Finance technology is changing all the time. Trends come and go. But the underlying goals of finance teams don’t change much at all.
The top goals of teams that manage the invoice‑to‑cash process remains the same — to improve payment timelines and reduce outstanding balances by strengthening customer relationships.
A new report — The State of Accounts Receivable (AR) Automation 2024: Next-Gen Credit Management: Tools and Techniques for the Future — shows how automation and artificial intelligence (AI) can assist in those pursuits. (The report was sponsored by the National Association of Credit Management aka NACM and conducted by Blackline.)
Automation Brings Faster Payments, Higher Efficiency
Companies that adopt automation see a 21% improvement in processing speed and a 45% reduction in manual data entry errors, according to the report. No wonder 38% of credit departments plan to adopt automation in the next two years. The three major benefits to automation are increasing revenue (which includes reducing the risks of invoice write-offs), boosting staff efficiency and providing a real-time view of cash flow.
“A substantial 70% of credit managers report that automation significantly reduces processing time and increases efficiency,” NACM and Blackline found. “Automation also helps decrease Days Sales Outstanding and improve cash flow, as 40% of credit professionals noted. … Forty-two percent of credit managers see improved accuracy in invoice processing and payment posting, while 40% recognize enhanced customer experiences through faster and more accurate payment processing. [And] 39% of professionals appreciate the increased visibility and control over their AR processes that automation provides.”
AI is also proving to be a valuable tool to cut companies’ credit risks. For example, credit departments are leaning more on machine learning algorithms that “can analyze historical data to predict the likelihood of late payments or defaults, enabling proactive management of credit risk.”
Top 2 Obstacles to Automating Payments
These concerns will sound familiar to some readers. The most “significant barrier to automation is integrating automated AR software with existing systems [that typically] lack the flexibility and compatibility to integrate with new automation tools seamlessly,” respondents said. Working with a vendor and phasing in automated functions is the best way to go.
Also: “Concerns about data security and privacy surged in 2024, with 30% of organizations expressing this worry, compared to only 7% in 2023. … Potential risks include data breaches, unauthorized access and compliance with regulations.”
