How Tech Companies Are Automating AR to Stay Ahead of the Competition

Shaun Jex | Thursday, Mar 9th 2023
AR Automation in Tech

In the world of tech, it’s not enough to simply keep up. If you aren’t ahead of the curve, it’s easy to get left behind. The problem is that getting ahead of the competition requires enough cash flow to invest in critical initiatives like attracting and retaining talent, research and development, and adopting new technologies. If your accounts receivable isn’t a fine-tuned machine, that’s just not possible.

The U.S. Chamber of Commerce discovered that 1/3 of surveyed merchants reported being at risk of closure due to delayed payments.

That’s where AR automation enters the picture. By eliminating inefficient processes, improving customer communication, and allowing you to anticipate payment behaviors, it provides all the tools you need to get cash flowing.

Let AI Do the Heavy Lifting

An automation solution like Quadient AR allows your team to strategically plan collections by embracing artificial intelligence and machine learning. It analyzes past customer behavior and uses the data to make predictions about future payments with up to 94% accuracy.

Not only does the software identify accounts that are likely to pay late. It’s also able to make estimates on when they are most likely to remit payment. With this information, your AR team can prioritize accounts that are at the greatest risk of late payment.

“We have seen payments come in faster, and a better customer experience because we are able to address things quickly.” – Cheetah Digital 

The software doesn’t only provide this analysis for the individual account level. It also assesses your entire AR portfolio, examining all receivables and providing you with information on how and when your “average” customer is likely to pay. The data is formatted into dynamic reports, detailing when invoices are going to be paid and how much money you can expect on a given day.  

While other automation solutions offer account scoring, Quadient AR is the only solution that uses algorithms to continuously monitor customer behavior and provide analysis of the most up-to-date information. It’s technology that has been recognized as an industry leader by global market intelligence firm IDC.

Ditch Manual Data Entry 

Leveraging payor analysis allows your accounts receivable team to approach collections strategically, but they can only do so if they aren’t mired down with busy “back office” work.  

Knowledge workers spend over 40% of their time on manual administrative tasks. 

Manual data entry is time-consuming and prone to error. Without software that integrates with the rest of your tech stack, AR representatives are stuck manually transferring data between a variety of systems. If mistakes are made, they may not be immediately detected, leading to invoice errors and subsequent disputes. A member of your team must then search for the mistake to correct it.

Quadient AR integrates with your ERP, billing and CRM systems, eliminating the need for manual data entry, and providing you with a centralized source of information. Not only does this improve the efficiency of your accounts receivable team, it also decreases the cost of the AR process.

The 1-10-100 Rule: 
The cost of prevention is less than the cost of correction, which is less than the cost of failure. For example, if it takes $1 to prevent a mistake, it would cost $10 to correct it, while the cost of failure would be $100.  

Start Communicating Better 

Another factor that frequently generates late payments is a failure to properly communicate with customers. This becomes even more difficult when dealing with organizations that have complex parent/child relationships. Often, AR reps are left wondering if they are directing invoices and communications to the correct location, which can lead to payment delays.

Quadient AR resolves this by displaying subsidiary relationships. This makes building collection workflows easier. The software also automates the delivery of invoices and follow-up reminders. Messaging can be customized, tailoring it to the individual account, and rules can be set so that messages are sent via the customer’s preferred method of communication, whether this is digital or postal mail.

The platform’s customer self-service portal also allows customers to better communicate when they have questions regarding their account or an invoice, or if they need to raise a dispute. With the ability to log in at any time from any location, customers can review open and outstanding invoices, make promises to pay, or submit a payment. In the event of a dispute, the software analyzes its nature and severity, directing it to the appropriate employee for resolution. Not only does this help speed up the payment process. It also lets the customer know that their concerns and questions are taken seriously and will be addressed in a timely manner.

Embrace the Future

In Deloitte’s Finance 2025: Digital transformation in finance, the firm makes eight bold predictions about the future of finance. The central theme? Automation. Whether it’s in the form of touchless transactions, self-service, or real-time reporting, financial success will be dependent on digitization. This is particularly true in the tech industry, where customers expect their vendors to be ahead of the times.

Each of the features explored above – predictive analytics, automated data entry and strategic communications - combine to lower the risk of late payments and bad debt. This in turn lowers DSO and increases cash flow. For technology firms, that means the ability to invest in growth initiatives that will keep them on the leading edge.

To learn more about how Quadient AR helps address some of the most pressing challenges facing the tech industry, watch our on-demand webinar Retaining Your Top Finance Talent in 2023.