{"id":243,"date":"2021-03-02T06:46:30","date_gmt":"2021-03-02T12:46:30","guid":{"rendered":"https:\/\/www.emagia.com\/blog\/?p=243"},"modified":"2025-01-28T22:40:40","modified_gmt":"2025-01-29T04:40:40","slug":"ar-in-europe-strategic-outlook","status":"publish","type":"post","link":"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/","title":{"rendered":"Accounts Receivable AR in Europe: Strategic Outlook","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"<div class=\"row justify-content-center mb-5\">\n<div class=\"col-md-10\">\n<div id=\"edge\">\n<div class=\"event-video-block event-video-block1\">\n<div class=\"image-block general-banner-image\">\n<div><a href=\"#\" class=\"event-video-play event-video-play1\"><\/a><img decoding=\"async\" src=\"https:\/\/www.emagia.com\/wp-content\/themes\/emagianew\/images\/ar-in-europe-strategic-outlook-screenshot.jpg\" alt=\"AR in Europe: Strategic Outlook\" class=\"img-fluid screenshot\"><\/div>\n<\/div>\n<div class=\"video-iframe\"><\/div>\n<\/div>\n<div><script>$(document).ready((function () { $(\".event-video-play1\").click((function () { $(\".event-video-block1 .event-video\").addClass(\"show\"), $(\".event-video-block1 .image-block\").addClass(\"hide\"); return $(\".video-iframe\").html('<iframe id=\"youtubeVideo1\" width=\"auto\" height=\"auto\" class=\"inline-frame\" src=\"https:\/\/www.youtube.com\/embed\/msgfkFdoV5M?start=1&#038;autoplay=1\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen=\"\"><\/iframe>'), !1 })) }));<\/script><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"the-status-of-accounts-receivable-management-ar-in-europe\"><\/span><strong>The Status of Accounts Receivable Management AR in Europe<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Prior to the Covid 19 pandemic, the four major European regions all enjoyed a reduction in DSO (based on leading firms in major sectors of the economy) over a period of several years:<\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-flat ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/#the-status-of-accounts-receivable-management-ar-in-europe\" >The Status of Accounts Receivable Management AR in Europe<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/#the-challenges\" >The Challenges<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/#so-how-can-these-challenges-ar-in-europe-be-met-and-overcome\" >So, how can these challenges AR in Europe be met and overcome?<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/#what-level-of-benefits-can-be-achieved\" >What Level of Benefits Can be Achieved?<\/a><\/li><\/ul><\/nav><\/div>\n\n<ul>\n<li>Northern Europe \u2013 decline in DSO from 53 to 50<\/li>\n<li>Southern Europe \u2013 substantial decline from low 90\u2019s to 70<\/li>\n<li>Nordics \u2013 from mid to low 50\u2019s<\/li>\n<li>UK \u2013 from upper 40\u2019s to upper 30\u2019s<\/li>\n<\/ul>\n<p>During 2020, the Covid 19 pandemic reduced overall European GDP by 7.4% and reversed the DSO trends in both an aggregate and in an industry\/sector specific manner.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"the-challenges\"><\/span><strong>The Challenges<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There are a number of key challenges to managing the AR Asset for European Companies. Among them are:<\/p>\n<ul>\n<li>The impact of the Covid 19 Pandemic on European growth. Across Europe, GDP growth is expected to regain about 60% of the GDP decline in 2020, with the exception of the UK, whose growth will recover only about one-third of the 2020 decline.<\/li>\n<li>Government supported <a href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/\"><strong>cash flows<\/strong><\/a> in 2020 are moving to payback.<\/li>\n<li>Continued low interest rates. The payback for investing in liquidating AR for companies with adequate cash is low. However, for companies with inadequate cash resources, converting AR to cash is critically important.<\/li>\n<li>Traditional Cross-border culture, language and <a href=\"https:\/\/thecreditapplication.com\/\" target=\"_blank\" rel=\"noopener nofollow\">credit<\/a> term levels.<\/li>\n<li>Government mandated payment terms and e-invoicing for Suppliers, concentrated in Business to Government (B2G) commerce.<br \/>\nPSD2 regulation governing electronic payments<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"so-how-can-these-challenges-ar-in-europe-be-met-and-overcome\"><\/span><strong>So, how can these challenges AR in Europe be met and overcome?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The fundamentals of excellent AR management will, as always, provide much of what will be required to meet the AR challenges. In addition, it will require an understanding the local issues, influences, and regulations affecting AR performance in the local economy.<\/p>\n<p>Training of staff in the fundamentals of working capital and the value of <a href=\"https:\/\/www.emagia.com\/blog\/four-essentials-of-digital-cash-forecasting\/\"><strong>cash is essential<\/strong><\/a>, so staff can conduct their daily operations in a way that optimizes the company\u2019s cash position.<\/p>\n<p>Accuracy and quality in fulfilling and invoicing customer orders is a major driver of excellent receivables management. Disputed AR typically comprises at least half of all AR more than 10 days past due. Excellence in order fulfillment and invoicing pre-empts most disputes.<\/p>\n<p>The other major solution to these challenges is automation. Automation to increase productivity, accuracy, AR portfolio coverage, faster customer response, higher quality credit vetting, and analytics capability. Automation applications for the processes of AR operations and management have been used for decades, embedded in ERP\u2019s and available as separate applications.<\/p>\n<p>However, the emergence of newer technologies such as Robotic Process Automation (RPA) and especially <strong><a href=\"https:\/\/www.emagia.com\/blog\/harness-big-data-artificial-intelligence-blockchain-for-trade-finance\/\">Artificial Intelligence<\/a><\/strong> (AI) Digital Assistants have increased capabilities exponentially in the past few years in Credit Risk Management, Collections, Payments Processing, Deductions and Cash Application.<\/p>\n<p>A key requirement for AR automation technology in Europe is the ability to accommodate multiple languages, currencies, local practices, and regulations.<\/p>\n<h4><strong>Other key capabilities are<\/strong><\/h4>\n<ul>\n<li>Electronic invoicing that can be customized to individual country or customer requirements.<\/li>\n<li>The ability to accept digital real time payments in all their forms. This capability is a key contributor to an enhanced customer experience, as well as accelerating cash receipts.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"what-level-of-benefits-can-be-achieved\"><\/span><strong>What Level of Benefits Can be Achieved?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For some companies in industries severely impacted by the pandemic economy, the minimization of deterioration of the AR asset may be a realistic expectation. For other companies (especially those whose industrial sector is expected to improve), a significant net improvement by the end of the year is a reasonable goal.<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"<p>The Status of Accounts Receivable Management AR in Europe Prior to the Covid 19 pandemic, the four major European regions all enjoyed a reduction in DSO (based on leading firms in major sectors of the economy) over a period of several years: Northern Europe \u2013 decline in DSO from 53 to 50 Southern Europe \u2013 &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/www.emagia.com\/blog\/ar-in-europe-strategic-outlook\/\"> <span class=\"screen-reader-text\">Accounts Receivable AR in Europe: Strategic Outlook<\/span> Read More &raquo;<\/a><\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":2414,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"class_list":["post-243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-receivables-automation"],"acf":[],"gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts\/243","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/comments?post=243"}],"version-history":[{"count":0,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts\/243\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/media\/2414"}],"wp:attachment":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/media?parent=243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/categories?post=243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/tags?post=243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}