Blog/Finance February 24, 2022

The Key to Unlocking Working Capital


Organizations have been deeply affected over the past two years, and business leaders must stabilize their supply networks to improve customer satisfaction. Executives are battling inflation, labor shortages, tax complexities, federal regulation changes, and more. With repeated disruptions, liquidity is more important than ever and CFOs are being asked to find new ways to generate resources. 

One way to improve liquidity is through effective cash management practices, starting with accounts payable and accounts receivable. The number of companies scaling their processes with automation technologies is growing, and companies that lack real-time automation tools are vulnerable to falling behind. In the recent State of Automation in Finance survey, 76% of accounting leaders stated that COVID-19 accelerated their digital transformation. Winning organizations understand that automating high-volume, repetitive tasks like invoice processing and statement reconciliation are essential for efficient payment processing.

The Dangers of Legacy Finance Software 

Finance teams across industries are facing obstacles due to payment processing inefficiencies. From disjointed software to manual entry spreadsheets, everyday accounting tasks can be labor intensive and time consuming. 

Let's explore some of the challenges low-performing finance software can pose:

Narrow visibility: Buyers and vendors need to see transactions in real-time. Without visibility into accounts receivable and accounts payable, teams can't address concerns like investigating disputed invoices or following-up on past due accounts. 

Slow transaction turnaround: Without automated workflows, documents are easily lost or stalled waiting for written approval. In addition to process inefficiency, error-prone manual processes increase the chances of wasted spending. 

Failure to capture ROI: Legacy systems and manual approaches fail to process financial tasks in real-time. This means duplicate invoices, overcharges, or unnecessary fees are often paid before detection.

Cash Flow Starts with Automation 

The modernization of accounts receivable and accounts payable processes is critical to maintaining positive customer and vendor relationships. According to recent data, companies are likely tying up tens of millions of dollars, and for large enterprises it could possibly be more than 100 million dollars due to weak capital management practices. Inefficient invoicing practices and process gaps slow the cash conversion cycle and reduce liquidity. Future-focused CFOs are open to using automation for routine accounting tasks and many believe AI and machine learning can help improve their forecasting capabilities. The full value of real-time accounting automation can offer benefits like: 

  • Streamlined processes
  • Reduced human error
  • Risk mitigation
  • Real-time audits
  • Improved cash flow
  • Accurate forecasting
  • Faster financial close

With accounting automation software, CFOs and finance teams can spend more time building strategic initiatives and strengthening their core competencies. Real-time accounting automation alleviates manual tasks, streamlines the collection spend data, and enhances reporting capabilities. With these improvements, finance teams can streamline the cash conversion cycle and unlock cash flow to support their business throughout any remaining market instabilities and supply chain challenges.

Want to learn about upleveling your finance technology and creating immediate cash flow for your business? Read more about real-time accounting automation in our whitepaper,  Automation Is The Key To Unlocking Working Capital.


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