Goodbye Checks, Hello Progress: AR Automation Unlocks Growth Potential

Commercial payments are never just payments. More than the money movement itself, business payments comprise the workflows and data surrounding and supporting them.

Ultimately, commercial payments help define and dictate the end-to-end experience a business can provide its customers.

“Helping our customers move to a more automated payment transaction and provide their customers with a frictionless process is the biggest benefit,” Ari Widlansky, managing director and U.S. chief operating officer at Esker, told PYMNTS.

“By improving the transaction experience, it makes that customer stickier,” Widlansky added.

Getting paid is crucial to the livelihood of businesses, no matter their size, and that makes the accounts receivable (AR) function critical to growth. The shift from legacy payment systems to digital solutions is proving to not be just a trend — but a necessity.

As Widlansky explained, the multifaceted benefits of digitizing the AR function can help unlock downstream improvements in both operational efficiency and customer experience.

Still, despite the proliferation and attractive positioning of digital payment options, many businesses rely heavily on traditional methods such as checks.

“Checks are still a big part of payments,” Widlansky said. “Surprisingly, 20% to 30% is not an uncommon number to hear.”

This reliance on outdated methods can be attributed to various factors, including familiarity, inertia and a lack of resources or knowledge to implement digital solutions, he said.

As he emphasized, there is no better time than now for businesses to catch up to the 21st century and embrace the benefits of digitizing their AR programs.

Substituting Digital for Legacy Payments

Legacy payment systems come with a host of inefficiencies and risks. Manual processing of checks and other paper-based methods can lead to errors, delays and increased operational costs, while outdated payment methods can erode customer loyalty and satisfaction.

On top of all that, the lack of real-time visibility into cash flow can hinder decision-making and negatively impact working capital management.

Conversely, as highlighted by Widlansky, one of the advantages of digital payments is the real-time visibility they offer into financial data. By embracing digital AR solutions, businesses can track transactions, monitor cash flow and make informed decisions quickly.

“It’s not just the visibility, it’s the real-time visibility and being able to take that data and transact and make decisions based on that data in real time,” said Widlansky. “This is where you can unlock value across the entire invoice-to-cash experience.”

Automating the AR process also reduces the manual effort required, allowing employees to focus on more value-added tasks. This efficiency can lead to cost savings and improved productivity across the organization.

At the same time, Widlansky explained that digital AR solutions provide the flexibility needed to scale operations, whether domestically or globally. They support mergers, acquisitions and other growth initiatives by integrating seamlessly with existing systems.

Digital payments also provide a seamless and frictionless experience for customers. The ease of transaction can strengthen customer relationships and enhance brand loyalty.

Read also: Getting Paid: Digital Payments for Improving Cash Flow and Customer Experience

Driving Down DSO and Building Stronger Bonds

Despite the benefits, some businesses hesitate to transition to digital payments.

Common barriers include a lack of resources, resistance to change and concerns about the complexity of implementation. Widlansky emphasized the importance of change management and organizational readiness, saying, “Change management is key to a successful implementation. Ensuring that internal teams are organized and committed to the initiative is crucial.”

“When you go from paper to digital, there’s a change period … and that change needs to be managed,” he added. “It’s easy to fall back on, ‘This is what we’ve always done in the past and I’m used to this.’”

Looking ahead, the potential for innovation in the digital payment space is immense, and Widlansky noted that there’s an ongoing and substantial shift in mindset from using digital AR programs to merely address a pain toward viewing AR automation as a way to unlock growth.

The integration of artificial intelligence and machine learning is also set to further enhance the capabilities of digital payment systems. These technologies can provide deeper insights into customer behavior, optimize payment processes and even predict future trends.

“Esker is at the forefront of AI integration, with 25% of our 1,100 employees worldwide focused on R&D,” noted Widlansky.

This focus on innovation ensures businesses can stay ahead of the curve and continuously improve their operations.

By embracing digital payments, businesses can unlock efficiencies, enhance customer experience and position themselves for sustained growth.

As Widlansky summarized, “Define what success means for your company upfront. This can save you so much time, energy and resources.”

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.