Automating Receivables In India – The beginner’s guide

Automating Receivables In India – The beginner’s guide

In today’s fast-paced world, organizations are busy in creating disruptions in what we eat, drink, breathe, how we commute, communicate, the very way we live.

Because that is what is gaining traction…disruption, so much so, that it is no more disruption now, it is the new normal. It is changing the way companies do business, the way they spend & invest that hard-earned money or the hard-earned funding!

However, the very essence of business is still intact, businesses still exist to make profits and to earn returns for the shareholders or investors and that phenomenon for sure is here to stay until eternity.

Therefore, it becomes utmost importance that we make sure that we are getting that money back from the market, the Receivables, which if not treated respectfully then can sure create a disruption of its own in your business and the kind you do not want.

Despite being, a very important area Accounts Receivables has not seen the kind of evolution that other areas of organizations have. Bringing that money home is still working more or less the way it was 10 years ago, nothing much has changed especially in Indian B 2 B segment.

Collecting Receivables back from customers/debtors in India is still manual in most ways, whether it is the invoice submission, collections follow ups or reconciliations all gets managed mostly in manual ways because of our deep rooted belief that nothing can replace human touch, personal relationships and those face to face meetings.

However, the reality is far off. With Indian economy gaining more prominence on the world stage, our homegrown companies going transnational, government’s digital push and policy makeovers, the scene is changing rapidly. More and more ways of easing the cost of capital for organizations are being pushed with the government’s full force behind it.

More and more measures are taking place to ensure that most transactions are carried out electronically, such as the adoption rate of digitally signed invoices, shorter credit terms for MSMEs, various platforms available for seamless payments etc.

On the back of these factors, if an organization decides to automate the receivables function then it will simply compliment the ecosystem that is being built to help them.  It will not only help in reducing the cost of capital further but will also keep the organization relevant & adaptable with changing times.

There are few things that you must keep in mind before taking the digital plunge into the ocean of automation, more so when the process you are automating is Receivables for it has the most far-reaching impacts which can go either way!

Things to mind:

What to Automate

Now Accounts receivables is not only about collections, rather the whole functions include onboarding a new customer, receiving orders, verifying them, system entry, liaising with procurement for the fulfillment, coordinating with sales team to meet the timelines and to manage any exceptions, invoicing correctly as per the order, submitting invoices with all necessary documents , follow ups for collections, receipt accounting and finally the reconciliations and balance confirmations.

Automating everything sounds very attractive and can give you biggest bang for the buck, however, the time taken in such large-scale automation can go well beyond the acceptable timelines and anything going off-track in this kind of automation can end up crippling the whole process.

Another approach can be to start with automating the Collections follow ups and analytics where the activities are redundant and transactional in nature. This can show the impact of automation on process outputs while limiting the chances and consequences of any initial hiccups.

Another area can be collections accounting that can be automated. It can show you great savings while keeping the ripples at bare minimum.

So, one must be clear about the areas that one would want to automate.

Idea should be to automate a process/activity large enough to derive value and redundant enough to be taken up manually should the need arises due to initial automation hiccups.

Timelines & Budget

Automation projects tend to become endless as one keeps exploring one after the other options in the absence of a clear timelines that in turn balloon up the budget and in the end, they are shelved as organizations stop seeing value in the initiative.

It is imperative to define a timeline and then stick to it. You can always go for the second phase of automation basis your experience with the first one but the key is not to merge phases together. Make it for the success of your organization and not to showcase your individual expertise.

Put something out there for the people to start working with, show some results and then move to bigger and complex objectives.

How to Automate – Insource Vs Outsource

In the world of Artificial Intelligence, Machine Learning and Robotics, whatever you do, it seems less when it comes to process automation. There is so much to talk about, so many options to work on and it can really overwhelm you and with you the whole initiative.

It is critical to take baby steps especially when you are a beginner in process automation and then build it up from there. For example, a non-complex auto-dunning platform can make a big difference in the way you manage your collections and what your output is. You do not have to bring in the sword when all it really needs is a needle.

This is where an able partner comes in very handy, a partner who can give an independent view basis your organizational objectives and your process study.

At the same time, the outside partner might not be able to align fast with the bond/relation that you share with your customers, but acquiring that knowledge is just a matter of time and part of initial expectation setting with the partner.

Outsourcing also helps in chalking out clear objectives and plan around it. At the same time, developing automation In-house can be seamless where interdepartmental coordination is very much required, however, internal coordination and drive is always a matter of change management from top management.

A very big plus that I personally see in outsourcing this is the ability of the partner to deliver unbiased processes and a balanced approach to it. This becomes a huge challenge especially when you are doing it in-house where the people involved invariably tend to feed the ecosystem with the pre-existing knowledge or the traditional ways of doing things. This hurts the very soul of automation and defies all the underlying objectives.

Another advantage of outsourcing over in-house development/implementation is the timely updates that an outside expert is able to bring to the system. For an outsourced partner that is the KRA whereas generally for in-house teams it becomes a matter of convenience or it is triggered when something has already gone south.

The Conclusion

In short, there are three things:
Keep it simple when it comes to project Scope
Use no frills technology as a starting point.
Find yourself ab able partner who can take you through your receivables automation journey.

About the AuthorSunil Yadav is an Account Receivables professional & consultant with over 14 years of International & Domestic experience in various industries such as Pharma, Logistics, Hospitality, Ecommerce, Fintech, IT Infra, Services, Manufacturing, Power etc. Sunil currently leads the “Order To Cash” vertical at Mynd Integrated Solutions.

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