93% of Organizations Receive Late Payments From Customers

Accounts receivable (AR) processes are vital and are something that’s done every day, yet they remain complicated. One challenge AR professionals face is that 93% of organizations receive late payments from customers that result in cash flow delays.

A new study, the November 2021 Working Capital Playbook, a PYMNTS and YayPay collaboration, reports that automation is one potential answer to this and other AR challenges.

“AR automation helps structure a customer communication strategy in which messaging is frequent, informative and well-timed,” YayPay CEO Anthony Venus told PYMNTS. He explained that automation can tailor the communication to each customer and include the details the customer needs to make the payment.

That’s one of many benefits the study found. AR automation could play a critical role in shortening payments delays, minimizing AR errors and reducing days sales outstanding (DSO). By delegating day-to-day processes such as collections and invoicing to solutions aided by artificial intelligence (AI), these systems significantly reduce the capacity for human error and accelerate the complex calculations that tend to be tedious for accountants.

Get the study: Working Capital Playbook

When AR automation is combined with payments digitization, there’s another benefit: the risk of check fraud is reduced. This fraud reduction, coupled with accuracy and timeliness improvements, makes payments digitization and AR automation a winning combination when it comes to improving firms’ cash flows and overall revenues.

The study reports that 87% of firms with AR automation in place said they’d seen an improvement in overall process speed, and 75% said AR automation had improved their customer service. Automated businesses also reported that DSO also dropped significantly; the average automated business sees a DSO of 40 days while firms that conduct their AR operations manually have a DSO of 47 days

Significant AR challenges remain across myriad sectors, but implementing automation could save precious human and monetary resources that could be devoted to other business pursuits.