8 Ways to Tell Your Finance Operations Technology Is Slowing You Down

There’s been plenty of discussion acknowledging how automation can help finance operations technology. In fact, 42% of respondents to our survey cited that implementing new or enhanced technologies to drive efficiencies will be one of their top priorities in 2021, indicating that the word is out: automation has changed the game. AI-driven solutions and machine learning are helping our teams become more productive and empowered by giving them an ability to focus on business drivers, instead of routine tasks that tend to steal inordinate amounts of time from their day. This significant percentage of respondents stating that implementing new technology is a top priority for this year suggests that carrying through with this endeavor is crucial, now more than ever.

You might still be wondering if it’s the right time for your organization. Implementing new finance operations technology is no small feat. What are some of the key indicators that could help you determine when it’s time to prioritize a collaborative approach to onboarding a new ERP solution?

Here are a few ways to determine whether your technology solution is slowing you down:

1. Data still lives in various siloed places, causing manual reporting.

By now you know that data silos exist in almost every industry, and it is something that most financial professionals know must be addressed. When data silos exist, it’s nearly impossible to gather a complete picture of any situation. The result of data silos is a lack of insight across touchpoints; sometimes your team will also be faced with conflicting data when cross-checked in different sources, causing an inability to trust the decisions and outcomes made that are based on what may seem like unreliable data. A finance operations technology solution that can bring all your data into one system to streamline operations and track customer interaction makes for a simplified process one source of truth.

2. You lack automated scoring or indicators to help assess risk in partners, so you have trouble with credit assessments or with creating a collections strategy.

Technology automation is a differentiator from manual processes and can dramatically improve operations – revealing details that can be missed within a static or even siloed environment. Automated scoring enables your team to properly assess the credit and collections risk of your partners. Your finance operations technology stack will uncover data and payment performance insights, affording your team a simplified workflow that supports their daily tasks. For example, the system can automate emails to delinquent customers, can improve credit decisioning, and in some cases, provide a customer payment portal, creating the service experience B2B customers have come to expect.

3. You’ve automated some straightforward decisioning, yet without advanced capabilities you can’t consider your automated system truly “smart.”

Once you’ve implemented automated scoring models, the next stage of your automation evolution is to take advantage of machine learning. An AI-driven system, with some programming, learns from patterns as they are being established and will eventually perform tasks on your team’s behalf. Here, AI can use algorithmic models built from historical datasets and apply the models to new datasets being introduced into your system (via transactions or interactions).

Find a configurable solution that allows you to assemble components together (for example, credit assessment, EIPP, cash application) in order to meet your team’s current capacity to onboard new technology solutions. In time, that configurable solution can evolve into a completely automated credit-to-cash platform, when you’re ready.

4. Workflows stop at cash management and are not connected to receivables or are driven by the team instead of your technology solution.

Often, integrating an entire credit-to-cash solution seems daunting, and for some, it makes more sense to implement one portion before the other. Starting with one area of focus can be helpful to get started; however, over time, the efficiencies of a fully connected solution are optimal.

Adopting a fully connected solution – or a complete credit-to-cash platform with embedded third-party data – is considered a robust, best-in-class approach. Once you have all the components working together, your system can learn from all actions and interactions and can then drive the workflow – moving between these applications – allowing for increased optimization. Further, the platform can detect nuances. For example, it records and recognizes customers with a certain combination of scores (based on global commercial data), remembers they tend to pay within a certain time frame, and then, based on a hypothesis derived from these indicators, places those customers within a recommended collections strategy. Further, as these regularly updated indicators continue to prove the hypothesis, or as they change it, the system will absorb the information, using it to adjust the previously suggested outcome, resulting in continuously optimized workflow.

5. Payment options are not integrated, and customer payments are still processed manually.

Unfortunately, the practice of manual and paper-based invoicing is not only outdated; it is also likely costing your business more than you know. Also, the probability of inaccuracies is higher because manual processes are prone to inaccurate data entry, duplication of entries, or overcharges, which could impact not only your relationship with customers, but also inventory or sales figures as well as gains and losses reported. The increase in productivity gained from implementing an EIPP can save companies thousands of dollars annually when calculating hourly wages alone.

Offering online bill pay also makes it easier for your customers to pay you and provides them with up-to-date accounts statements as well as the ability to track orders, manage their profile, and communicate with your business. This improves the customer experience and can greatly improve customers’ ability to make more timely payments, request documents and statements, and resolve issues more quickly.

6. Any part of your work is being subcontracted.

It’s more costly to subcontract. On top of that, your team will have less control and accountability. Often, organizations rely on outsourcing because the manual tasks impede the team’s ability to focus on strategic initiatives. With the advent of automation, which has greatly improved with AI-driven intelligence, we have nearly eliminated the need to send this work externally, thereby regaining complete control and accountability of the process in-house while affording the opportunity for our team to focus on projects, customer service, and other key business drivers.

7. A/R processes lag and the number of invoices 90 days old become difficult to manage.

If your team assembles aging reports and sorts by days past due (DPD), there's a good chance cash flow is impacting collections and impeding forecasting. Using finance operations technology that automatically generates these reports can quickly help wrangle this process and increase efficiencies. Segmenting accounts by risk, not solely based on today’s invoice, but also accounting for historic performance as well as payment performance with other businesses, can greatly help prioritize high-risk accounts and reduce DPD.

While credit reports from bureaus like Dun & Bradstreet are beneficial and have long been considered a best practice, when possible, find a credit-to-cash solution that has credit intelligence embedded. Blending third-party data together with your internal data creates the most robust view of what to expect from your customer for the most accurate risk assessments. Are they paying others on time and not paying you? Perhaps your customer has defaulted on multiple accounts. Having insights into corporate hierarchies and other scores can help provide a more holistic view that affords your finance team the opportunity to have a more meaningful and productive conversation with your customer.

In addition, a credit-to-cash solution with embedded global data enables real-time account monitoring and can provide up-to-date expectations for the performance of your A/R. This type of solution enables benchmarking against others in the industry to help you gain visibility into a customer’s payment performance elsewhere and use that insight to consider whether you want to extend credit or offer additional services.

8. Your collections team spends more time searching for information than they do speaking with customers.

Aging A/R can impact cash flow. When tracking down the most up-to-date information takes more time from your team’s day than their ability to actually connect with customers, this is definitely a sign of needing new technology to remedy the situation. Often, aging accounts require connection and relationship in order to resolve, and as we all know, relationships can’t be rushed and extenuating circumstances, especially during times of crisis, such as a pandemic, are understandable. Comprehending the gravity of the situation can’t always be accomplished without a discussion.

Therefore, having robust data that demonstrates trends over time, collects and generates scoring, and utilizes AI to develop a collections strategy are all integral in developing a system that empowers and enables your team to work directly with customers that may require additional attention from time to time.