Introduction
As global business transactions continue to grow, the Accounts Receivables department faces the challenge of managing and achieving smooth cash flow processes within the department. According to PYMNTS.COM – “Only 17% of Small Firms Are Reaping Benefits of Automating Accounts Receivables the latest study identifies a compelling link between Accounts Receivable automation and significantly reduced days sales outstanding (DSO), particularly for larger firms generating more than $1.5 billion in revenue. AR automation can reduce DSOs by as much as 32%, according to their latest study of 100 U.S.-based CFOs.” By leveraging AI, companies can predict payment behaviors, automate reconciliation processes, and enhance credit risk management, ultimately improving collection efficiency and reducing the risk of bad debt. The following use cases highlight how AI is revolutionizing the Accounts Receivables department.
Use Cases
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1. Predicting Late or Non-Payment
Identify clients with a higher risk of late or non-payment by analyzing their demographic and behavioral patterns. This helps in proactive risk management and better cash flow planning.
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2. Identifying Trends and Drivers of Unpaid Provisions
Analyze trends and factors leading to unpaid estimates to understand and address the root causes of payment discrepancies. Continuous monitoring helps in maintaining financial accuracy and improving payment processes.
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3. Supporting Credit Approval Workflows
Streamline the credit approval process by collecting and analyzing client solvency data from both internal databases and online sources. This ensures informed decision-making and reduces credit risk.
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4. Managing Accounting Journal Entries
Oversee the creation and management of accounting journal entries. Facilitate the approval process and information requests through files and emails. Automate the posting of journals to appropriate subsystems and general ledgers based on specific criteria such as category, timing, or amounts, enhancing efficiency and accuracy.
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5. Creating Pre-Populated Journal Entry Templates
Develop pre-populated templates for business use and standardized templates for users to facilitate the monthly creation of journal entries. This standardization ensures consistency and accuracy in financial reporting.
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6. Automating Accounting Validation and Reconciliation
Implement AI-driven processes to validate and reconcile accounting entries automatically within ERP systems or other platforms. These validations can occur at predetermined times, such as monthly, or upon completion of all accounting activities, ensuring timely and accurate financial records.
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7. Auditing and Rationalizing Manual Journal Entries
Review and optimize the number of manual journal entries by examining their volume and nature. Ensure accurate reconciliation of accounts and intercompany transactions to maintain financial integrity and reduce errors.
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8. Performing Reconciliations of General Ledger with Sub-Ledgers
Retrieve, execute, and document the reconciliation of general ledgers with sub-ledgers according to organizational standards. Conduct intercompany reconciliations within the ERP system to ensure consistent and accurate financial reporting across the organization.
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9. Smooth Investigation Processes
Create detailed reports that categorize and summarize financial discrepancies, then distribute these reports to the appropriate controllers for thorough investigation. This process aids in identifying and resolving financial issues promptly.
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10. Identifying and Resolving Account Discrepancies
Detect and address the underlying causes of account discrepancies. Communicate via email to initiate investigations and resolve these discrepancies, ensuring accurate financial records and reducing future occurrences.
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11. Managing Gaps with Other Finance Teams
Coordinate with other finance teams or departments to address and close gaps in financial processes. This may involve back-and-forth communication and specific actions like posting balancing journal entries to ensure financial accuracy and consistency.
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12. Setting Up and Maintaining Account Master Data
Establish and manage account master data by overseeing approval workflows for creating, modifying, or deleting accounts. Ensure these changes are automatically executed within the systems to maintain up-to-date and accurate financial records.
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13. Reconciling Bank Transactions and Accounts
Perform bank transaction and account reconciliations by downloading statements from each bank account. Extract relevant Accounts Receivable and Accounts Payable ledgers from the accounting system and match them with bank statements to ensure accurate financial records.
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14. Generating and Categorizing Discrepancy Reports
Create detailed reports that categorize and summarize financial discrepancies. Send these reports to the appropriate controllers for investigation. Additionally, identify and address the root causes of account discrepancies to maintain accurate and reliable financial records.
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15. Supporting Reporting Entities
Assist reporting entities by providing answers to frequently asked questions about accounting principles. Additionally, extract monthly sales data to calculate and process rebates and commissions, ensuring accurate and timely financial reporting and compliance with accounting standards.