Automating Accounts Receivable: Shorter Cycle Times, Lower Costs

Manufacturing product manufacturers face increased demands for lower costs; concurrently, they are being called upon to develop and utilize more innovative and complex products. To achieve both objectives, where should organizations look to cut costs? One answer could be found in their accounts receivable practices.

Few would disagree that many current back-office processes are not as efficient as they should be, but many do not realize the costs and risks these inefficiencies introduce to their organization and their bottom line. Consider the critical processes in accounts receivable (AR)—invoicing a customer, receiving payment from that customer, and settling the transaction within the AR system platform.

Data from APQC shows that top-performing industrial products organizations receive all of their receipts electronically or automatically—in fact, 32% of all the respondents in this industry said that they had 100% receipt automation. (“Top performers” indicates organizations with values below which 75% of all responses fall; “bottom performers” indicates the value below which 25% of organizations fall. ) On the other end of the spectrum, the bottom performers receive receipts electronically or automatically only 37% of the time (Figure 1).