Pandemic Unmasks Companies’ Lack of Real-Time Cash Flow Insights, AR and AP Visibility and Control
New Corcentric research reveals finance leaders face siloed, manual processes impeding innovation and true holistic cash forecasting
Disruptions stemming from the COVID-19 pandemic in the past year revealed a deficiency of holistic, real-time views of cash flow for nearly two-thirds (74%) of companies, according to Corcentric’s new study, “The Future of Finance: 360-Degree Cash Flow Visibility and Control.”
Financial leaders agree that achieving top business goals—including improving the customer experience, increasing revenue and profitability, reducing costs, and improving sustainability—hinges on optimizing cash flows as well as digitizing and automating processes and payments. However, the majority (95%) of companies do not have a solution and/or service partner in place for holistic cash forecasting, and nearly 90% are not automating their accounts receivable (AR) and accounts payable (AP) processes today.
“Although the pandemic continues disrupting operations globally, it has helped finance leaders recognize the need for improved insights into their operations’ cash flow,” said Matt Clark, President and Chief Operating Officer at Corcentric, a leading provider of business spend management and revenue management software and services. “For companies to meet business goals, they must prioritize optimizing AR and AP systems and processes as much as revenue growth and customer experience.”
Corcentric commissioned Forrester Consulting to conduct the online survey examining senior financial leaders’ views of the current state of AR and AP functions in the U.S., the UK, and France, as well as their perceptions of the future. Top findings include:
Unlocking funding to support key business priorities
- During the next 12 months, companies will focus on improving the customer experience (66%), increasing revenue (62%), and becoming more insights-driven (61%). Finance teams said they help accomplish these goals through cash flow optimization (71%), digitizing and automating processes (64%), and digitizing payments (57%).
- A deciding factor in payment innovation success is the user experience, with 82% saying that payment users (i.e., employees and counterparties) increasingly expect the same quick, secure, and efficient experience that consumers have.
- Yet, current AR and AP processes and systems provide a poor experience and limit financial leaders’ view of cash flow. Over half of companies (57%) struggle to innovate payment processes to deliver the experiences that users demand. While finance leaders rely on these systems for insights, 70% said their solutions provide only partial insight into their company’s cash position.
The value of digital transformation amid process roadblocks
- About three-quarters (73%) believe enabling holistic cash forecasting would be valuable to their organizations. Benefits include smarter decision-making (97%), improved payment user experience (88%), and increased business agility (83%).
- Cash flow optimization failure slows progress. Respondents said lacking a real-time complete view of cash position can increase risk of fraud (52%), hinder their ability to pivot quickly to disruption (45%), and limit them in uncovering funding to support the initiatives stakeholders care most about (48%).
- Many companies still struggle with a lack of payment digitization (51%), lack of AR and/or AP automation (49%), manual payment processes (46%), and disconnected AR and AP processes (44%). These stymie cash flow processes and optimization.
People limitations lead to engaging external partners for forecasting strategy and implementation
- Businesses have unique requirements, processes, cultures, and technology challenges, but human resource gaps hinder holistic cash forecasting initiatives. The top people challenge is a lack of internal talent and/or bandwidth to understand how to do this well (54%). Almost one-third (32%) report that key stakeholders do not align on the value of this effort.
- In the next 12 months, companies’ investment in AR and AP invoice automation will grow 19 percentage points and process automation will increase 20 percentage points compared to today. To fill existing talent gaps and leverage best practices in the next year, about one-third (31%) of companies say they are engaging or plan to engage a managed service partner.
- Specifically, over half of companies (52%) will seek to engage a comprehensive solution provider providing software, implementation, and managed services. Finance leaders cite industry expertise (55%) and flexible solutions (48%) as their top needs.
“The majority of AR and AP departments tend to operate separately within finance organizations, citing a lack of resources and expertise for automating these processes,” added Clark. “Leaders can unify these functions through invoice automation systems, unlocking cash forecasting and management and capturing valuable data for analysis. The result is better risk management, improved fraud management, and more effective financial planning.”