Businesses Are Open to AR Automation, Study Shows

Credit professionals have big plans to keep their businesses profitable and successful as the role of credit and accounts receivable (AR) departments continues to grow exponentially each day. In the next 18 months, 41% of credit professionals say their biggest focus for AR is to develop a stronger focus on customer relationship management in order to improve payment timeliness and reduce outstanding balances, according to a recent report powered by NACM and BlackLine.

One of the top ways to improve efficiency is with automation. The report revealed that 43% of businesses are somewhat resistant to change to an automated accounts receivable process, but are open to discussion. “For departments that do not have automation yet, there is a bit of fear around it and the unknown,” said Danny Wheeler , AR solutions strategy manager at BlackLine Systems, Inc. (London, UK). “But when you explain what the change process looks like and the added benefits that come with it, such as the increase in available data that gives you better control and visibility around that AR process, you’ll find that people come around quickly.”

Of the credit professionals surveyed, 37% say they have difficulty integrating automated software with existing systems. “Ultimately, IT programming does not have the time to do it,” said Sandra Logan , credit and collections manager at Stanton Carpet Corporation (Calhoun, GA), who plans to automate AR processes in one to two years. “My end goal is to reduce processing time, increase efficiency for payments and decrease DSO. We’re mostly ready but we are also waiting on budget approval.”

The survey revealed that 17% of other departments are at the same stage as Logan—waiting on budget approval. “Resistance to change from employees or stakeholders within the organization is the main reason we did not switch to automation sooner,” said Jon Hanson , CCE, CCRA, VP-director of corporate credit at OVOL USA (Carrollton, TX). “We just hope to have reduced processing times and increased efficiency with the help of automated tools.”

AR automation eliminates repetitive, tedious tasks while allowing credit managers to focus more on customer relationships and add value to their companies. The top three technologies that credit departments plan to implement are electronic invoicing (49%), digital payments (47%) and digital credit applications (40%). 

Automation can feel like a large undertaking, but the payoff is well worth the time. Don’t worry about getting everything perfect at the start, Wheeler said. “Look at your biggest problems first and find a solution to help you solve them,” he explained. “Once the big problems are solved, then you can start to look at tools to refine the process further, such as e-invoicing, which will allow you to make the collections side more efficient. But ultimately, you need that stable base of a digital platform to improve the overall process and then you can add in all the incremental changes.”

Roughly one in six credit departments plan to begin automating AR processes in six to 12 months. “Our current AR process is very manual and takes a lot of time, not to mention the errors we have,” said Joy Conrad , CICP, global credit analyst at Franklin Electric Co. Inc. (Fort Wayne, IN). “I’m looking for a faster, more accurate application so that the credit analysts can focus on resolving issues such as customer disputes, deductions and unapplied cash.”

You can download the full State of AR Automation 2023 report here. Keep an eye out for a white paper diving deeper into these results this September.

Tune into NACM’s Extra Credit podcast episodes diving into the AR automation conversation with BlackLine here:

Leaders Want Increased Visibility of Accounts Receivable

Bankruptcies Are Rising, What Is Your Strategy?

Automation: A Credit Manager's Best Friend

Interested in discussing technology with other credit professionals? Join our Technology Thought Leadership Discussion Group today! The next meeting is on Aug. 8 at 2pm EST.