Written by: Ashton Steffl
Over the years, accounts receivable (A/R) organizations have routinely utilized multiple, disparate systems and legacy dashboards to accept, process and manage different payment types and channels—and unfortunately, far too many companies are still using siloed payment acceptance, management and cash application systems and processes yet today.
Historically, many organizations have relied on numerous systems, and more recently, dashboard-driven software cobbled together to form some semblance of a payment processing and cash application Frankenstein (sewn seams, neck-bolts and all).
However, legacy dashboards and disparate systems just don’t equate to true A/R automation. The evolution of receivable operations across the B2B and C2B payment landscapes have left A/R organizations with a choice: update and accelerate receivable operations to deliver more efficient A/R processing, or be left behind with the A/R silos and legacy dashboards of the past.
Now is the time to update your receivable processing to keep pace with the evolution of the payments landscape. Don’t be left with the horrors that come along with manual, disparate processes and silos that can haunt numerous legacy systems and processes within your organization.
But, what exactly are A/R silos, what do they really mean for your A/R operations and processes, and how can you fix these ghostly efficiency ghouls and goblins?
We’re glad you asked. Let’s dive deeper (if you dare…)
Accounts Receivable Silos & Dashboards: A Trick or Treat for Your A/R Operations?
If your A/R organization has to manage multiple systems to accept and process different incoming payment methods (ACH/EFT, credit card, debit card, cash, check) or channels (online, mobile, mailed-in, AutoPay, lockbox) and then manually associate the payments to customers accounts and key in payment details for back-office posting—then you have silos.
Many organizations are tricked into believing that A/R dashboards are able to fulfill their need for a single solution to manage all incoming receivables. However, what they really end up with are time (and cost)-sucking siloed systems hidden behind a pretty dashboard that ultimately still ends in your A/R team members having to manage multiple systems.
There is definitely no shortage of technology providers today that have dashboards and systems capable of taking feeds of your A/R and payment data. However, behind the vast majority of these dashboards lie more silos. Don’t be fooled by vendors promising dashboard-driven solutions that will automate your A/R operations. Disguised behind the dashboards is really just a mix of disparate, siloed systems presented as accounts receivable automation.
Below are a few of the “horrors” that are associated with continuing to utilize a siloed payment processing system, and how to solve them with true accounts receivable automation solutions. Don’t let your outdated system(s) trick you into believing that you are using the best payment processing, A/R management and cash application solutions for your organization.
Complete A/R Oversight is all Hocus-Pocus in Siloed Systems
Leveraging outdated, siloed systems leaves a large gap within your A/R operations and processes. Many siloed systems and software lack the ability to accept, process, manage and post multiple payment types from different payment channels. In order to do this, many organizations have to cobble together different systems and capabilities from multiple third-party vendors, instead of utilizing a single A/R automation platform to streamline payment acceptance, processing and cash application within a single solution.
This attempt to conjure a workable mixture of disparate systems across your A/R operations leads to a frightening mash-up of complexities and increased costs. Your customers can be left cornered with disjointed and inconvenient payment options, while your A/R team is haunted by incomplete A/R oversight, and tied down by manual processes spanning numerous systems. By utilizing disparate, additive systems, your receivable operations and systems will resemble a slow, stumbling zombie rather than the flexible, scalable solution for your A/R department needs.
With A/R automation software, your organization is able to use a modular, scalable and flexible payment processing platform that can accept, process and post any payment type from any payment channel. True A/R automation software provides receivable management and automated cash application from one zombie-free, cloud-based interface.
By using a single solution for all your receivables, your internal team is able to reduce, or completely eliminate, manual A/R tasks across various systems. Now’s the time to save your team(s) from the horrors of continuing to utilize outdated, siloed A/R systems and processes, and the nightmarish inefficiencies and costs that come along with them.
Legacy Systems are Keeping You Trapped in a Tomb of Archaic Technology
As previously mentioned, siloed payment systems lack the ability to flexibly adapt to your ever-changing business needs. In conjunction, legacy systems are also primarily not cloud-based or agnostic by design.
