In my role as an independent treasury strategist, you wouldn’t believe how often I meet with businesses and organizations still using outdated accounts receivable methods. Many companies have a mentality of ‘if it ain’t broke, don’t fix it’ regarding their accounts receivable departments. So, they continue with slow, manual, and outdated processing methods when they could embrace newer and more automated tools.
A recent article from Pymnts.com highlighted how outdated account receivable methods affected a specific industry, in this case, the construction industry. Cash flow issues are a common sore point in this sector, and payments are often late or delayed during many projects because of this issue and outdated account receivable methods. Data shows that in 2023, late payments cost the whole industry $273 billion, or 14% of its total construction costs.
Like many industries, the construction industry functions as a supply chain. So, if one payment is delayed, it triggers issues for other suppliers, causing a chain reaction that can have dire consequences, especially for smaller firms. Late payments are not an easy problem to fix, but some tools can help, such as AR automation tools.
AR automation tools in the digital payment sphere are becoming more common and widely accepted. Businesses can incorporate various tools into their accounts receivable practices, like setting up digital payment portals for customers to avoid late payment issues. However, the problem that many businesses run into with these tools is that they start using them without updating their account receivables practices. So, it becomes someone’s job to transfer data manually.
Businesses can only adopt AR automation tools by overhauling their account receivable process from the ground up to be more digitally friendly. This process isn’t easy, and it may take time and effort to get it right, but it can be beneficial when done correctly. Automated account receivable tools and processes can make sending and accepting payments more manageable. When this process is automated, it’s easier to track payment data, which can help companies avoid cash flow issues that lead to late payments. When late payment issues are resolved, it can help improve relationships with suppliers and vendors who no longer have to reach out repeatedly for payments. These automated tools also help improve customer satisfaction because it’s easier for customers to pay bills and stay on top of their accounts. I’ve seen the adoption of these tools cut costs for your businesses, reduce workforce needs, and improve cash flow issues.
As a treasury strategist, I help your business embrace newer, more efficient methods. When you work with me, we look at all your accounts receivable practices, keeping what works and removing what doesn’t. We’ll embrace new tools and technology that give you more data and insight into your business’s financial health. Plus, you’ll always own your data for easy tracking and reference. So, if you’re ready to eliminate outdated and slow account receivable processes and embrace faster, more automated tools, let’s talk.
