Account receivables management at companies across a broad range of industries suffers from severe limitations that are leading to avoidable trapping of significant value. Disparate and non-intelligent IT systems, duplication, inaccuracies, inconsistencies in data and information across collections, finance, treasury, operations and customer departments are severely affecting the efficiency.
Intuition-based approaches and loosely defined key performance indicators (KPIs), and use of one-size-fits-all strategies are factors leading to entrapment of value that would otherwise be available for business growth. Reactive processes are inadvertently guiding teams to focus on accounts with poor conversion ratios, and escalations that surface almost around the time that risk events occur, preventing effective management by exception. Limited staffing is another constraint that hurts the efficacy of account receivables functions.
Part 1 of this series provides detailed insights into various challenges facing the account receivables function. This installment offers a solution.
Digital to the accounts receivable rescue
All the above challenges represent fertile grounds for infusing new digital technologies to build a proactive and more efficient account receivables management function. We present a four-pronged digital strategy to effectively manage the account receivables by turning information silos into systems that are symbiotically tied to each other, supplanting one-size-fits-all approaches with tailored strategies, automating follow-ups and receipt reconciliation processes that collectively help reinvent the incumbent systems managing account receivables.
This article was written by Vinod Malpani, Pramit Basu and Naveen Krishnan from Cognizant Consulting’s Banking and Financial Services Practice.
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