But, why is this a problem for your A/R operations?
Cloud-based A/R platforms allow your organization the ability to quickly and securely stand-up payment processing solutions without needing to add additional hardware on-site. You are able to select a single Software-as-a-Service (SaaS) solution to solve all of your payment processing and cash application needs. With cloud-based A/R automation, you can easily access all incoming payment information from a single application. And, your organization is able to save significant time and costs since you’ll no longer need to maintain a graveyard of on-site hardware.
In addition, legacy systems hinder your receivable processing by being static (almost mummy-like) in nature. Many outdated solutions lack the ability to adapt to your ever-evolving business needs. The rigid nature of payment silos presents an issue if your business ever looks to shift to different banking or merchant processor relationships, back-office systems, or even check scanning hardware. If your business decides to update any existing partnerships, banking or card processing relationships, or technology platforms while using a siloed, legacy system, then you may be in for a frighteningly costly and time-consuming overhaul when it comes to making any changes.
However, agnostic systems and platforms can easily adapt to your changing business needs. Flexible, agnostic A/R software is designed to be compatible with your business’ existing bank(s), merchant processor, back-office system(s), and check scanning hardware—and can seamlessly integrate with any new partners/systems as needed.
Again, A/R automation solutions are simpler, easier and more effective overall for you, your A/R team and your customers. A receivable platform that is agnostic by design means you don’t have to change platforms or rebuild existing processes as your business needs change today, tomorrow or years into the future.
Manual Processes Suck the Lifeblood Out of Your A/R Operations
While many third-party vendors try to pass off A/R dashboards as modern, automated receivable processing systems, they are not. The hair-raising truth is that behind those shiny dashboards lurks inefficient and expensive silos ready to suck the lifeblood (i.e. cash flow and operational efficiencies) out of your A/R operations. In order to actually access the transactions and data reflected within those dashboards, users have to manually access those siloed systems behind the dashboards in order to perform any meaningful tasks.
Using software such as this results in increased complexity and an over-exhaustion of your organization’s resources and your employees’ time. The cost of siloed systems across your organization is considerable and will only increase. You should be able to accept all payments through one system/interface, while also being able to view and match associated A/R details (accounts, invoices, statements, etc.) within the same platform. There’s no need to settle for DSO exceeding 5+ days. No, you should not have to pay a percentage of any check or ACH transactions similar to credit card interchange rates. No, your bank doesn’t have to be your primary payment technology provider. And no, you should not have to wait 6+ months to implement a dashboard driven system that doesn’t even deliver complete access to all your receivables in one place.
Today’s leading A/R automation platforms can help your A/R operations achieve the operational efficiency and cost savings that may seem out of reach. Stop settling for anything less than a single platform for the acceptance, processing and cash application of all payment methods from any payment channel. It may be all hallows’ eve, but there’s never been a better time to free yourself of the horrors of siloed, legacy A/R systems.
As we’ve shown, silos only create more difficulty for your A/R organization. Whether your business is already dealing with the horrors of siloed, legacy systems or you have yet to be tricked by your outdated, manual processing, the time is now to treat yourself to true A/R automation. Continuing to over-exhaust your business’ resources and time will only result in more and more losses as your organization continues to process and manage payments through numerous systems. Eventually, your receivable processing can simply no longer be additive; you must make the switch to a single, cloud-based A/R processing platform.
By implementing a single user-interface to accept, process, post and manage your receivables, your business is able to automate a large majority of payments and accelerate your cash application processes—i.e. true straight through processing. You are able to save time, costs and resources across your organization—all while delivering your customers with a full range of convenient, secure ways to pay.
Don’t let the horrors of legacy A/R silos scare you away from updating your back-office A/R processing and cash application. And, don’t be tricked any longer by the promises of legacy receivable systems. Treat yourself to accounts receivable automation software—your A/R team, and your customers, will thank you.
Originally published in Payments Business Magazine (May/June 2015 Issue) Integrated Systems Lead to...Read More
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