The accounts receivable department is responsible for overseeing, organizing and handling a tremendous amount of files and forms each year even when the company is not all that big. When the accounts receivable department begins to fall behind on invoices or simply does not have the tools necessary to complete its work, several issues can quickly come to pass.
These problems include the following:
- Poor cash flow.
- Missing payments.
- Inability to handle audits.
- A lack of transparency in accounting.
- Compliance-related shortfalls.
- Tax-season woes.
- Lackluster financial accountability.
Businesses - regardless of size or industry - need to ensure their accounts receivable performance is optimal to avoid these problems and boost the overall health of their finances and accounting procedures. Data capture is becoming an increasingly prominent necessity in AR, and the right solution can go a long way toward better supporting staff members therein.
"Invoice volumes can be high, increasing risks in AR."
How data capture technology helps Think about it this way: Even larger companies will not often have a large staff dedicated to AR, nor accounts payable, for that matter. At the same time, invoice volumes can be high, and the amount of logging, journaling, recordkeeping and other data entry tasks will go up accordingly. When there is a lack of sound technology supporting these staff members, errors can begin to stack up, inefficiency is all but guaranteed and engagement can begin to dwindle, leading to even more expensive and operations-related risks.
On the other hand, new data capture technology can help to significantly streamline AR processes to the point of not only supporting staff in their daily responsibilities, but also better protecting the company from the legal and regulatory threats involved in poor accounting practices.
The right solution should possess the following functionality:
- Flexible, comprehensive capture: Because AR will virtually never have complete control over the formats of data that are coming in from clientele and others, it will often need to manage a wide range of standards and sources. The best tool will be capable of capturing data from any external source, including email, FTP, HTTP, Web API and Web Scraping.
- Entry automation: Manual data entry is as risk-laden as it is arduous. When errors begin to build, missed payments can on unnoticed. Even worse, payments that were received might not have been properly accounted for, which can lead to avoidable hostilities between a company and its client. Data entry automation mitigates these risks, all the while saving employees from the tedium involved.
- Analyst support: Whether for audit-related purposes or pure analysis, having a strong data capture tool in place will make it easier to search and pull necessary files efficiently and quickly. As such, the data capture tool should have intuitive functionality, allowing analysts to focus on their core tasks rather than forcing them to learn an overly complex solution.
At the end of the day, companies can expect to save a wealth of funds from deploying a data capture solution that was built for their unique needs in the AR department. Now, data capture is critical, but so is processing.
AR processing and data capture can be improved with the right technology.
Improving AR processing efficiency, consistency The best solutions will make AR processing a bit more seamless as well. After all, processing can come with just as much of a burden as general organization, management and capture. If a company does streamline every other component of AR but does not put enough attention into the processing component, the efforts will be largely undercut. Processing needs to be quick, as well as tightly integrated with the policies and workflows involved in AR data capture, to yield a truly optimized ebb and flow of payments from clients.
Data capture technology and other solutions will need to be in place to handle payments before, during and after with integration being a priority to track all of the tasks that were completed and log audit-related data. This will not only help to improve daily performances in the accounting department and its subsets of AR and AP but will also significantly alleviate the strain that would otherwise be placed on the company when tax season rolls around or in the event of an unforeseen audit.
All businesses need to be aware of these demands, as well as the modern technologies available to make life easier on those in the relevant departments. However, financial services firms should be especially proactive in deploying these solutions given their enhanced need for speed and transparency when handling invoices and payments.