The Digital Transformation of Accounts Receivable

The Digital Transformation of Accounts Receivable


Compounding advanced digital technologies are transforming business. Digital transformation is impacting the work, the workforce, and working capital management.

Digital transformation, according to Gartner, is “the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.” Digital transformation has become a whirlwind sweeping up not only operational aspects of businesses but, in many cases changing the businesses’ very nature. And like Dorothy in The Wizard of Oz, they won’t be in Kansas anymore when they come down.

Companies must change the way they operate. Organizations are not all in the same place, but the digital whirlwind, accelerated by the pandemic, is sweeping up everything in its path. Those that resist leaving Kansas may find nothing left when the winds finally calm. Buggy-whip manufacturers will be out of business.

Accounts Receivable Digital Operations

While the outcomes of that transformation are not yet fully apparent, digital transformation already is realizing substantial benefits to financial operations for leading organizations. For example, the application of artificial intelligence (AI), robotic automation, and analytics to aggregated accounts receivable processes and data from across the organization is revolutionizing the order-to-cash (O2C) process.
Accounts Receivable
Accounts receivable digital transformation provides real-time holistic visibility and unprecedented coordination across an entire organization’s O2C processes. Consequently, large organizations with operations across multiple countries see a unified, real-time picture and rapid improvements in O2C efficiency, KPIs and cash flow maximization.

Digital Expectations

As individuals and consumers, people have adapted to rapidly changing technology. Today a person wakes up and verbally consults their smart speaker or phone to ask what the day’s weather will be, what is on the calendar, and what the news headlines are. They are accustomed to that easy access to information.

People are bringing those expectations to work—managers, employees and customers. But can you ask and get answers from a digital assistant at work? For example, can you ask your ERP system, “How many payments came in company-wide yesterday?” Even if it could understand you, it could not tell you because it’s probably just one of several ERPs across the company’s several regions.

On your phone, however, not only can you stream your favorite program. You can call up a specific movie moment to share a quote with a friend. So why can’t you find out if a customer has paid its invoice before you make that collections call? What if, instead of a customer’s credit application taking two weeks, you could have an answer seconds after they applied?

Customers increasingly demand more responsiveness, and at least the younger workforce members expect the same kind of capabilities at work that they have on their phones. And while leaders saw automation as a process accelerator, they now recognize that intelligent automation offers much more.

Mindset, then technology

Such operational support is available now, as with Emagia’s O2C platform. IDC reports that accounts receivable is a top priority for transformation. But transformation requires a shift of mindset. AR/O2C and other operations process owners must shift from a functional and administrative mindset to a strategic one. Intelligent automation can take care of functional and administrative tasks. The workforce can now become proactive rather than reactive. Transformation also requires a shift in skillset, but mindset is the first step.

AR/O2C leaders and staff must shift from the functional day-to-day operations and crises to focus on the strategic, to look beyond “today” to AI-driven insights on cash forecasting and capital management. AI-based automation takes over manual processes. Meanwhile, accounts receivable personnel can connect with related financial functions from sales to procure-to-pay and actively find ways to increase customer experience.

Executives, IT and Process Leaders must shift their thinking, particularly in terms of control of information. To realize the promise of advanced technology, they will have to accept the democratizing data and be willing to allow multiple people to manage processes. Technology is finally a powerful enabler. A new mindset is the key to unleashing it.

The Technologies

Several digital technologies work together to transform AR/O2C. These include:

  • The Cloud (shifting ownership from IT to process owners),
  • “Data Lake” repository,
  • mobile access,
  • digitalization of all data,
  • Robotic Process Automation,
  • Machine Learning Artificial Intelligence Assistants,
  • AI/Intelligent Data Capture using AI/Deep Learning,
  • real-time, secure payments,
  • blockchain with its distributed ledger,
  • smart contracts and cryptocurrency, and
  • APIs, which liberate information exchange between systems.

ar processes
The integration of these technologies enables true automation of AR/O2C processes. While delivering better performance, it also allows staff to shift to “knowledge work” – analyzing data to understand how to act and support strategic decision-making.

Two years ago, Deloitte made several predictions of what it expected to see by 2025. The pandemic has advanced that timetable. Deloitte predicts automated finance factories of O2C, P2P and R2P, with finance cycles becoming real-time. ERP systems are becoming record-keepers as coordinated digital systems liberate and democratize operations. And O2C processes, systems and data have the power to unleash enormous amounts of information to organizations that will result in performance improvements and shape new business models.

In a late 2018 survey, Deloitte found that 63 percent of CFOs said that the time allocation of the finance workforce in three years would likely shift toward analysis, prediction, and decision support. That is happening today.

To view the on-demand webinar on this topic, click Global Order-to-Cash: Learn how digital transformation changes your 3Ws – Work, Workforce and Working Capital Cycle

Emagia’s AI-Powered Receivables Automation Software delivers exponential advantage by simplifying workflow for AR processionals, boosting “touchless” collections with digital assistants, automating dispute resolution, and enhancing the overall customer experience.


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