6 timely reasons to integrate your receivables

Today’s accounts receivable platforms address traditional challenges around cash flow, efficiency and more.

Accounts receivable (A/R) has come a long way from the days of adding machines and ledgers. Digital accounting tools and business platforms transformed the way businesses manage receivables, increasing the ability to apply payments and report data. Conversely, the explosion of payment options in recent years adds multiple levels of complexity for A/R teams to manage. Receiving multiple incoming payment types can create operations hassles, visibility challenges and nightmares for exception management.

Fortunately, the latest treasury management tools enable organizations to automate the receivables function to a much greater extent, post payments easier and faster, and provide a consolidated view of all incoming payments, regardless of payment type. In fact, a truly integrated receivables solution not only keeps up with the speed of modern business, but creates efficiencies in A/R that were unheard of just a few years ago.

Here are six reasons to consider an integrated receivables solution for your business:

1. Improve your cash flow

In a world that moves as fast a mouse click, waiting for a check to arrive is both frustrating and inefficient. That’s why it’s important that banks can now make it easy for you to accept the full range of electronic payment types —from Automated Clearing House (ACH) transactions to up-and-coming, faster alternatives like Same Day ACH, RTP^® and Zelle^® payments.

And because the latest A/R banking solutions enable a company to match remittance data with related electronic payments, both the payments and data can be posted simultaneously. As a result, not only do you receive payments sooner, but you can apply them with equal speed.

Research shows that automated A/R solutions, by allowing a company to receive payments sooner and apply them faster, can significantly improve cash flow. Businesses that rely on manual A/R processes have 30% longer average days sales outstanding (DSO) than those that rely on a medium or high level of automation, according to recent PYMNTS and American Express research.¹

2. Reduce and manage exception

Often, the remittance data accompanying electronic payments is inconsistent or incomplete, and electronic payments arrive separately from their related remittance information. This makes it challenging to reconcile payments. The resulting manual reconciliation work is time-consuming and costly, diminishes staff productivity, and reduces visibility around incoming payments, which hurts customer relations.

However, by automating with today’s tools, you can reduce the volume of payments requiring extra review and attention prior to posting. Emailed remittance data can be captured, automatically matched to received payments and transmitted to your business.

3. Give customers more payment options

Many of your customers transitioned to digital payment types after the onset of the pandemic to avoid handling paper and better accommodate remote work, and they’ve become accustomed to those methods. They don’t want to revert to paper checks.

Because state-of-the-art receivables banking platforms solve the reconciliation challenges companies traditionally have had in accepting electronic payments, businesses using these solutions can offer their customers a full array of electronic payment options.

4. Utilize your A/R data to reduce your workload

Modern integrated receivables solutions enable you to utilize your open A/R data to supplement your incoming payments, making payment posting faster, more accurate, and less manual. These solutions use data in your incoming payments to find matches in your A/R file, then enhance payments with additional fields valuable for posting. Your A/R file is always at your fingertips, so incorporating it into your cash application solution is a practical, low-effort step toward receivables automation. Leveraging your existing A/R data in a new capacity is a powerful way to save time and effort in your receivables posting.

5. Boost employee productivity and job satisfaction

Manual tasks associated with posting payments create a drain on staff time. By reducing such work, an integrated receivables platform can increase the productivity of A/R employees and free up their time for more strategic tasks. 

Companies using such an A/R automation tool report their staffs being able to work on cleaning up old, unapplied cash items on customer accounts, cross train and learn advanced analysis skills, and collaborate with other departments on overall finance area initiatives. Not only is this good for the company, but it makes the job more attractive and fulfilling for A/R employees, who appreciate the opportunity to broaden their skill sets. And, in this labor market, anything a business can do to make A/R staff positions more attractive is a win.

It can be awkward for your business to make a collection call and be told by the customer that they sent their payment a week ago — and frustrating to learn it’s true but you didn’t know because the payment hadn’t been posted yet.

Using the latest in receivables automation, a business can update customer accounts on a timelier basis. What might have taken two or three days in the past might now only take a day. The result: You increase incoming payments visibility, avoid uncomfortable customer interactions, and in the process improve relationships.

To learn about the U.S. Bank VantagePoint integrated receivables management solution, contact your relationship manager or Treasury Management consultant.

¹ Firms That Rely on Manual Processes Take 67% More Time to Follow Up on Overdue Payments, PYMNTS.com, Oct. 31, 2021.