4 Ways to Modernize Your A/R Operations Right Now

Written by: Ashton Steffl

October 23, 2020

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The digital revolution is impacting virtually every industry across the board, and the way payments are made, managed, processed, and ultimately applied to customer accounts is no exception. Accounts receivables (A/R) operations are caught in a web of legacy systems and a fast-growing list of payment methods, channels, and customer demands.

In an ever-changing and increasingly digital environment, many companies have been forced to take reactive, inefficient, and unnecessarily expensive measures in order to keep up with customer demands for greater flexibility when and how they want to pay. All the while still having to maintain and support legacy systems and processes for established payment methods and channels. This has created an abundance of disparate, siloed systems and processes that result in high levels of manual work, resource requirements, and ultimately higher costs.

New, electronic payment methods and channels (ACH, credit card, online and mobile) have started to overtake the “old school” methods of cash and check and created a complex environment for managing multiple payment options. This has caused an urgent need for streamlining and integrating payment processing, exception handling and cash application as these efforts have been largely siloed between various systems and left to generate increasing costs, inefficiencies, and general frustration within A/R organizations. This is especially true for those departments spread across geographic locations.

As companies looked for the “quick fix” to satisfy a growing number of customer preferred payment options, many have found themselves left with a growing number of systems spread across numerous vendors—or what some (including FTNI) would refer to as “silos”. Emerging from this patchwork quilt of legacy systems are A/R departments that lack holistic oversight of all the payment methods and channels that make up today’s modern A/R environment. What’s more, as the number of disparate systems within your environment grows, so too will the manual, error-prone mistakes that are left for intervention within your team’s daily cash application efforts.

Even though the focus is shifting from paper money and check towards electronic payments, those “old school” methods are still far from extinction. In fact, more than 50% of B2B payments in the U.S. are still made via check.1 A/R teams and systems are having to manage both paper payments, as well as electronic, in an ever-changing environment. Understanding how to manage and support this shift in the payments landscape is essential to successful business operations.

There is no shortage of ways to utilize technology to improve A/R operations in today’s rapidly evolving digital environment. In fact, a growing number of vendors trying to piggyback on the success and growing adoption of integrated receivables solutions will direct you towards “dashboard-driven” solutions that allow you to see all your A/R in one handy dashboard.

But beware, simply seeing can be deceiving. Behind many of those fancy dashboards lie elaborately disguised silos—and in some cases, even third-party delivered solutions. To us, if you can’t accept, process, post, view, and report on all payment methods and channels from one seamlessly integrated platform, then it isn’t truly integrated.

Admittedly, sometimes just getting started is the hardest step, especially during times like these. But getting started is also the first step towards making the changes you know need to be made right now, in order to succeed in the long run.

So, don’t wait any longer. Here are four quick, easy, and affordable ways to get a head start on modernizing and streamlining your A/R operations when it matters most…right now.

4 Ways to Streamline Your A/R Operations Right Now:

  1. Smarter RDC

Remote Deposit Capture (RDC) may not be a new technology in the world of corporate payment acceptance and A/R operations, but truly integrated receivables solutions enable smarter RDC that significantly reduces (if not completely eliminates) manual activities associated with applying check data to customer information and even open invoices or statements.

Using MICR (Magnetic Ink Character Recognition) matching technology, advanced RDC solutions are able to match scanned checks to customer accounts automatically. Additionally, intelligent invoice matching algorithms are able to analyze the written amount of a check and evaluate possible matches to open invoices based on your unique business rules within seconds—ensuring that you’re A/R resources are focusing their time and effort on the highest value functions.

Along with smarter RDC for desktop check scanning within your office environment, leading integrated receivables solutions seamlessly integrate mobile payment solutions as well. Especially useful for companies with field sales representatives or delivery drivers, mobile payment solutions allow for checks, as well as credit cards and ACH, to be accepted securely (and compliantly) and sent to the home office in real-time for review, approval, processing, and posting.

