Accounts Receivable Automation and How it Affects People and Processes

two men collaborating in front of their laptops

As more companies look for ways to streamline internal processes, the question I am asked the most is about personnel. This goes beyond the whole, “Robots are taking our jobs” trope; it speaks to how companies maintain their culture and employee loyalty in times of uncertainty. The concerns of employers balancing client retention, cost reduction, and innovation are even more heightened as we face a shaky economy.

But what if cost-reduction or risk-reduction measures did not mean losing headcount?

Picture the following scenario:

A manufacturing company is expanding their B2B operations online after recognizing that their growth is stagnating. Diane in the Accounts Receivable department cannot handle an increase in B2B buyers, but the company’s leadership wants to expand into eCommerce and double the size of the business.

A solutions provider pitches the idea of outsourcing the accounts receivable functions, offering a white-labeled, omni-channel invoicing and terms program for the B2B buyers. The program includes the following

  • Enhancing customer experience through a painless onboarding process for new and existing buyers
  • Reducing costs because the working capital and credit risk are the responsibility of the solutions provider
  • Driving sales growth by providing an invoice option during online checkout and through the sales team

During an initial sales call, the CFO asks whether deploying the solution will reduce headcount, putting Diane out of a job. “She has been with us for 20 years,” he says, “she’s been with us since the beginning and we do not want to lose her.”

Eventually, the manufacturing company chooses to adopt the solution and grow the business. Six months after the program launches, the relationship manager visits the office of the manufacturing company and meets Diane.

“I am so glad we found your solution,” she says, “working with you saved me two days or more per month keying invoices into our system and about an hour a day processing checks from the mail. Now, I am working on a new project streamlining other internal processes!”

~ ~ ~

While this scenario is not always the case, it is reflective of a situation from a current client of MSTS.

In the current work-from-home environment, companies who are not invested in digital practices, especially as they relate to accounts receivable, will feel the cash flow pinch more quickly and acutely than their peers. With over $3 trillion tied up in outstanding AR and over 40% of those payments tied up in paper checks in the United States, the pressure to manage cash flow will only grow. The problem is also global, with 1 in 5 invoice payments being sent to the wrong address in Australia and late payments causing immense pressure for small businesses in the U.K.

As businesses look toward solutions that improve the bottom line while also creating opportunities for growth, automating accounts receivable practices is an appealing option. There is not only a major cash flow impact – businesses that reduce DSO by just 5 days have access to 33% more cash on average – the availability of multiple payment options for B2B buyers online creates a distinct competitive advantage. Overall, companies that invest in automation mitigate risk and save money.  

During an economic downturn, the easy answer is to think “lean,” especially when it comes to headcount. But what about thinking dynamic?

Pivot intelligently

Outsourcing AR processes does not mean losing the people who make your business great. When evaluating internal adjustments that come with shifting unscalable processes to a third party, the following questions can be helpful:

  • What are the core competencies of the company?
  • Do we really want to be AR experts, in addition to those competencies?
  • How much time are employees spending on redundant activities, like email reminders and responses related to invoice collections?
  • What other strategic initiatives or teams could use additional people?

Many companies right now are on a hiring freeze until further notice. Check in with team leaders about cumbersome processes and who’s on their team. If you outsourced the AR processes, could you cross-train those individuals in other areas? Relieving internal pressures related to hiring freezes through automating unscalable processes is the key to saving jobs.

Providing opportunities for employees to spend time on value-added activity for the company is a dynamic way to utilize existing resources during times of uncertainty. The leadership in the organization should be examining strategic priorities and core competencies, leaning into those initiatives so that when the economy stabilizes the team is well-positioned to execute and leap to the next level.

This is not a situation of “do more with less,” it is a unique opportunity to optimize, prioritize, and scale alongside the people who make the company great.


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Angela Murphy
After earning her Ph.D., Angela built a partner program at a Fortune 100 company from the ground up, leveraging her global experience and relationships across the fintech sector. Angela gives talks to universities and corporate organizations looking to change the relationship between the private sector and academics. Recently, her work has been featured on Versatile Ph.D. She is a Founding Fellow and contributes content to Coruzant Technologies.