Want to Optimize The Invoice to Cash Cycle? Your ERP Will Need Help

Shaun Jex
Invoice to Cash Cycle

There’s no denying that an ERP is a great tool, a versatile workhorse that businesses lean heavily on. But is it strong enough to help you optimize our invoice to cash cycle? Probably not.

ERPs are simply not designed for accounts receivable, even when they offer AR modules. In general, ERPs lack the in-depth reporting and customer collaboration tools that make the process run smoothly. They also require numerous manual tasks that eat up valuable time.

Adopting an automation solution can not only decrease workload but can also improve customer experience and elevate AR into a growth driver for the organization.

The Importance of Data and Reporting

While ERPs typically offer some analytics related to accounts receivable, the options are limited and rigid. The problem is that most companies have an enormous amount of unstructured data that they need to evaluate. Valuable metrics like days sales outstanding (DSO), total open AR, payor trends, and others are not available to organizations relying on ERP alone. As a result, they likely have an abundance of raw data, but no real way to maximize its potential.

One of the best ways for companies to resolve this is to build custom reports. This can be a drain on IT, or if the process is sent to an outside company, it can be costly. Perhaps even more problematic, manually pulling data from a variety of sources for customer reports can result in errors, creating difficulties when it comes to making informed financial decisions.

69% of workers surveyed by Experian reveal that bad data is undermining their business strategies.

The advanced reporting available through an automation solution like YayPay allows you to quickly create customized reports and easily convert them into charts and graphs that will help inform strategic decisions.

With the press of a button, an organization can identify any invoices that are past due, how much money is outstanding, and which accounts are in danger of falling behind. By providing insights into areas like payor trends, average days delinquent, and DSO, AR teams can proactively identify problem areas in the invoice-to-cash cycle and address them head-on.

The Benefits of Customer Collaboration

While it may seem obvious, perfecting our invoice to cash cycle is going to require your customers’ help. After all, they’re the ones who will be paying the bill. That means regularly communicating with them to ensure that the invoices have been received, that there are no questions related to the bill, and that any and all errors are recognized and resolved promptly.

Unlike an ERP, automation software facilitates the creation of email cadences and tracks all customer communications. This regular contact keeps the issue top of mind for the customer and helps ensure prompt payment.

A self-service portal also gives customers the ability to log in and make payments at their convenience. The easier it is for your clients to do this, the more likely it is to be resolved in a timely manner.

The portal also allows them to quickly raise disputes when there is an issue or disagreement regarding an invoice. ERPs are rarely built to handle the various steps required to resolve these issues. The ability for the customer to immediately log disputes online also eliminates the need for long phone calls and endless emails back and forth to explain the issue.

The Pitfalls of Manual Processing

Because they do not integrate with your other systems, ERPs do not always have the most up-to-date data. If customer information changes, it must be manually input into the ERP. The lack of communication between solutions also means jumping between programs like Excel, e-mail, CRM, and others when looking at account information. It is time-consuming and prone to error.

Automation solutions centralize all information, integrating between your various systems such as ERP, CRM, and others. Because of this, you have ready access to up-to-date data at any given moment, and you eliminate the possibility of human error during data entry. All of these factors make it easier and faster to transform your invoices into cash.

Companies that implement AR automation see an average decrease of 7 days in their DSO.

While an ERP is an invaluable tool for businesses, it needs help when it comes to making sure your accounts receivable are functioning at their highest possible level. To learn more about how to improve your AR process, read YayPay’s Working Capital Playbook.