CFOs Say Collections Need Balance of Automation and Personal Touch

When Bryan Hasegawa assumed the CFO role at LightRiver in August, he said he spent the first few weeks just learning the ropes of the company’s existing accounting functions to see what was in place, what worked well and what needed improvement to keep up with the company’s growth plans.

After promptly hiring a controller to help identify gaps and monitor the company’s accounting functions, Hasegawa told PYMNTS it wasn’t long before his action plan started to fall into place.

“Manpower alone isn’t really going to be able to allow us to get to that next step,” Hasegawa said, noting the need for improved and simpler accounting and invoicing functions that scale alongside the business as it accrues more customers in more locations.

At the same time, Hasegawa also followed the expanded CFO role trend and took time to evaluate the efficiency of the operations team, from order intake to invoice generation, much of which he said involved some degree of manual processing — if even as simple as setting a reminder to email an invoice. While these areas might transcend the traditional scope of a CFO’s job description, Hasegawa believes that operations have “tie-ins with the financial system.”

Manual vs. Automated

Like most in his role, Hasegawa wants to use automation to avoid “throwing more bodies to do manual entries or utilizing band-aids” to patch up a flawed system.

To that point, he says some manual processes need to stay in place. For example, reaching out to a delinquent customer to remind them to make a payment.

“It would be nice to be able to track all the communications, like where we are, where people’s collections are, what the discussions are,” he said. “Right now all that’s being tracked in just some random Excel document,” he added, noting that tying records of the manual task of reaching out to customers to AR records would make the processes more efficient and productive.

Managing a Distributed Team

The goal to automate some accounting functions is made all the more relevant with LightRiver’s distributed team. Hasegawa said that in-office work makes it more difficult for things to slip through the cracks. “People just walk by your desk and be like, hey, I have this question, or I have this vendor, or I have this thing,” he said.

The fact that employees are in different places and sometimes even disparate time zones, necessitates a lot more structured communication among the people that manage AP and AR functions.

The remote work setup hasn’t made it easier to deal with people moving around. Hasegawa recalled a few instances when employees forgot to notify the accounting team that they had moved. The company wasn’t able to withhold the appropriate taxes and had to fix the issue after the fact.

“When you’re not actually actively seeing how people are moving or the communication flow isn’t there, you get surprises on the back end.”

Things get exponentially more complicated when you start to operate internationally. “You’re dealing with potential like labor unions, you’re dealing with international tax filing​​,” Hasegawa said. He believes that with a distributed workforce, the accounting team needs to “know what people are doing when they’re doing it, and how they’re operating in all territories.”

Macroeconomic Anxiety

Having international supply chains means worrying about geopolitical events. Hasegawa says he is kept up at night by things happening around the globe.

“We constantly worried about national tensions, like if there are any impacts in Taiwan that [would effect if] the chip manufacturers can operate,” he reflected. Hasegawa knows very well that disruption can have a “cascading impact on revenue streams” and LightRiver’s “ability to operate as a business.”

He believed that the effect of disruptions can be minimized with systems that rely on a diverse set of vendors and building out accounting systems that allow finance professionals to be nimble in their response to challenges.

With a looming recession, Hasegawa anticipates that there will be much more lag in accounts receivable, as companies divert resources away from vendor payments. And he is preparing for that contingency by evaluating the potential of automation to make billing and AR more efficient.