For CFOs, it’s vital to keep a pulse on the state of A/R and the challenges your team is facing – especially after the year they just had.
The pandemic caused a renewed interest in A/R as a way to boost cash, explain the pros at Celonis in The State of Business Execution Benchmarks Report 2021. But this pressure to improve cash control and sustain cash reserves has made A/R’s job even more difficult.
Here’s a deeper look at A/R’s current challenges and obstacles, so you can help your team work through them and finish out the rest of 2021 strong.
Top A/R challenges
According to the Celonis benchmarking report, the three most prevalent challenges for A/R are:
- Managing risk during crisis. The pandemic brought a whole new kind of risk management for A/R. Your team may be feeling the pressure to minimize risk in its processes and decrease the number of unrecovered payments.
- Being proactive instead of reactive. The last year taught A/R that to perform at its best, they can’t simply let invoices go unpaid. They must be more proactive with collections, making use of data to prioritize certain accounts before they get to the point of overdue.
- Pinpointing which customers are most likely to pay. A/R can still do more to better analyze data and think strategically. For example, they should be looking at KPIs to create a “complete picture of likelihood to pay” for customers. That way, they can focus their collection efforts on customers who are most likely to pay.
Gaps in execution
Now you know the top challenges your peers are facing, which likely mirror some of your own. But what’s keeping many A/R teams from overcoming these challenges? The top obstacles getting in their way are:
- Rigid systems and technologies. Despite the pandemic’s incentive to increase digitization, some companies may not see improved systems as a top priority or realistic possibility. But as you know, old technology can stall A/R and prevent process improvement.
- A fragmented data landscape. As mentioned, A/R must make better use of its data to prioritize accounts and see who’s most likely to pay. If data’s fragmented, they can’t achieve that.
- Broken or inefficient processes. Companies may still stick to what worked “well enough” for many years. But given how much the business world and your customers’ circumstances have changed, the same old manual processes aren’t cutting it for receivables anymore.
Overall, the report’s findings call for A/R to shift to a more strategic approach with better systems and data insight. For CFOs, it’ll be key to talk to A/R about these and other difficulties they’re facing. You’ll also want to look at your budget and priorities to decide how your company can overcome A/R challenges and obstacles.
