If you are looking more carefully at cash flow after the collapse of Silicon Valley Bank, you are not alone. One place to look is automating accounts receivable (AR).

With the increasing digitization of all aspects of finance, AR sticks out for its antiquated processes. Most businesses still do AR manually, and changing from that process has not been top of mind. But it should be.

Automating AR has the potential to increase cash flow, save businesses a lot of money, improve customer service, and be more environmentally friendly. Digitizing AR also makes it possible to use artificial intelligence and machine learning to parse AR data and find patterns that can be used to improve the business in surprising ways.

In a recent PaymentsJournal podcast, Steve Murphy, Head of Commercial and Enterprise Payments at Javelin Strategy & Research, and Bob Purcell, CFO of Billtrust, discussed the many benefits of automating AR. Many people think that it isn’t worth the cost or effort to automate AR and that there are no synergistic benefits for a business by doing so. Their conversation counters that assumption.

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Financial Resilience Starts With Perfecting AR Cash Flow

The pandemic and the recent bank collapses have reanimated the importance of managing working capital.

The pandemic led to a significant disruption of supply chains and increased uncertainty in the economy. The bank collapses have also highlighted the importance of working capital management as businesses have struggled to find alternative sources of financing. Many companies were caught off-guard by the bank collapses and have had to scramble to find alternative funding sources to maintain their operations.

In preparing for a downturn, companies should focus on what they can control and make their businesses more efficient. Shifting from manual AR to automated should be at the top of the list.

Manual AR tasks inhibit cash flow and increase operating costs. Automated AR processes improve cash flow and reduce costs. 

“We’ve reached an inflection point in our profession,” Purcell said. “Finance leaders across our customer base are beginning to understand that digitally transforming AR and adapting technology bolsters our financial resilience.”

This shift has been a long time coming.

“AR software penetration is only around 24% of companies today...