A company’s success in the marketplace is determined not just by the quality and sales of its products and services but by its buying power. In a fiercely competitive marketplace, with every company coming up with new ways to impress the customer, the race to the finish line is more plausible for those with the maximum buying capacity. A company with ready cash in hand has a bigger advantage in terms of reaching out to the customer first. Just think about it.
“...many companies fail to realize that there is a lot of hidden cash in their existing systems and processes. To improve cash reserves, businesses needed to optimize their current work processes.
Most of the heavy lifting in terms of manual paperwork and repetitive operations that drive critical business functions can be found in the back-office. Intelligent automation lowers the costs of running these operations, and subsequently frees up a lot of the working capital hidden in them…”
Whether it is to purchase the best raw materials to build the best products or to invest in the latest technology to accelerate sales, healthy liquidity and cash flows give companies the leverage to plan and execute their marketing, sales, and growth strategies better. But, unless it is a large corporation that has been in the market for quite a few years, is it possible for growing companies, especially those catering to the midmarket to have lump sum cash at any point?
A lot of the earnings made from product sales must go towards payments to vendors, employees, and other stakeholders expecting a return on the investments they made in a company. So, it is not uncommon for companies to be left with little cash reserves at the end of the quarter or year. What are the other avenues for cash generation for a company?
Not surprisingly, many companies fail to realize that there is a lot of hidden cash in their existing systems and processes. Companies can save a lot when processing mission critical functions like accounts payable, sales order processing, medical claims processing, remittance handling, and many other document-dependent functions that incur huge costs owing to manual paperwork. In order to improve cash reserves, businesses needed to optimize their existing capital and work processes.
Most of the heavy lifting in terms of manual paperwork and repetitive operations that drive critical business functions can be found in the back-office. Improving operational efficiencies along document-dependent processes lowers the costs associated with running these processes, and subsequently frees up a lot of the working capital hidden in them. The result is a steady stream of savings and increased cash reserves, meaning more buying power to reach out to the customer first and fund future growth initiatives.
There are many ways in which you can tap into hidden cash in mission critical processes, but we will discuss automation, specifically intelligent process automation to accelerate a heavily document-dependent process like accounts receivable to save or generate more cash. Accounts receivable is a traditional cost center that incurs labor and operating costs. By optimizing specific tasks in this function like sales order processing, businesses can hope to turn it from a cost center into a strategic center that brings in steady cash flows.
All companies have strong policies governing the optimum functioning of accounts receivable, but many fail to enforce these simply because of a lack of structure and visibility across the accounts receivable division. Rules regarding the billing process, the deadline to collect receivables, and the related discounts, interest, or late fees based on how early or late payments from customers are received are often hard to enforce when you do not have a suitable mechanism to diligently track down collections.
Intelligent process automation solves this by providing a single platform to manage collections. Policy enforcement can best be achieved when a company has a single view of its receivables and is able to track down payments in a time bound manner. Also, in an effort to keep customers and encourage new ones, companies often tend to extend credit and timelines for making payments, which can really damage finances in the long-run. It is important to have stringent controls over receivables in order to boost timely payments and cash inflows. Late payments represent a loss to the company — companies cannot pay off their debts on time and also miss out on investing in lucrative business opportunities or buying equipment that could further their growth. A lot of companies forego chances to bank on new business opportunities simply because they do not have ready cash to invest in those opportunities. A lot of factors contribute to poor receivables management:
Intelligent process automation of critical accounts receivable tasks like order processing helps centralize operations. Intelligent automation employs digital transformation technologies like AI and machine learning along with robotic process automation and intelligent data capture technology to automate the most painstaking steps in sales order processing — data entry and document processing. This serves to lower the errors, delays, inefficiencies, and costs associated with manual data entry and document processing work.
AI-enabled intelligent document processing dramatically reduces the order processing cycle times, enabling staff to reach out to the customer quickly and follow up on payments. Clear visibility across the order processing chain including the capture, validation, and approval of sales orders helps accelerate receivables management and enforce timely checks on receivables. Also, intelligent automation of order processing lowers the dependence on manual paperwork and accelerates the time-to-capture payments.
Policy enforcement is also easy because staff members have a single view of accounts receivable operations including a clear audit trail of pending payments, incorrect order entries, or missing paperwork.
With intelligent automation, businesses can eliminate the aforementioned factors contributing to poor receivables managements, in the process ensure consistent cash flows and liquidity.