May 4, 2020

As companies and individuals settle into the ‘new normal’ of remote working and video conferencing, we are already thinking ahead to how this will affect businesses in the coming weeks and into the future. What will everyday life look like when the crisis has passed? How will business processes evolve? Will business and finance functions emerge leaner, fitter and more agile from the pandemic?

Release cash

An opportunity is now available for organsiations to improve efficiency and productivity, through automation of accounts receivable processes, which can significantly and quickly impact debtor performance. Therefore, improving working capital.

In fact PWC quoted in a recent report: “In unforeseen situations, such as the current coronavirus crisis, an extra focus is required on the effective management of accounts receivable and payable, inventory development and the liquidity forecast.”

In order to survive and take the opportunity to transform through the pandemic, organisations must evolve, adapt, and reset their finance processes to release cash within their accounts receivable. Why? For the majority of organisations they will be faced with 3 challenges which can hinder growth during these times: reduced working-capital, delayed receivables and reduced or volatile sales revenue.

Let’s drill down into that a little more.

Businesses still have payment obligations to comply with, and some could think about taking longer to pay suppliers. However, this approach is likely to damage business relationships and negatively impact operations in the future. Companies tend to miss opportunities to optimise cash during a booming economy, however cash-flow is now under the microscope. In the same way organisations could delay payments to suppliers, customers begin to do the same, if they haven’t already. Reduction in sales impacts cash flow and therefore strategic credit management becomes more critical.

All of the above point at one thing, there is an urgent need to increase cash collections and forecast accurately. In order to survive the current crisis and emerge stronger than ever, organisations must optimsie their working capital.

“Half of SMEs in UK will run out of cash in 12 weeks.” This is just one of many reports citing some businesses will run out of cash in the coming weeks. However, this is not isolated to a sector or industry, this will reverberate around all parts of the industry, and the flow of cash will be reduced.

Credit management challenges

As we previously mentioned, customers are likely to delay payment, therefore it’s important to remain vigilant and proactive ensuring invoices are punctual and accurate, and credit management strategies are well informed and executed. Waiting for out-of-date data to highlight late payments or unusual customer payment behaviours can result in customers slipping through the net of the credit management team, and ultimately resulting in increased bad debt right off.

Cash flow forecasting

In times of uncertainty it is extremely important to have accurate and up-to-date insight into your cash flow, both short-term and long-term. Improving your cash flow not only saves you money by reducing the levels of unallocated cash but will also improves the customer experience.

“Businesses that are currently struggling for profitability—those with low cash reserves or unstable cash flows— are particularly vulnerable.” – Managing cash flow during a period of crisis, Deloitte

Cash is at the heart of any business and through automation of the Accounts Receivables (AR) function, organisations can radically improve cash flow. Drive the most efficient end-to-end process from your customer invoice, to cash in the bank, fully applied to invoice level within minutes and month end closed, on time regardless of the volumes.

Now is the time to review previously accepted processes, such as cash allocation. Automating your accounts receivable allows valuable resources to focus on collections and risk management, resulting in up-to-date, accurate and timely debtor information and cash allocation. This significantly reduces the level of unallocated cash and ultimately reduces costs.

Give your AR a little TLC

Cash is the life blood of an organisation and Accounts Receivables (AR) Automation is central to improving your cash flow and working capital. Rimilia’s cash allocation solution is powered by AI and built by finance professionals, matching customer payments against outstanding invoices, to turn your payments into cash. Transforming the invoice-to-cash cycle and significantly reducing the time it takes to apply cash to open invoices, resulting in up to a 99% reduction in unallocated cash.

With the right financial management strategies and intelligent automation, your company can emerge stronger than ever. Learn more about credit management and intelligent automation here. 

We have a proven track record and we are confident we can impact your AR processes and results, talk to us today.