Benefits of an integrated approach to payables and receivables

Companies are increasingly looking for solutions to alleviate the pains associated with the manual work required to process payments, reconciliation, and reporting. They seek to automate both payables and receivables, turning to software providers to solve inefficiencies, errors, and give them the time back for more strategic activities.

Automating payables and receivables independently brings significant improvements to a company's financial operations. However, an often overlooked step, especially for companies aspiring for growth, is integrating both payables and receivables under the same system for even better efficiency, time savings, and cost reductions. Disjointed payables and receivables systems can, over time, cause issues related to reporting, obtaining accurate insights into cash flow, and generating solid forecasts for future planning.

In this article, we discuss the benefits of taking an integrated approach to accounts payable and receivable, and how using one software to manage both processes can be advantageous.

Enhanced Cash Flow Management

By managing payables and receivables from the same place, you can gain better insight into inflows and outflows without needing to aggregate information from two disjointed systems. This approach allows you to monitor metrics like Days Payable Outstanding (DPO) and Days Sales Outstanding (DSO) to ensure a steady flow of cash, optimize access to working capital, and meet all business needs, including ambitious growth goals. With all data on incoming and outgoing payments in one place, you can generate detailed reports faster. Aggregating data from two different systems can result in outdated information by the time it's combined and analysed, making forecasting and responding to market trends or pressing issues extremely difficult. Integrated accounts payable (AP) and accounts receivable (AR) allow you to plan proactively rather than reactively.

Increased Efficiency and Productivity

In growing finance teams, it’s unlikely to have dedicated teams for AP and AR; one team usually handles both processes. Using the same tool for both keeps the process unified and streamlined, improving the team's efficiency and speed as they can process payments, reconcile, and send payment requests from the same place without switching systems. This not only saves time but also reduces the risk of errors and the time wasted correcting them. With less administrative burden, finance teams can focus on more strategic tasks like forecasting and planning to ensure the continued growth of the business.

Additionally, since both payables and receivables are handled with the same process and system, data integrity across payments and invoices is maintained, ensuring compliance with regulations and keeping a clear audit trail.

Improved Vendor and Customer Relationships

Managing supplier payments and collections from clients from one place can greatly reduce the time spent on these processes, improving both vendor and customer satisfaction. Suppliers can expect timely payments, client invoices are sent out quickly, as the administrative burden is minimised. With less time spent switching systems, you can manage client and supplier relationships better, which will inevitably translate to a better reputation for your brand and your standing as a business partner.

Cost Savings

Automation clearly benefits business efficiency, saving the need to hire additional finance department staff (which can cost up to 40,000 EUR a year). The benefit of having AP and AR in one place is even greater, as it reduces the subscription, maintenance, and training costs associated with having two systems. Additionally, good software can scale with your business and adjust to larger transaction volumes without necessarily incurring the extra cost of an additional tool or new finance team members.

While ideal given the listed benefits, achieving an integrated approach for both receivables and payables is still out of reach for many companies. They still operate on either manual systems, a combination of one automated and one manual system, or two completely disjointed automated systems.

The reason for this is that only a few vendors currently offer both AP and AR in the same platform, together with integrations to accounting tools. Additionally, when a new vendor with a full offering appears on the market, companies are reluctant to switch because of the costs and labour associated with implementation and training of the staff. However, in the long run, investing extra time to train the finance team on a new, more efficient, and fully automated system can greatly benefit the company and support its future growth, compared to adhering to outdated methods.

Fyorin is one of the financial operations platforms that offer both automated receivables and payables solutions while integrating with major accounting platforms like Xero, QuickBooks, NetSuite, and Zoho Books. With one onboarding and setup, you gain access to both products to streamline your financial operations in multiple currencies and save up to 120 hours per year.

Interested in trying it out? Book a free demo or contact us by sending an email to [email protected].