Business process automation enables firms with high transaction volumes to improve their order-to-cash cycles by optimizing invoicing, accounts receivable, dispute resolution, collection and cash application processes. Automating this cycle also frees up working capital by reducing errors, boosting collections and increasing data visibility, which in turn improves customer contact. Even if discrepancies have to be assessed manually, automating corporate accounts receivable processes reduces incidences of manual intervention, and cuts manual resources devoted to correcting errors, according to CFO.com magazine.

Fortune 500 firms such as Kimberly-Clark, Unilever, Kellogg’s and Multifoods are already using electronic invoices to eliminate paper from their procurement cycles, while using EDI 214 technology to transmit transaction data and automatically update supply chain systems. Customers often push trading entities to improve their order-to-cash cycle in the belief that transaction efficiency at a vendor implies faster settlement of accounts. In an optimized environment, invoices submitted for payment would trigger a payment if certain criteria were met, but the challenge lies in getting suppliers to adopt the same system.

“Short pays” can impede order-to-cash cycles if retailers expecting a rebate from a manufacturer present an unauthorized invoice reduction (short pay) instead of waiting for the reimbursement. If these invoices accumulate, manufacturers are left with partially paid invoices that require manual reconcilement by the accounts receivables department. Automation would solve this issue, if the industry could settle on one protocol, but so far, supply chain communication systems have not been standardized. For now, trading entities are monitoring invoices and receivables collection, even if ERP systems promise an interim solution.

(CFO Magazine)