How to Keep Your Accounts Receivable Team Motivated and Happy


For some AR Teams, it might feel like another time, another life, but for most AR teams, the process of payment matching had its own set of challenges which not only consumed time but was prone to errors:



1. Labour Intensive and Time Consuming

  • Manual Data Collection: AR teams had to manually retrieve bank statements and payment advice from different sources (emails, portals, etc.), which consumed a lot of time.
  • Slow Matching Process: Manually matching payments with invoices was extremely labour-intensive, especially if the amounts were different or if the payment involved multiple invoices.
  • Follow Up with Customers: If payment advice was missing, AR teams had to manually contact customers, and that used to cause additional unnecessary delays.

THE IMPACT:
The process slowed down cash application and delayed cash flow visibility. The time spent manually matching payments reduced AR team productivity.

2. High Error Rates

  • Data Entry Errors: Manually inputting data from bank statements and payment advice into ERP systems increased the likelihood of human error.
  • Incorrect Invoice Matching: Due to the complexity of matching, incorrect allocations happened frequently, leading to errors in financial records.
  • Miscommunication with Customers: Follow-up emails for payment advice were many a times mishandled or missed, leading to prolonged disputes or misunderstandings.

THE IMPACT:
Errors in payment matching can result in incorrect customer balances, inaccurate financial reporting, and prolonged reconciliation cycles.

3. Lack of Standardization

  • Varied Payment Advice Formats: Different customers provided payment advices in varied formats (PDFs, emails, handwritten notes), making it difficult for AR teams to standardize the process.
  • Nonstandard Bank Statements: Banks often provided statements in different formats, further complicating manual reconciliation efforts.

THE IMPACT:
Lack of standardization required additional effort to normalize data before processing, increasing the overall time and complexity of the task.

4. Inconsistent Cash Application

  • Delayed Posting in ERP: Due to manual bottlenecks, payments were not immediately applied to the corresponding invoices, delaying real time visibility into open receivables.
  • Complexity in Handling Multiple Invoices: Payments that covered multiple invoices or partial payments created additional complexity, making it difficult to ensure accurate allocation.

THE IMPACT:
Inconsistent cash application hindered real time financial analysis and forecasting, as receivables weren’t accurately reflected in the system.

5. Limited Scalability

  • Manual Processes Don’t Scale: As transaction volumes increases, suddenly the manual process became unsustainable, with more resources required to handle growing workloads which created even more pressure on the existing resourced or ended up in piled up work thus breaching TATs.
  • Resource Intensive: Handling increasing volumes of payments and invoices required hiring additional personnel or extending work hours, neither of which was cost effective.

THE IMPACT:
The need for additional resources made the manual process expensive and inefficient, especially for growing companies.

Original Source: https://inebura.com/blog/the-mantra-to-happiness-for-accounts-receivable-teams



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