Whether you use a partner’s stand-alone mobile app or embed mobile SDKs/APIs in your company’s own mobile application, mobile payment solutions are a quick, efficient way to streamline remote payment acceptance to decrease DSO, accelerate cash flow, and streamline cash application operations.

  1. Contactless Online Payments

Truly contactless payments (here meaning payment options that require no contact between you and your customer) have never been more relevant or sought after than during this time of social distancing and hyper disruption brought on by the COVID-19 pandemic. But in reality, contactless payments have been around for quite some time—think about it, how long have you been making online payments within your own consumer life?

What’s changed is the significantly increased demand for, and adoption of, online payments within businesses-to-business (B2B) payment processing, A/R, and A/P operations. Online payment solutions not only benefit your customers due to its contactless and convenient self-service nature, but also benefit your A/R team by allowing payment and remittance data to be accepted and applied automatically. With online payment solutions, customer information and sensitive payment data are securely stored on PCI-compliant software. You don’t have to deal with the burdens of handling any sensitive payment information on your servers--greatly reducing compliance overhead.

Another benefit to online payment solutions is the ability to present your customers with complete EIPP (electronic invoice presentment/payment) features, allowing them to see and select the invoice(s) they want to pay. Additionally, leading online payment solutions are fully mobile responsive, so your customers get the same easy-to-use payment experience no matter what device they use.

  1.  Enable the Ease of Automatic Payments

Your customers want quick and easy ways to pay. And these days, it doesn’t get much easier than recurring or automatic debit (AutoPay) payment options.

Regardless of whether your customers enjoy consistent billing amounts each month, or if those amounts due can vary each billing cycle, AutoPay and recurring payment solutions help to streamline the customer communication, payment processing, and cash application, all with little-to-no manual touchpoints within the payment cycle.

In both scenarios (recurring or AutoPay), email notifications can be sent to your customers alerting them of an upcoming, scheduled payment. These communications can include the amount to be paid, and even any applicable invoices or statements that will be associated with the payment. On the day of the payment, another email can deliver a payment receipt, once again providing an overview of the payment and the statements/invoices the payment covers.

When coupled together with online payments as we discussed above in #2, customers can even gain more control over their contactless payment options by having the ability to turn on AutoPay or schedule recurring payments as allowed within their payment terms.

  1. Step-up to Straight-Through Processing

Each and every time someone within your A/R department has to touch/view a payment, it costs you money.

The association of payments with supporting remittance data and the subsequent posting/applying of that information can add countless hours of highly-manual, error-prone work each day for A/R resources. With straight-through processing—or the automation of payment acceptance, processing, and posting (cash application)—from a single platform, you can ensure your most valuable resources (your employees) are focused on the highest value functions.

Whether it’s the intelligent matching of invoices to a scanned check based on algorithms tailored to customers’ unique payment terms, customers viewing, selecting, and paying open invoices and/or statements via an online payment portal, or representatives in the field accepting payments via a mobile app right on the spot, a truly integrated receivables platform will help streamline these scenarios—and many more—so that you have complete oversight AND control of all your receivables operations in one place.

The end result is a more efficient and effective focus on exception handling, accelerated cash flow, and significantly reduced DSO.

Yes, there is a lot of uncertainty in the world today, but one thing that is absolutely certain is that A/R operations and the importance of efficiently accepting, processing, and posting payments will continue to be of utmost importance for business success. With no end in sight to the business challenges associated with COVID-19, getting paid quickly and accurately has never been more critical.

Why continue to use a mixture of disparate, outdated, and costly systems to support your A/R operations? Leading integrated receivables platforms are proven across numerous industries, easily integrate with your existing banking, merchant processor, and back-office system relationships, and are ready for launch within 45-60 days in most cases. The SaaS-based structure of these solutions conveniently fit into most budgets and does not require arduous CAPEX budget requirements.

In the long run, starting the evolution of modernizing your A/R operations now, will save time, money, and ultimately result in your (and your customers’) success for many years to come.

Originally Published 10/23/2020


1 Mastercard Business Payments 2022 Report, 2018

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