The Hidden Cost of Manual AR Processes

It’s almost 2025, but many enterprise firms are still chasing paper when it comes to their accounts receivable (AR).

When faced with the choice between being buried in mounting piles of invoices or embracing the streamlined benefits of paperless processes, many organizations frequently choose to do nothing — preferring instead to struggle with outdated, manual AR processes that not only hinder cash flow but also stifle growth and innovation.

“If I had to boil it down to two words, it’s ‘competitive advantage,’” Aaron LeHew, director of invoice-to-cash at Esker, told PYMNTS about embracing AR digitization and automation.

“Organizations with well-oiled AR processes can rely on their own liquidity, reducing the need to tap into external financing,” he added. “This allows them to invest in growth initiatives and other strategic priorities.”

In today’s dynamic macro backdrop, cash flow is the lifeblood of any business, and the efficiency of an AR process is directly tied to a company’s financial health and growth potential.

At the same time, beyond financial benefits, a streamlined AR process can enhance customer and employee satisfaction.

LeHew noted that 21st century business customers increasingly demand transparency, flexibility and ease of doing business. Simultaneously, their employees seek meaningful work and opportunities for growth — not just manual and repetitive tasks that sink them in drudgery.

Automation in AR processes can address both needs, helping contribute to long-term business success.

Read also: The High Cost of Manual AR Processes and What to Do About It

The Impact of Outdated AR Processes Shouldn’t Be Overlooked

When examining the current state of AR programs, particularly within larger enterprises, LeHew said he has observed an ongoing shift toward more strategic roles and responsibilities.

“There’s a greater emphasis on continuous improvement and tracking the customer’s journey,” he explained. “Organizations are identifying gaps and addressing them to remain competitive.”

However, despite these advancements, many AR programs still rely on manual processes, which can lead to inefficiencies and bottlenecks.

“As workloads increase, the issues with manual processes are exacerbated,” LeHew said. “Without the ability to add headcount at the pace of growth, companies risk falling behind.”

Outdated AR processes can have far-reaching negative impacts on a business.

“When AR processes are outdated, organizations may struggle with delayed payments, cash flow issues and an inability to meet working capital needs,” LeHew explained. “This can force companies to rely on external financing, which is not always ideal.”

Moreover, manual AR processes often involve repetitive, mundane tasks that can sap employee morale and productivity.

“Employees may spend a significant portion of their day trying to determine what tasks to prioritize, rather than focusing on higher-value activities,” LeHew said. “This can lead to a black hole of activities that aren’t being tracked or managed effectively.”

See also: Payments Speed and Security Acceleration Driven by Behavioral Expectations

The Strategic Importance of Efficient AR Processes

Automation offers a solution to the challenges posed by manual AR processes. By using digital tools and technologies, organizations can streamline AR operations, improve cash flow visibility, and enhance both customer and employee experiences.

“Automation can help organizations stay in front of customers, ensuring timely payments and addressing any issues that arise,” LeHew said. “It also provides employees with clear priorities, allowing them to focus on high-priority tasks rather than mundane, repetitive work.”

Despite the clear benefits of automation, however, many organizations are hesitant to embrace it. LeHew pointed out that this hesitation often stems from a resistance to change, particularly among employees who may fear the disruption that automation could bring.

“Change is hard, and some people resist it because it impacts their world,” LeHew said. “It’s important to openly discuss where changes can make a positive impact and involve users early in the process. When users are part of the process of change, they are more likely to embrace it.”

For organizations looking to modernize their AR processes, finding the right partner is crucial. LeHew emphasized the importance of working with providers who offer strong change management support, including use-case scenarios, training and ongoing support during implementation.

“Look for a partner that can drive speed to value and provide the face time needed to ensure successful adoption,” he said. “Change management is key to realizing the full benefits of automation.”

As businesses continue to navigate an increasingly complex and competitive landscape, the need for efficient, automated AR processes is clear. By embracing automation, organizations can unlock competitive advantages, improve cash flow, and improve both customer and employee satisfaction.

“Automation is not just about efficiency; it’s about driving growth and ensuring that your business remains competitive in the long term,” LeHew said.

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