The effectiveness of AR processes is decisive to ensure healthy cash flow and working capital for any given organization. Similar to several other business functions, the account receivables management brings with it a set of challenges that are sometimes overlooked by organizations. Ignoring the challenges in receivables management can significantly increase financial risks and lead to unfavorable outcomes in business.
Increase in DSO’s, lack of secured credit card payment system, manual processing of invoices, ignoring the importance of CX, difficulty matching payments to invoices, late payments, etc. are factors leading to poor account receivables. Moreover, lack of automation can adversely influence the account receivables process. The Credit Research Foundation says in a report that 61% of late payments are due to compliance or administrative problems such as incorrect invoices or receiving the invoice too late to process the payment on established credit terms.
Inefficient receivables management will have a detrimental effect on business processes as it reduces the speed of revenue cycle, impacts liquidity management, manipulates credit decisions, and may lead to financial instability. Conversely, organizations can significantly reduce financial risks and increase working capital by improving the efficiency of receivables management.
VisionTree deploys Receivables Management Solution with SAP S/4HANA as the digital core to handle sales cash flow efficiently and improve working capital management. With SAP S/4HANA organizations can solve the key challenges in Accounts Receivables and efficiently manage receivables, payments, and reporting of high volumes of financial transactions.
Manual, disparate, and reactive payables management process is one of the key issues faced in receivables management. SAP S/4HANA offers:
- Integrated multiple account systems: For a unified view of invoices, suppliers, and vendors in a single platform which will further help to reduce the accounts payable operational cost
- Real-time receivables data: For finance managers to evaluate customer credit risk and prioritize customer collections and thereby minimize DSO
- Integration of third-party data: For dispute resolution, collections, and credit management
Receivables Management integrates with all the core Finance functions to provide a seamless experience and following benefits:
- Reduce DSO by automation of payment reconciliation process
- Reduce AR write-offs and minimize bad debts
- Proactive management of delayed payments
- Informed decision-making on various aspects with a consolidated view of outstanding debts across multiple billing systems
- Increase productivity in invoice processing
- Reduce AR management costs
VisionTree partners with organizations to implement SAP S/4HANA for Finance to streamline their financial operations and improve business performance, efficiency, governance, and compliance across the enterprise. We work with enterprises to achieve some of the core objectives in receivables management such as reduce DSO to improve working capital, lower operational costs and minimize bad debts, etc. by leveraging the power of SAP/S4HANA.
If you are planning to migrate to SAP/S4HANA or get started with it, allow our experts to guide you in the process. Connect to us for a quick consultation on improving finance operations in your organization!