B2B Payments

What Scares AR The Most About Automation

For corporate accountants, automation can be a polarizing topic. On one side, proponents say automation speeds up accounting and reduces the rate of error, leading to faster payments. On the other side, critics argue that automation tools are costly to implement and threaten B2B sales and accounting jobs.

The debate becomes even more divisive when considering the differing needs of accounts payable and accounts receivable.

A study published by Ardent Partners and Basware last July found that AP executives are eager to implement automated processes throughout the procure-to-pay cycle. Not only does automation streamline AP, they say, but it can improve the quality of financial data used to analyze spend and promote improved supplier relationships.

A whitepaper published late last month by e2b teknologies, however, says that AR officials aren’t too excited about automation. The release highlights the chief concerns being voiced by accounts receivable departments around the globe, many of which, said e2b teknologies CEO Bill Henslee in a statement, are “based on half-truths and common misconceptions.”

He added that the whitepaper looks to “set the record straight” and help the AR side of B2B business overcome anxieties of shifting from a familiar, manual accounting process to realize the cost and productivity benefits that automation can offer. 

Seven Fears

According to e2b teknologies, there are seven common fears held among AR officials when it comes to automation.

[bctt tweet=”There are seven common fears held among AR officials when it comes to automation.”]

Much of these concerns, the report says, are based on expectations that automated AR processes will entirely overhaul the way business is done. The number one fear, e2b teknologies says, is that “automation will change everything.”

But there are other concerns that all stem from this fear of a disrupted business flow.

For example, AR officials are concerned that automation will give them a loss of control in how payment collections processes are handled or that AR automation software will be difficult to implement or even use once it’s adopted into an accounting department.

Executives have also shied away from AR automation, the report concluded, because they fear that once such software has been implemented, team members will be slow to start using it — leading to wasted time and money.

There are also more tangible fears of AR automation, said e2b teknologies.

One of the most common is cloud security. Businesses, especially small suppliers that may be considering the use of AR software, are not yet convinced that their corporate data will be secure in the cloud, whether it be from a data breach or a loss of data altogether. Fears are also being raised about what could happen if Internet connections go down and how that down time will impact the productivity of the accounting department. The cost of implementing AR software is also one of the most commonly mentioned concerns for businesses today, large and small.

Finally, e2b teknologies pointed to fears that AR automation simply won’t work. Some companies may question whether automation will really lead to an improvement in workflow, a reduction in errors, easier data aggregation or lower operational costs.

Calming The Fear

With its whitepaper, e2b teknologies said it aimed to quell some of these fears. For some concerns, the company said common sense can largely debunk assumptions regarding the usability of AR automation software.

The ability of AR automation to simply take out some of the manual steps in the accounts receivable process — not change them — as well as to be customized for the specific needs of a business address fears that AR software will change the entire AR process and remove control from AR managers.

The report also argues that AR software is easier to implement than ERP services or other systems that may already be in use by businesses.

To address concerns that a business will see a low rate of adoption once an AR automation tool is integrated, e2b teknologies says that the “number one” way to ensure an easy transition “is to make sure end-users understand why the change is happening, how it impacts their daily activities and how it will benefit them as individuals.”

With some of the more tangible fears like cloud security, cost and function, e2b teknologies’ paper says statistics can ease the minds of AR officials.

In terms of cloud security, the report pointed to Hurricane Sandy, which knocked out power for more than 265,000 businesses in the state of New York. Cloud-based services will secure and regain function after a disruption of power much faster than on-premise tools, the paper concluded. Plus, the authors wrote, many businesses already use cloud-based services, like banking, file storage and project management.

Regarding cost, e2b teknologies said that solutions can lead to a reduction in the time it takes for a company to get paid by about 20 percent and can help reduce bad debt by 15–25 percent, PayStream Advisors analysts said.

Those analysts also found that AR automation tools can yield a 20 percent drop in invoice days outstanding, a 25 percent reduction in past-due receivables and a return on investment time of as little as two months.

The numbers don’t lie, e2b teknologies said. With AP executives jumping on the cloud, AR departments need to catch up. To do so, the company said, accounts receivable officials should examine the facts of AR automation and move past the fear of change.

“A business that doesn’t change is a business that doesn’t grow,” the report concluded. “And the adoption of accounts receivable automation is definitely the result of growth and change. But it’s a change for the better.”


Featured PYMNTS Study: 

With eyes on lowering costs to improving cash flow, 85 percent of U.S. firms plan to make real-time payments integral to their operations within three years. However, some firms still feel technical barriers stand in the way. In the January 2020 Making Real-Time Payments A Reality Study, PYMNTS surveyed more than 500 financial executives to examine what it will take to channel RTP interest into real-world adoption. Here’s what we learned.