How data-driven AR transformation boosts cash flow and business growth

5 minute read

In today’s challenging macroclimate, every competitive insight counts more now than it ever did.

 

That’s why activating an increasingly rich tapestry of internal accounts receivable (AR) data through analytics and reporting can help businesses optimize their cash flow forecasting, improve DSO (days sales outstanding), and foundationally transform their working capital strategies.

 

“We are on an evolutionary journey,” says Andy Murphy, director in receivables product management at Bank of America. “A lot of companies are not currently realizing the trapped value of their data — but it’s the new oil.”

 

He emphasizes that by leveraging the vast amounts of information businesses are increasingly able to glean from nearly every touchpoint, organizations can come away with insights and analytical recommendations to a degree never before possible.

 

So, what is it that’s holding companies back?

 

“One of the biggest blockers to tapping into copious amounts of data tends to be a lack of visibility. Companies have access to so much data in their systems, but the problem is that it's fragmented and it's messy. And so, quite often, it can become very difficult to transform that data into something more meaningful,” Murphy explains.

The countless terabytes of data collected today are what allow organizations to visualize and

automate relationships across different locations, departments and systems.

 

“Companies need to be able to produce, through data analytics, a single source of truth that can generate proactive and actionable insights,” Murphy says.

 

He adds that this “single source of truth” is what helps turn historically reactive operational AR

functions into proactive growth drivers and a key contributor to overall business health.

 

Automating back-office and financial business processes and activities is proving critical to providing leaders with real-time insights through data analysis, and data-ready organizations are more able than their competitors to gain an advantage when it comes to integrating and activating digital innovations.

 

As for what the immediate, easy wins of a “big information” strategy are?

 

Murphy explains that while the key benefits are all interrelated, the biggest takeaways include

maximizing revenue while minimizing costs, as well as improving relationships with end customers.

 

That’s because visibility and control over money in and money out provide a much fuller

organizational picture that can better inform decision-making while allowing for greater

flexibility and responsiveness.

 

After all, businesses don’t know what they don’t know — which is why leveraging data-rich environments is so important for companies attempting to predict future revenue streams or develop a liquidity management model.

 

“There are additional nuances that data lets businesses tap into because historically, things

like cash forecasting look at payment behavior in terms of two dimensions,” Murphy says.

 

Future-fit data analytical capabilities, by contrast, tend to take a multimodal approach to

transforming data, drawing upon “additional comparison points” around customer behavior to

provide a more robust picture.

While performance hinges on data accuracy, integration and adoption of modern solutions hinges upon education and understanding of the capabilities that exist in the marketplace.

 

The majority of companies operating today produce vast amounts of data, but many of them don’t have the resources or expertise necessary to glean critical AR and payment data and transform it into actionable insights.

 

“A lot of the room for improvement is around adoption,” Murphy says. “Being able to manipulate data gathered from various sources often depends on both the quantity and quality.”

 

Organizations also need the appropriate data governance models able to effectively harness

that data as well as to be able to layer on the tech that’s available to drive better decision-making.

 

Establishing a modernized infrastructure that can grow in step with the demands of today’s

ongoing digitization is only growing more critical as it continues to play a key role in driving

business success.

 

Particularly because, as Murphy explains, “We are only just scratching the surface when you consider how much data is expanding.”

 

“Even between now and five years from now, there will be an exponential growth in the amount of data that is available, and that will bring with it an accompanying growth in the number of insights and recommendations — the real value — born of that data,” Murphy adds.