Automating the financial process of the electronics supply chain is crucial as the field has exhibited a drop in the development. With automation of the AR processes the companies can increase the scope of improvement extensively.
FREMONT, CA: Companies fail and subside when the payment handling fails. Excess or lack of payments can substantially hinder the growth of the organizations’ business operations. The process of accounts receivable (AR) mostly ponders on the management of invoices, how well the system is managed internally is the priority. It also involves mechanisms with customers and how well the sync in co-ordination exists. The system should effectively occur within a timeframe of 30 to 90 days, from sending out invoices to receiving payments.
The process is mostly paper-heavy, as it needs a compilation of numerous documents which are collected and filled; some should be obtained from various sources and in an updated format. The invoice data and its supporting documentation includes the product and services rendered, tax pricing, expected payment date, deductions, and disputes if any exist. The process can be time-consuming and prone to errors while filling and generating them manually.
The post-payment process is even lengthier as the payments need to be tracked and applied correctly to match the request sent. Delayed and short payments need to be sorted and resolved before the 90-day deadline. If all the processes occur collaterally without hitches, the money is received within the expected date. Usually, the transaction never goes as planned.
A survey on Payments Practices Barometer by Atradius found that about 92 percent of the businesses have received late payments from B2B customers, and 40 percent have not denied late payments to its suppliers. This study also notes that B2B customers from the electronics domain are the ones who are most likely to make use of the outstanding invoices to leverage financial advantages.
Majority of these challenges can be tackled effectively by utilizing automated software. With the gaining popularity of supply chain automation in most of the enterprises, the automated AR management software is also a crucial part of the process. The automated AR processes, which function with augmentation of AI, can dismiss several issues that are labor-intensive manual tasks and cut down the usage of paper. Since the manually generated invoices or paper statements are avoided, the AR automation software will digitize every step in the process, reaping innumerable benefits. Some of those benefits are:
• Speedy flow of cash:
Customers’ demands are met with automated processes. The invoices are sent immediately, enabling the customers to conduct transactions earlier and by any means favorable, such as electronic data interchange (EDI), email, a customer portal, and even via postal service. The scope for errors is minimized, and the costs are reduced; increasing the transparency and visibility of the processes.
• Enhanced Financial situation:
Automated AR management software, when complimented to the ERP(Enterprise Resource Planning) in use or the accounting system increases the efficiency of collection, the delivery of invoices and reminders for payments are transferred automatically. In the case of many electronics companies, automation can significantly decrease the Days Sales Outstanding (DSO) by up to 7 days. It can also reduce the time devoted in total for the entire AR process and reengage the saved time to improve customer service. This method will minimize dispute solving by up to 88 percent.
• Meaningful Customer Bonding:
Automation of collections and its management can result in a much frictionless, customer experience that results in happier customers; much more optimized cash collection process, and enhanced collaboration between the AR executives and customers. The capacities to offer the customer a self-service portal for making the payments can be enabled for increasing the satisfaction of the customers and on-time payments. Many companies have seen a rise of up to 70 percent in autopay after installing the self-service portal.
AR is one of the major sections in the electronics supply chain, as it enables seamless payment transfers and collections from customers. With the automated system in place, the agility of the employees should be on point as any differences in the time of the task can cause a ripple effect as all the steps are interlinked — errors in invoicing results in unhappy and irritable customers. The automated AR software can clear the mishaps by enhancing the efficiency of the finances along with the speedy recovery of the payment. It is carried out by supercharging the timeline, while simultaneously elevating the customer experiences.