The Power of a Single AR Ledger

A single, consolidated AR ledger is much more efficient and accurate than a fragmented ledger, which can create many obstacles to the efficient management of the AR asset. Achieving world-class AR management performance is virtually impossible without an automated, consolidated AR ledger. A single, consolidated AR ledger is the foundation of excellent AR and order-to-cash process management. If you don’t have it yet, have it in place this year with Emagia.

Managing the accounts receivable (AR) asset is not an easy job. The AR asset’s condition deteriorates everyday unless the right actions are performed. The challenges can be more difficult if you are coping with a fragmented AR ledger because the AR data is kept in several disparate ERP systems. With interest rates and credit risks forecasted to increase in 2023, a fragmented AR ledger can add to the complexity of AR management.

A single, consolidated AR Ledger enables the user to quickly and efficiently assess the size, age, inherent credit risk and composition of their Accounts Receivable (AR) asset, which is one of the three largest assets for 75% of the Fortune 500 companies. This capability is essential to the optimal management, protection, and valuation of this huge asset, which is a fiduciary duty of senior Finance managers.

If you work with a single, consolidated, all-inclusive Accounts Receivable (AR) Ledger, you will wonder, “What’s the big deal?” If you do not, you know the problems and challenges of a fragmented AR Ledger.

Fragmented AR Ledgers – Causes and Risks

Fragmented AR Ledgers usually result from acquisitions whose financial systems are not fully consolidated with the parent company. This is very common. While most companies have an objective of putting all operations/divisions on a common ERP, this is a long and expensive undertaking, and does not happen for most companies. Some of the challenges associated with a fragmented AR ledger include inefficiency, increased risk of error, increased credit risk, crippled auto-cash and deduction resolution.

The result is that AR data resides on more than one ERP in an unconsolidated state. Analysis and control can be substantially impeded, and a consolidated view requires significant data analysis in Excel or Access. This requires time and additional effort from a skilled team member, which causes delay.

This is especially true of the enterprise’s customers who purchase from multiple divisions, and as a result, their AR resides on several of the unconsolidated AR Ledgers. While summation of their total AR may seem easy, the mere requirement that it be done semi-manually will reduce the frequency of its compilation which can delay response to a worsening Credit Risk situation.

On a global scale, delayed or inadequate analysis of the AR asset can ultimately lead to slow recognition of a threat, or failure to recognize an opportunity to improve. In addition, fragmented AR Ledgers seriously reduce the effectiveness of Auto-cash, which can reduce the accuracy of data presented on your Customer Care Portal and make deduction processing and reduction more difficult.

Consolidate your Global AR with a Single AR Ledger

Obviously, the solution is to implement a Single AR Ledger that includes all the AR in one file, aka Aged Trial Balance. Getting all your divisions on a single ERP is one answer – but that can take years.

A better solution is to invest in AR applications that can produce a Single AR Ledger by accessing and combining the sub-ledgers resident on the various ERPs. Then the benefits of a Single AR Ledger can be enjoyed faster and at a lower cost. Emagia offers such a capability as part of its Receivables Automation module.

A single AR ledger improves the quality and efficiency of AR portfolio and analysis, collection portfolio allocation to staff, auto-cash, deductions processing, analysis & prevention, cash forecasting, and a global view of AR asset.

Why not make 2023 the year that you make this happen!