How Automation Is Helping CFOs Transform Accounts Receivable Into A Strategic Partner

Shaun Jex | Friday, Jul 22nd 2022

For many companies, accounts receivable (AR) is strictly a function-based department. Their job is to ensure invoices are paid on time, and follow-up with customers who are late on payments. However, as a result of the pandemic and the push for greater digitization and automation, forward-thinking companies are beginning to view the AR function as a strategic partner in the life of the business—one that can fuel growth, and improve the long-term value and satisfaction of their customers.

According to research conducted by PYMNTS, 63% of CFOs are prioritizing efforts to increase the overall lifetime value of their customers (CLV). With the cost of gaining customers exceeding that of retaining them, increasing lifetime value is crucial to driving growth —and accounts receivable is vital to this effort.

The same study found that 70% of CFOs believe AR digitization will increase CLV. In addition, 69.5% believe that greater AR transparency is indispensable to the effort, while 61% believe the AR process needs greater efficiency. Automation solutions like YayPay provide the tools needed to improve these areas.

Move Beyond the Day-To-Day

One of the main inhibitors to AR becoming a strategic partner in business is the cumbersome processes that preoccupy the team on a daily basis. Making phone calls, composing emails, and other mundane tasks eat up time that AR teams could use on higher-level projects, such as collaborating with the sales team to identify accounts to cultivate.

Moving beyond a manual, paper-based approach to accounts receivable and embracing automation makes AR teams three times more efficient.

By centralizing customer data and increasing transparency, AR teams can work with greater speed and accuracy. Once labor-intensive manual tasks are eliminated, accounts receivable staff members can optimize the rest of the AR process by focusing on practices that free up cash and strengthen working capital, such as proactively approaching the collection process.

Making Accounts Receivable a Growth Driver

Another key to increasing both the internal and external value of accounts receivable is to recognize that the future of AR is customer-focused, and that practices such as collecting on invoices, dealing with late-paying clients, and other functions of the department will impact all areas of a business during its lifetime.

The transparency afforded by an AR automation solution like YayPay provides a centralized source of accurate information so that representatives can provide consistent and detailed information to customers. This in turn creates more satisfied customers, building stronger relationships that helps to generate repeat business. Bain and Company found that companies that excel at customer service grow revenues 4% to 8% more than the market average.

In the age of social media and instant online reviews, the importance of satisfied customers cannot be overstated. After all, word-of-mouth marketing drives US$6 trillion in annual consumer spending and accounts for 13% of consumer sales.

Consumers also state that they are 90% more likely to trust a business recommended by a friend.

This means that by moving to AR automation, companies create happier customers, which in turn transforms their receivables department into a major driver of growth.

Collaboration is Key

With the help of AR automation, accounts receivable can play a significant role in driving further growth by becoming a partner with sales departments. YayPay provides centralized data on a customer’s payment history and uses artificial intelligence to identify trends and predict future behavior, meaning this real-time data can help sales teams make informed decisions about which accounts to pursue, what types of credit to extend, and what kinds of offers to make.

The transparency and predictive payment behavior data in YayPay empowers AR to provide real-time information to CFOs, which can help them make accurate cash forecasts. Additionally, the detailed reporting in YayPay’s Business Module allows AR to provide insight into decisions such as parameters for extending credit, whether or not to offer early payment discounts, as well as if and when to factor receivables.

In addition, advanced reporting capabilities enable AR teams to provide CFOs with real-time metrics to monitor key performance indicators (KPI). Tracking KPIs like the percentage of customers who pay late, unreconciled items, and monthly write-offs helps to provide a better understanding of the company’s financial health. Utilizing this data CFOs can better provide financial context to the CEO during operational decision making.

The C-Suite Is Ready For Change

The good news is that the groundwork for elevating accounts receivable is already in place with many C-level executives, as most are ready and willing to embrace the technology that will transform AR into a strategic business partner.

98% of CFOs from companies with more than USU.S. $1 billion in annual sales view digitization as important.

The move to AR automation is one that CFOs are increasingly viewing as necessary for the health of the company. An even greater number — 86% — view digitization of financial processes as key to increasing customer satisfaction, retention, and revenue growth.

To take the next step in learning how YayPay can empower accounts receivable, book a demo of YayPay today.