote resources

In a post-pandemic world, companies must consider ongoing support for their hybrid and remote workers. Automation allows for the AR process to continue in any environment without disruption. “You can work from anywhere and the automation gives you the tools and the visibility into the data that you need,” Bourgoin adds.

Assess your receivables opportunity

How strong is your order-to-cash cycle?

Diagnose your opportunity areas with these common issues:

  • Is your DSO higher than necessary?
  • Does your AR staff struggle to keep up with cash application?
  • Do even electronic transactions require manual review or data entry?
  • Do you have numerous customer payments that require special handling instructions?
  • Does every billing cycle yield large volumes of unapplied cash?
  • Does each payment method and channel have its own data feed and process?
  • Do your processing delays often result in false collection notices for customers?
  • Is it difficult to verify deductions and discounts?
  • Do you have limited visibility to payment status?

A majority of “yes” answers indicates you’re ready for change. No matter where you are in your automation journey, Deluxe can support you with an efficient, all-in-one receivables solution.

 

Deluxe Exchange 2021:

What does end-to-end accounts receivable processing really mean?

 

To learn more about the end-to-end AR process, see our highlights from the Deluxe Exchange 2021 session.

 

Or listen to this podcast to hear PaymentsJournal editor-in-chief Ryan McEndarfer, Mercator Advisory Group analyst Steve Murphy, and Deluxe experts Beth Bourgoin and Rick Scholz discuss the value of automation in an end-to-end accounts receivables process. 

WHITE PAPER:

Accounts Receivable in the Age of Artificial Intelligence