Every day brings the possibility of new innovations to treasury management. One solution rapidly gaining traction is the combination of artificial intelligence (AI) and accounts receivable (AR).
Together, this pair can streamline electronic payment posting, dramatically reduce exceptions, and help corporations lessen the manual work associated with today’s growing volumes of electronic payment methods. It’s a team so powerful it even has a name: integrated receivables.
Integrated receivables solutions apply cutting-edge technology to tackle one of AR’s most vexing problems. While electronic payments may arrive in a company’s bank account automatically, figuring out how to apply those funds to open invoices remains a time-consuming and largely manual process.
The challenges are numerous and include:
As a result, AR staff spend numerous hours playing detective and digging for information across emails, PDFs, spreadsheets, and portals. Once they locate remittance data, there’s more work involved: rekeying data into company systems, then attempting to re-associate electronic payments with open invoices. In many cases, working with electronic payments exceeds the time needed to apply traditional paper check receivables.
These lengthy posting cycles impede Days Sales Outstanding (DSO). They can snowball into customer service delays related to credit availability, and hamper visibility to cash flow for company stakeholders. It’s one reason why 6 out of 10 AR teams describe their current systems and processes as “frustrating,” according to a recent survey.
Combining AI and AR pairs the power of technology with the problems of electronic payments and remittances. It’s a match that can automate cash application, saving time and hassle for the AR team and decreasing DSO by as much as 30 percent.
These technologies form the core of integrated receivables applications:
Optical character recognition (OCR), which can “read” documents like PDFs and extract relevant information.
Artificial intelligence and machine learning, which use robust algorithms to process vast amounts of data in accelerated timeframes. The technology is also structured to become smarter over time as it “learns” from user inputs and growing volumes of data.
Robotic process automation (RPA), which uses smart software to handle repetitive processes like retrieving payment information from online portals, eliminating countless hours of legwork for AR staff.
These tools match electronic payments with correct remittance information, then with open invoices in the company’s AR file. They can analyze thousands of invoice line items in just seconds. Any remaining exceptions are presented to AR staff for point-and-click decisioning. Some solutions can even consider the impact of discounts and deductions when identifying potential matches.
The potential benefits of this automation can be significant:
Integrated receivables helps take efficiency, automation, and speed to a new level. AR and business customers have much to appreciate in this exciting application of technology.
Business Wire, “New Study Shows Accounts Receivable Modernization is More Perception Than Reality,” July 12, 2021
PYMTS.com, “Digitizing the Cash Application Process Reduces Supplier DSOs by 30%, Improves Cash Flow,” September 17, 2021
Wells Fargo Bank, N.A. Member FDIC.
TM-3279 PAR-0723-00303
LRC-0823
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