Automation capabilities allow finance teams to better stabilize receivables and reduce operating costs across the organization, according to a recent study. “Teams recoup an average of 227 hours per month along with better employee retention rates,” said Yan Lazarev, Co-Founder & CEO of Gaviti.
Tel Aviv, Israel, June 14, 2023 — The latest research conducted by Gaviti, a leading accounts receivable collections platform, revealed B2B companies who collect payments using online payment gateways reduce late payments by an additional 33% compared with companies that use A/R automation alone for their dunning process. Researchers reviewed over 14 million invoices sent through automation or preset workflows between 2019 and 2023, highlighting the contrast between those who used a gateway and their peers who saw an increase in delinquent payments.
While there has been a rise in the adoption of accounting and receivables automation over the last number of years, the majority of companies still rely on traditional manual practices. Gaviti’s research showed that by adopting A/R collections automation, companies see DSO improvement of up to 34% in the first six months alone. What’s more, the study shows that companies who go one step further to implement payment gateways into their collections strategy, experienced an additional cash flow improvement of 35% for a total of over 50% improvement.
“The 33% faster time to receivables is only the upfront benefit,” said Yan Lazarev, Co-Founder & CEO of Gaviti. “Teams who utilize multiple tools across our platform are seeing collections teams recoup an average of 227 hours per month along with better employee retention rates.” The study focuses solely on the benefits of payment gateways, not taking into account the boost in cash flow teams experienced when moving from manual processes to full automation.
“In addition to a more reliable cash flow, the study showed a drop of late payments by 9% year over year and average days late (ADD) decrease by 34%,” said Michelle Cohen, Lead Data Analyst at Gaviti. “In addition, we were pleasantly surprised to find a 3% increase in early payments YoY.” With near-quarterly interest rate hikes, companies are putting more effort into avoiding financing ventures and keeping cash on hand. The ability to reduce both resources necessary to process invoices and the ability to collect on them in a third of the time can give companies the boost they need to move faster towards new initiatives at a lower cost.
Bringing dedicated automation technology for the A/R collections teams will empower the teams beyond collecting receivables faster. For the first time ever, finance teams have data at their fingertips to manage credit in a smart way using customers’ payment histories. In addition, managers can gain an overview of department and employee processes, identifying opportunities for further optimization.