“The Right AR Tech Stack Can Save Upto 40% of OPEX and 46% of Billable Hours Per Week for your Organization"
Oftentimes at the early stages, businesses tend to build their finance tech stack with ad-hoc solutions that get things done for the time being. They start by implementing an ERP system and then adding a portfolio of independent solutions available for billing, accounting, and managing the process. A few organizations also opt for custom-built solutions that are built in-house.
These solutions are good enough to do transactional tasks and record-keeping purposes but they are typically standalone and don’t offer holistic integrations, automated workflows, and data intelligence. Also, there’s a lot of manual effort included because finance teams rely a lot on spreadsheets/Excel on top of these solutions.
As a finance leader, if you are wondering
Then you need to take a hard look at your tech stack.
“The focus in this phase of startup growth is on acquiring customers and growing revenue, not how to make the business operations function more efficiently at scale. But there is a critical point in time during the scaling phase where the stressors of running the business within the current model create added stress within the C-suite. Data is stored in disjointed systems that create an additional burden for financials to be reported on time or invoices sent to customers in a timely manner.” - Forbes
A tech stack for any B2B organization’s key functions like AR is mainly built around 4 key layers.
During the inception stages, startups are more likely to be focused on the Transactional and Record-Keeping layers. These two layers are good to begin with as they are more focused on building the customer pipeline and maintaining the cash or payment records. So, ERP and accounting solutions work well for record-keeping purposes; as well as managing a few workflows. And in this stage, most of the workflows are done manually on spreadsheets.
But as you start growing your business, the complexities of the AR function start increasing. You start seeing your tech stack break with increasing invoice volumes, resolving invoice issues, and different payment methods, and currencies. At this stage the AR teams can get burdened and here arises a need for a streamlined process for collection follow-ups, dispute resolution, reconciliation, etc.
Before we get started on the challenges of using a legacy tech stack let’s dive down to look at how the AR process in a fast-growing business looks like today.
If you look at the image above, the typical AR process is highly decentralized, and manual and uses a lot of traditional tools like spreadsheets, messaging apps, and generic email systems on top of an ERP. There are multiple stakeholders involved such as the billing, sales, and finance teams, who work manually on individual spreadsheets for collections activity management, generating reports, etc. There’s no single source of truth for accessing data, which can impact collections follow-ups and customer experience.
The Finance leaders also don’t get real-time visibility into their key metrics like DSO or key parameters such as at-risk or potential-risk accounts. It becomes difficult to know where your cash is stuck or to predict how much cash you can collect over a period of time. They end up reaching out to multiple teams like sales, csm, or legal to understand the status of an invoice or the reason behind any disputes. It also leads to a very time-consuming and manual report-generation process with no access to real-time data.
The CAPRI framework is an actionable template that can help fast-growing businesses in assessing the gaps in their current AR tech stack. It covers the 5 key areas that are essential to improve AR process efficiency
Legacy systems like ERP are jack of all trades but masters of none! Using an ERP or an add-on built on top of an ERP or CRM might seem to be working for you. After all, you can record your payment information and automate a few activities like follow-ups with some basic dunning. And you’re probably managing invoice delivery and looking up AR Aging. But, that’s not enough for a fast-growing business with increased customers, where the frequency of billing is high with different modes of payments in different currencies.
Your scaling business’ AR process needs a purpose-built solution, which can not only improve your collections efficiency but also have a positive impact on your cash flow. But before we go into how a purpose-built AR solution can benefit your business, let’s take a look at where it fits in your tech stack and what it can offer
“It is always better to get collections from your customers rather than go for a funding round because your investment cost is very high. But, It is a nightmare to fast-track it (collections) with these manual processes.” - Yeshwanth PS Director, Finance at Facilio
A purpose-built AR solution offers end-to-end transformation by streamlining the transaction, workflows, and intelligence layers. It perfectly integrates into your legacy tech stack to fill the gaps in automation, process efficiency, data accessibility, visibility, and predictability.
Your fast-growing business needs cash, and there’s no better way to get cash faster than by improving your end-to-end AR process. Implementing a purpose-built AR solution like Growfin can help you:
