Cash flow. It’s all about knowing where the money is, where it’s coming from, and where it’s going. One of the oldest accounting functions and most fundamental concepts in the field, the process has remained largely unchanged—consideration in exchange for products and services. While the process has evolved to include various time frames for payments and related discounts, the process has remained largely conservative and is managed by two key functions: AP and AR.
However, as speed of business has increased and organizations have become more customer focused, many companies have turned to technological advancements to drive innovation in the accounts payable and receivable world, working to align the two into a shared service center.
Part of a larger technological renaissance in the accounting world, these two processes have been augmented by innovation and change, with automation, analytics, and AI giving organizations more power to make decisions with better information. Yet there are still issues. From outdated technology to underwhelming functionality, businesses are often held back.
Three Challenges in Bringing AP/AR Forward
With innovation at the forefront and speed of business a priority, many businesses struggle to see the big picture. According to a recent report from leading analyst firm IDC, businesses continue to struggle with creating service centers due to the following:
AR and AP are critical aspects of the long financial chain driving the business forward. Managing this complex web of business transactions can be difficult in the best of circumstances and can be nearly impossible when dealing with information across siloed departments. Finance has a complete view of every business transaction no matter which department owns the data. This level of communication between departments is difficult, especially in more complex organizations operating internationally across numerous business units.
Many organizations’ back-office infrastructure resembles a “hair ball” of point solutions that talk to each other sporadically, if at all. For accounting managers, this presents a huge challenge for the accurate determination of cash flows. The fundamental questions of “How much does my company owe to its suppliers?” and “How much do my customers owe?” become very difficult to answer quickly and accurately. The challenge is amplified when core enterprise systems are antiquated and have less overall functionality and limited reporting capabilities.
Today, there are still thousands of companies of all sizes with manually driven workflows for some aspects of AR and AP. As a result, these processes become exceedingly inefficient — consuming precious resources and returning delayed approvals, with a multitude of errors and limited fraud detection capabilities. Moreover, manually driven processes within AR and AP can lead to inflexibility and a lack of agility, which can be extremely harmful to a company’s ability to maneuver in the increasingly dynamic digital economy.
Bringing it All Together: How the Right ERP Enables Change
With cash flow optimization a priority in today’s business, many businesses are seeking products that can bring together these processes, addressing functionality gaps and simplifying workflows in these processes. The entire IDC report provides a deeper look into the benefits of aligning AP/AR within your ERP system and compared the leading ERP vendors for their ability to provide this alignment.
The report, IDC MarketScape: Worldwide Cloud and SaaS ERP Accounts Receivables and Accounts Payables, found our friends at Sage Intacct to be a leader in this field, noting the product for:
- Being built for finance professionals by finance experts
- Having a preferred provider recommendation from the American Institute of Certified Public Accountants
- Demonstrating excellence in micro-vertical customer understanding
We invite you to download the entire report here, and contact us for a free demonstration.