Keys to unlocking the productivity and effectiveness of accounts receivable

Keys to unlocking the productivity and effectiveness of accounts receivable

The accounts receivables process, also called the Invoice-to-cash process by many, constitutes the lifeline of a business. It is the route through which an invoice is raised and money (or cash) realized for the goods or services sold to a buyer.

In the context of business, cash has been, and continues to be, king. Cash enables you to buy raw material. It helps you pay for employee salaries. It facilitates hiring an office. And whatever is left over becomes profit that can be used in many different ways, the common ones being distribution to owners or plowing back into the business as investment for future growth. Cash has many uses.

Digitalization has made inroads into all aspects of our lives. Accounts receivable is no different. While the primacy of fast realization of cash continues to drive the function, embedding digital tools into the process is making life easier not only for the seller, but sometimes the buyer as well. This is good news for a process that has been manually run for a long time. In fact, the other side of the account receivable function, namely the accounts payable or invoice payment function, is a process that has steadfastly continued largely as a manual process, being handled on different platforms from the ones that issue the invoice. But that is another subject.

From the accounts receivable perspective, digitalization of the journey is unlocking value for all participants.

oWorkers is actively embedded in many different data-based services that BPOs provide to their clients. The proficiency it has achieved in a short period of time can be judged from the fact that it is already recognized as one of the top three data based BPO services providers in the world, not a mean achievement by any standards.

 

User experience is key; all users matter

Not that this needed telling, but the pandemic has made us realize more than ever before the importance of user experience when they interface with your business. The user here refers not only to the customer but to the employee as well, the human being that a customer will be interacting with. It is now widely recognized that the staff who interact with customers need to be happy and inclined positively towards the company in order that the customer ends up with a satisfactory experience. Additionally, other employees, the ones not interacting with customers, also need to be happy and positively inclined as they will interact with customer-facing employees and deposit their feelings of dissatisfaction on them, impairing or improving customer interaction. The bottomline is that all employees should be happy and satisfied. Of course, even at a generic level, no sane organization will argue that they should not have satisfied employees.

Enough has been written about the importance of customer satisfaction and experience, hence we will not dwell upon that here.

Accounts receivable is a customer interaction function. It needs to create ease and comfort for customers. We need to remember that customers always have a choice, though some companies tend to forget that occasionally.

Digital solutions have become essential in the modern world. They bring consistency and stability to the process and make it largely seamless, eliminating needless effort on the customer’s part to reach and elicit a response from a person. It also smooths out processes like credit assessments and billing. The human touch, thus, can be chosen wisely by the provider and controlled with a view to leaving the best experience for the customer. The digital solutions do the work, with human minders stepping in now and then to smoothen out the wrinkles.

With an established presence in each of its delivery locations, oWorkers is a magnet for talent and regularly receives walk-in applicants in droves. This enables selection of the most suitable resources for all its client projects, while keeping costs low, since they do not have to spend on advertising to attract talent. Even providing additional resources to handle short-term unexpected spikes has never been a challenge for oWorkers. Its positive influence is visible in the feedback left by employees, both present and former, on external platforms like Glassdoor, consistently rating it 4.6 and above on a scale of 5.

 

Digitalization creates efficiencies for cash management

Cash being the lifeline, many AR departments describe their primary goal as being to realize cash (revenues) in the fastest time. For this to happen, the invoice needs to be raised quickly and the realization of the money thereafter has to happen speedily. Of course, all this within the terms provided while setting up the arrangement. They cannot push for payment in 30 days if the terms provide for a 60day credit period. It should be remembered that for the client, who is paying the money, the objective is often the opposite, to pay as late as possible, unless there is a benefit in paying earlier.

A digitalized accounts receivable function is able to balance the requirements with aplomb. In addition to transactions, it provides MIS and reports on its own functioning, facilitating the process of decision-making. These insights not only result in better performance of the unit, with faster recoveries and lower past dues, it also yields insights that help in improving the system for future use and users.

oWorkers provides a fertile host environment for the latest technologies, with its super secure facilities & protocols with ISO certifications (27001:2013 & 9001:2015) that are designed to protect sensitive data. It is also GDPR compliant. Clients trust oWorkers with their data and sensitive information.

oWorkers has forged close relationships with technology companies that enables it to access the latest developments for deployment in client projects.

 

Accounts receivable needs to contribute to the company’s cost management efforts

Stepping away from AR for a minute, it is the beholden duty of every company to maximize its revenues and minimize its costs, on an ongoing basis. This allows it to earn profits that can be distributed to owners.

Accounts receivable is an integral part of an enterprise and hence, subject to the same rules of the game. It needs to maximize revenue and minimize cost. While the generation of revenue opportunities is in the hands of what are called ‘business’ people, typically the teams and functions like Sales, Marketing and Product Management, AR’s contribution to revenue is efficiency. It needs to ensure that revenue is realized fast and completely.

This exercise of efficiency also needs to be undertaken in an efficient manner. In other words, the function needs to ensure costs are maintained at reasonable levels while it creates efficiency in the revenue processes. Automation is often a key step in this endeavor as it often reduces the recurring cost of human resources while creating efficiency through better controls and information generation.

oWorkers is no stranger to the constant need to look for cost efficiencies in a business. Many of its clients, particularly the ones from the US and Western Europe, testify to the saving of almost 80% cost as compared to their pre-outsourcing numbers. They also love the oWorkers method of giving them the option of choosing between an output or input-based pricing model for their contract.

 

Compliance, controllership and adherence are relevant even in a digitalized function

The accounts receivables process, being responsible for revenue realization, is a natural candidate for scrutiny from the perspective of compliance and adherence to the rules and regulations that most organizations have for the function.

Compliance in AR is often challenging because it is an external-facing function and interacts with clients each of whom could potentially have different systems on which invoice processing is done, as well as different methods of remitting the payment. If the customer base includes overseas clients, the complexity goes up one more notch with different jurisdictions and taxation related rules coming into play.

It becomes important for digitization efforts of the function to keep this in mind while undertaking the exercise; providing for the compliance requirements and integrating them into the technology to the extent possible.

oWorkers not only turns transactions around fast, it is also equipped to operate on a round-the-clock schedule in each of its global delivery centers, where there is a client with the need. In addition, it is able to cover all geographies and provide a one-stop solution to its clients with its facility in handling work in over 20 languages, which is the outcome of its active support of a multi-national and multi-cultural workforce.

 

In conclusion

At the end of the day, each organization is different. The functioning of the AR department will, no doubt, be a reflection of the values and goals of the organization it serves.

Digitalization is a desirable pursuit in many organizations, as it is known to result in automation, data-based decision-making, programmed reliability and reduced recurring cost. This is even more so when the scale begins to increase, making the ROI easier to justify. There are always many examples to learn from as well as technologies to choose from in this journey. Each company will make a choice based on the unique combination of variables that impact its business outcomes.

oWorkers supports corporations from around the world in their efforts at handling back-office functions with efficiency, both of processing and cost. Often, for clients who are unable to build an ROI justification for investment in the function, outsourcing to partners like oWorkers helps. They often have access to better technologies and are able to provide a superior ROI justification on account of aggregated volumes across many clients in the domain.

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