Integrated Receivables: Six Tips to Help Your A/R Operations Adapt and Evolve

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What Charles Darwin had to say about the evolution of species applies to business enterprises as well: adaptability is key to survival.

Consider accounts receivable (A/R) operations. The proliferation of check payments during the 20th Century led many businesses down the path of automation, in the form of lockboxes (managed in house or outsourced), which helped to reduce costs by compressing collection cycles and eliminating labor-intensive processing steps. By the turn of the 21st Century, however, the proliferation of new payment methods and channels (ACH, cards, online and mobile), created a new, more complex environment, as companies, acceding to customer demands for more payment options, were forced to implement disparate systems for accepting and processing receivables. What has emerged are corporate A/R operations bogged down by costly, error-prone manual processes spread across numerous legacy systems.

Today, businesses are struggling with the need to consolidate and streamline A/R and payment processing operations in order to drive better efficiencies and cost savings while supporting customer demands for quality service and payment convenience. They need truly integrated receivables solutions.

Here are six quick-hitting tips for how companies can adapt to this new business imperative.

  1. Don’t settle for the [on-premise] status quo.

    Change can be scary, but not changing often comes with a higher price tag. Each disparate system brings costs that can pile up quickly—ongoing maintenance, training, overhead, etc. Not to mention the costs associated with the manual processes that have to be maintained separately on each of those systems. You may have heard us say it before, but we’ll say it again, each time someone on your team has to touch a payment, it costs you money.

    There really is no better time than the present (especially as COVID-19 has forced teams remote) to make the move to the cloud. Cloud-based solutions ensure no unnecessary overhead, can be delivered quickly and seamlessly, and come with the added benefit of flexible pricing models to ensure you only pay for what you use. This is especially useful when new features and functionality can be delivered quickly, easily and remotely.

  2. Integrate new online and mobile payment options into your receivables mix.

    Online payment options provide added convenience to customers while improving cash application processes for businesses. Add to that the elimination of employees having to handle mail and physical checks and the added benefit of customers having anytime access to electronic versions of their bills/invoices/statements, it really is a win-win for your business and your customers.

    Mobile payment options are particularly useful for companies with field employees collecting payments remotely. Checks, ACH and credit card payments can all be facilitated securely and compliantly via a single app. Users back at the home office should have real-time oversight of all payments made via the mobile app (or any other integrated payment channels) from single user interface. Mobile software development kits and application programming interfaces are increasingly popular among companies with more extensive development resources and allow companies to accept payments within their own applications and to do so in a secure and compliant manner.

  3. Automate cash application into back-office systems.

    Look for an integrated receivables solution that can support flexible integration options based on your unique requirements and specifications into any back-office system. While many back-office systems can now support real-time integration options, batch-file integrations are still preferred among many organizations. Whether you leverage real-time or batch file integration, either option will enable you to devote more time and resources to exception handling and delivering top-notch customer service and less time manually posting payments into your back-office systems.

    Any system that leaves your team(s) having to manually apply cash into one or numerous back-office systems for hours each day, is not helping you move forward. It is inhibiting growth and efficiency within your organization. Be sure to identify a technology partner that can assist you in streamlining and strategically automating the entire payment life cycle—regardless of what back-office system(s) you have in place today, or in the future.

  4. Don’t expect your bank to lead the way.

    A true integrated receivables solution should be agnostic in nature and therefore flexible enough to seamlessly support changes in your receivables mix; including changes in banking and merchant processor relationships that are likely to take place over the natural course of business. Most banks rely on third-party dashboard providers anyway; leaving you to manage efficiency inhibiting silos (more to come on this in #5) disguised as the latest and greatest “shiny objects”.

    Getting an integrated receivables solution straight from the source ensures your chosen solution keeps pace with your company’s unique requirements and saves the you the added time, cost and frustration of a bank playing technology middle man.

    In all fairness, a growing number of banks are now partnering with integrated receivables partners who can deliver truly integrated receivables solutions. This includes the ability to support changes in banking and/or merchant processor relationships. While this is a refreshing development, these financial institutions still fall into the minority when it comes to how banks are bringing receivables processing solutions to market. Many of the banks leading the way in bringing truly integrated receivables solutions to their corporate banking customers fall within the community and regional banking sectors—effectively positioning themselves to provide more flexible, cloud-based solutions than many of the leading national banks can currently deliver.

  5. Look behind the curtain.

    Beware of dashboard driven products that attempt to cobble together feeds of payment data from multiple other systems. This is an attempt to provide a high-level view into what’s going on in those different payment processing systems, but the truth remains that these disparate systems still require direct access (and costly maintenance) in order to access and action any of the actual transactions you see within the dashboard. These systems are commonly referred to as silos and reside behind the “curtain” of these dashboard driven products.

    A true integrated receivables platform will support the acceptance, processing and posting of any payment method from any payment channel—all on a single platform. Regardless of how a payment is initiated/received, the system should have the ability to automatically identify, gather and consolidate critical information associated with those payments, for a unified view of the company’s cash position and even help to intelligently monitor customer payment risks. Not only should you be able to see payments in real-time, but you should be able to readily access any exceptions that require additional oversight and benefit from the automatic cash application of those payments into your chosen back-office system(s).

  6. And don’t skimp on security and compliance.

    Your technology provider should deliver state-of-the-art proactive security and compliance tools that supplement, or in some cases, even diminish the need for excessive internal resources addressing these requirements. Plain and simple, if a solution provider cannot assure compliance in all pertinent areas (PCI, SSAE 16, HIPAA, etc.) they are not capable of delivering a complete, secure solution.

Finally, don’t lose sight of the fact that while technology can be a great enabler, no software is infallible. An integrated receivables solution can only be as good as the people who built and stand behind it. You need a solution provider that treats you like a partner—one capable of thinking outside the proverbial box in order to address your company’s unique situation and requirements. Both now, and years into the future.

Originally Published April 8, 2020


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Topics: online payment options, mobile payments, integrated receivables, Cash Application