Accounts receivable: From neglected function to strategic imperative
Accounts receivable (AR) is a business-critical function that ensures organisations get paid, yet it is consistently undervalued and underappreciated. This oversight creates significant risks and missed opportunities for companies, especially in today’s uncertain economic climate where visibility of their cashflow management is vital to their survival.
AR teams are not just back-office processors – they’re at the frontline of payment patterns. They see in real time how quickly customers pay, who is always on time or late, and where broader economic pressures are impacting financial confidence and payment habits. This unique look into payment trends provides businesses with a strategic edge they can and should leverage.
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However, the challenges facing AR teams are mounting. The critical insight they can offer often remains untapped because the function remains pigeonholed as merely being able to send invoices and chase payments. And pressure on AR professionals has grown steadily, driven significantly by a rapid increase in payment requests as the number of active businesses in the UK hit an all-time high of 5.6 million this year.
But despite this growing demand, AR remains low on the list of investment priorities for many finance leaders.
The result of decades-long under-investment
Many AR teams operate with outdated systems, some installed as far back as the late 1990s to handle the Y2K issue. This manual reality means that the human touch, which is crucial for sensitive customer interactions like negotiating payment plans or chasing overdue invoices, is bogged down by inefficient processes.
But the human element in AR is indispensable. Accounts receivable is about relationships, not just transactions. Payment conversations require emotional intelligence, and done right, the AR experience can significantly aid customer satisfaction, loyalty, and recommendation. While AI and machine learning can help flag invoices for follow-up and automate reconciliation, the job will always need a human touch due to the bespoke nature of many processes and the importance of customer relationships.
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By GlobalDataTherefore, simply automating processes won’t solve the core issues; businesses must modernise not just their tools but also their approach to how AR is valued and supported.
Clinging to legacy systems also carries significant data risks. AR systems house some of the most sensitive data, including customer bank details and billing history. Legacy platforms, often receiving little maintenance, are prime targets for cybercriminals. High-profile incidents, such as those impacting major UK retailers, demonstrate how vulnerabilities in ageing platforms can lead to severe operational disruption and financial losses. The hesitation to migrate this data, while understandable, actually poses a greater risk than a strategic modernisation.
Evolving AR from neglected to critical
To recognise AR as a strategic business asset, it needs the right tools and investment, whether this is supporting with reconciliation, securing sensitive data through encryption and tokenisation, or ways to offload risk and improve compliance.
The invisible cost of not making the most of your AR team is significant. Businesses don’t just lose money from inefficient collections; they miss out on the benefits that better forecasting and tighter cash flow control could bring to operations. In an economy that is increasingly fragile and uncertain, businesses that continue to sideline AR run the risk of turning a low-profile operational gap into a critical point of failure.
Investing in modernising AR is a strategic necessity, and it’s time for business leaders to take this seriously. Leaders must enable AR teams to provide critical insights, enhance security, and drive business resilience, transforming them from an overlooked back-office function into an indispensable strategic asset.
Kush Shah is Director Product Management – PTX, Bottomline
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