As an industry analyst from the very respectable Paystream Advisors, who closely track the Receivables Space, rightly puts, “ERP solutions have been woefully inadequate in terms of credit and collections functionality.” Is that hyperbole. Or is there some truth to it? Let’s understand why such an opinion arises.
ERP – a jack of all trades
ERPs have been around for decades. They are a category of business management software that your organization uses to collect, store, manage and interpret data from many business activities. They are pretty broad in functionality and are created to address the very many internal processes in an organization. Their prime focus has always been to maintain and balance books and to assist in operations. Over the years, the solutions have significantly expanded in their scope, going way beyond the traditional functions of finance, accounting, human resources, and corporate governance.
ERPs are also built around the assumption that dedicated personnel is available to push all data into the system. At the same time, all external factors are dealt with manually. Take for example the excels you end up working with. How optimal is that, really?
So what exactly are you missing?
In the absence of a customized collections platform, there are a few things your ERP isn’t giving you. Thus, leaving your collections process in a far less ideal state. And if you notice, there are quite a few of these ‘missing’ gems!
Visibility to Internal Stakeholders
ERP is suited to cater to the needs of visibility across various stakeholders: management and the operational finance teams, and even sales teams –only to some extent. Afterward, it needs the IT departments to create periodic ‘dumps’ for the finance teams to start wading through with their own set of excels and pivot tables. But managing the Collections function needs the data and information to be available all the time, in ways that can help decision making at all levels. And so the spiral of Excels continues – costing efforts and time.
The most basic of collection functions such as dunning – true automation.
Dunning is a primary collections task. It is something that an ERP isn’t built to handle optimally – unless you invest heavily in customizing it to your needs or to buy another module altogether. IF you don’t do this, you will end up using a one-size-fits-all approach in dunning that the ERPs provide out of the box.
A Dynamic Approach to Business
Key activities such as field-sales and marketing are facilitated only by some native extensions to an ERP that are usually vendor-recommended. Furthermore, suppose a business wants to deploy an extension. In that case, they need to bear heavy expenses of customization and comply with the system’s restrictions. This approach becomes the first casualty of vendor lock-in, mandating the business to follow only what the ERP vendor offers. Therefore, impacting the dynamism and creativity of the business’ day-to-day functioning heavily.
Workflow Automation and Communication between Internal and External Stakeholders
ERPs provide only very basic workflow visibility amongst internal teams. They also don’t support most of the detailed, common-sensical interaction between team members or clients, creating massive bottlenecks in the collections process, especially when there are disagreements and disputes. ERPs need external resources, and currently, all these interactions and data are managed over emails and spreadsheets.
Factoring in Risk in the Collections Strategy
The focus of an ERP, by design, is on internal business processes. It doesn’t cover any external exchanges and interactions (including disputes and issues) made for collections or have any checks in place to see if these interactions have been made with the right customers, at the right time or in the proper manner, leading to far from optimal results. ERP systems cannot record most of the customer responses – especially the ones that can help you unblock collection issues. Any data collected stays on spreadsheets until a transaction is made. Thus eliminating any scope of dynamism in the company’s collection strategy.
Access to other 3P services that can help your AR/Collections
Your collections management is not just managing the function alone. But to also enhance it, with the best practices and products that might be available. ERPs, while having multiple integrations, continue to have broad-based solutions requiring customisations. So when it comes to things like Payment Gateway needs or needing a Loyalty management solution, you will need to go to either multiple vendors or expect the ERP vendor to customise it.
The Result: even with the ERP, you having to manage your processes, especially in Collections, manually with many many excel sheets – is primarily manual and inefficient. These manual and inefficient process interventions lead to delays and productive time being wasted only in facilitating visibility, dunning, factoring in risk – modifications, ad-hoc needs and decision making, dynamism and creativity of business still being far away!
This is where numberz Smart Accounts Receivable And Collections steps in!!
Ok. Got it! ERP needs a lot of work! But how is numberz any different? How will it help?
Well, in short, it plugs a lot of gaps of an ERP. And then adds many deep workflows and third-party products. All in service of Accounts Receivable and Collections. The Result: automation of various processes in the collections process, improvement in team productivity, mitigation of default risk. adequate visibility of AR/collections to the stakeholders (including deep insights), better AR decision making. Ultimately reducing the DSOs and the write-offs.
How? This is how!
- Facilitates real-time presentment of invoice data (ledgers, statements), viewing credit notes, cash discounts, etc., and communication to all involved parties across channels.
- With nifty AR dash-boards, it allows finance leaders and decision-makers to track end-to-end receivables positions, performances & take actions for improvement.
- It supports ad hoc reporting, multi-level views etc. Also since it’s a cloud platform, it provides for continually evolving product capabilities – the basis of the best practices.
- numberz provides a CRM for collections that offers integrated workflows to manage coordination and communications between internal SPOCs and Clients.
- Whether it is the internal teams – finance, operations and/or sales teams (centralized or spread out), or the various Client teams, numberz ensures that they all are on the same page.
- Facilitates substantial improvement in team productivity as well as mitigation of client risks.
- numberz helps to plug the ERP automation gaps – and that too smartly! Using data insights and deep AR/Collections knowhow to impact what gives the maximum results.
- Automation of workflows across the pre-collection and collection areas ensures that that AR is covered holistically.
- From Smart Reminders to Periodic statements/ledgers. From Loyalty and Cash Discounting schemes to assessing risk. From AR tasks and activities for collectors to managing client communications around disputes, numberz automation covers various scenarios, as suitable to various business types.
- numberz provides an e2e issues and dispute management module that ensures that the entire issue identification process is automated, visible and is seamlessly handled – anticipating and arresting issues before they become disputes.
- The dispute workflow includes triggering, escalating, monitoring and communicating issues.
- Most importantly, it provides the managers with behavioural information around disputes: types of disputes, resolution times, broken promises, invoice volumes/values stuck, etc, that can help in decision making.
- numberz provides options to integrate various financial services, in service to managing the AR and collecting faster. Services that can offer Pay Early, Pay Now and Pay Later options to your clients.
- PayEarly option provides the sellers to create various cash discounting schemes (rules-driven and dynamic) to incentivise early collection behavior from their buyers. This gives every customer a unique experience and the collection agents the ability to communicate and share real-time discount details with clients via the client portal.
- The PayNow option helps process inwards payments straight out of the reminder/invoice emails or even the client portal. Many of these workflows also come with intuitive options – such as recording the ‘Promise-to-pay’ to build better projections for Finance & Strategy teams.
- This industry-first PayLater service, provides the buyers a chance to pay you by availing unique financing options. Ranging from Invoice Discouting to Receivable Financing, numberz helps you help your clients and unblocking your own payments!
- The other services that are being worked on are Virtual Cards for your clients, Receivable Insurance, Credit Lines etc.
All Things Considered, Why numberz AR?
With numberz AR, you can future-proof your collections processes to meet your working capital demands. With integrated financial services, you can ensure that you can continue to add to the options that you can provide to the clients. You can continue to improve the overall customer experience dramatically. numberz, hence, helps you bring down operating costs, study customer behavior, and formulate better business strategies with precise money-in projections and scenarios.
To think of numberz as a separate investment would be erroneous. To think of it as a ‘replacement’ of your existing system would be downright wrong! Look at it like a boost, a complement to your ERP. The numberz AR platform integrates with all leading ERP systems like SAP, Microsoft Dynamics, Oracle, Sage, and numerous others, allowing you to extend your existing investment capabilities and get the most out of not just your ERP, but your Accounts Receivable process and your team!