Once upon a time, CFOs viewed accounts receivable as an inefficient operational issue that had little relevance in their daily roles. But amid challenging economic conditions and fast-evolving marketplaces, modern CFOs are now embracing it as a key strategic asset to increase the competitive advantage of their companies – and, consequently, becoming the key architects of business transformation.
When it comes to achieving business and financial transformation, accounts receivable isn’t at the top of most chief financial officers’ priorities. In fact, it’s probably an area they haven’t dealt with since the beginning of their financial careers. To them, it’s a necessary but transactional back-office function with no purpose on their immediate agenda.
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However, in today’s panorama – where liquidity, automation and financial intelligence underpin business success – this way of thinking is outdated and represents an existential threat to businesses. Neglecting or mismanaging AR can have huge consequences: lawsuits, supplier relationship breakdowns and missed opportunities that cripple growth.
Implementing a robust AR strategy will lead to superior financial planning, risk management and strategic decision-making. Moreover, the rich financial intelligence of a real-time AR system is a powerful competitive weapon that can fuel unprecedented growth for organisations. CFOs who treat it as such are true visionaries, unlocking huge strategic advantages to build more resilient, sustainable and successful businesses.
But mastering AR and turning it into a competitive advantage isn’t simply a case of chucking money at the latest technologies or implementing a specific set of processes. It requires a fundamental cultural and mindset shift within finance teams that only the CFO can achieve by playing an active role in masterminding and championing AR strategies.
The CFO’s role: Why AR is no longer a back-office concern
It’s understandable why AR has become a back-office concern in recent years. The CFO function has changed considerably. A position once responsible for accountancy-related matters is now a strategic partner in business growth and decision-making. Working closely with the CEO and other C-suite executives, CFOs are playing a greater role in how businesses spend their money – and aren’t just responsible for managing it.
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By GlobalDataJuggling so many different hats means it’s easy to lose sight of financial functions like accounts receivable. Preoccupied with board meetings, investor relations, and regular sales updates, many CFOs may simply view AR as an operational problem that can be delegated to junior team members.
But in doing so, they risk short-changing themselves – and their entire organisations – on major strategic opportunities. As customer payment habits change rapidly, new business trends driven by technological advancements emerge, and economic conditions become more challenging, AR has never been more important for CFOs.
There’s a unique opportunity for CFOs to step up and cement their status as key innovators within the business. The key is using AR and cash as critical financial levers for financial forecasting and planning, managing risk, improving liquidity, optimising working capital, and so much more. Doing so won’t add to the CFO’s newfound strategic obligations but make it easier to perform them.
The real cost of legacy thinking in AR
When it comes to AR, it’s easy to think of issues like working capital constraints, missed forecasting opportunities and revenue leakage as inefficiencies that can be brushed under the carpet or solved at a later date. However, in reality, each of these problems can threaten the very existence of businesses when left ignored.
Working capital constraints – such as high levels of unpaid customer invoices, surplus stock, and economic downturns – can leave businesses without enough cash to pay staff and suppliers. These different stakeholders may then be forced to cut ties with the business, putting a spanner in day-to-day operations.
Not to mention, they may sue the business in question for late payment, causing reputational damage and potential monetary loss by way of fines. At the same time, limited cash flow prevents businesses from investing in growth opportunities and leaves their future in peril.
Many of these issues come down to incomplete or fragmented AR data that creates financial blind spots for CFOs and the wider finance department. For example, inaccurate market forecast data might result in businesses ordering more stock than needed – a costly mistake if they’re struggling to make ends meet during tough economic times – or too little stock, hindering their ability to cater to growing customer demand.
Meanwhile, a lack of oversight over incoming invoice payments makes it difficult for accounting teams to monitor and chase unpaid invoices. This leads to revenue leakage that, when accumulated, can detrimentally affect the business’s bottom line.
Clearly, businesses can’t afford to ignore these issues – AR holds the key to preventing existential crises within businesses. By investing in robust AR systems and processes, finance departments will have a 360, real-time overview of incoming payments. Leveraging this data, CFOs can ensure their business always has the cash reserves needed to sustain existing operations and expand the business. So, CFOs aren’t just protecting the business but setting it up for future success.
Of course, legacy ways of thinking around AR can mean that senior business leaders don’t see the necessity to invest in the latest technologies in these areas. But CFOs have the power to make profound and lasting change in the business by stressing the importance of AR to the wider C-suite. That way, working capital constraints become a thing of the past, and the business can succeed at all odds.
The CFO’s next move: Why leadership in AR matters now more than ever
What’s clear is that AR is a central pillar of financial and business transformation. As we have explored, it offers businesses of all industries a unique financial and strategic edge when taken seriously.
The challenge is that many business leaders aren’t convinced by, or simply don’t understand, the importance and benefits of a proactive and refined AR strategy. But CFOs will have lived and breathed AR at some point in their career. And it’s up to CFOs to take the lead and educate the rest of the C-suite on the strategic value of AR. That could be as simple as mentioning the topic in a board meeting or demonstrating the power of AR through real-life data and case studies.
As well as getting the C-suite to support AR initiatives, CFOs must also demand more from their finance teams and technology stacks. Due to the outdated notion of AR being a necessary but transactional part of the corporate finance function, finance teams may only dedicate a small part of their working week to it. In the process, they’ll be missing out on the financial intelligence of a proactive AR system, which can set back businesses enormously.
To change this, CFOs must make it clear to the wider finance department that AR strategies are proactive drivers of financial agility that can’t be ignored. And if they lead by example, leveraging this financial intelligence in their day-to-day function, other team members will follow suit.
Along with adopting a new mindset towards AR, finance departments also need the right technology stack. This should be a combination of powerful automation tools that streamline AR processes and data-rich, customer-facing dashboards that allow CFOs and financial specialists to visualise transactions in real-time.
Artificial intelligence, in particular, is transforming accounts receivable and the wider financial services industry at unprecedented speed. AI systems can put an end to the very inefficiencies that have given AR a bad rep, automating everything from invoice processing to payment tracking.
AI technologies can also ensure regulatory compliance by automatically flagging payment discrepancies and fraudulent transactions, streamline cash application thanks to advanced customer monitoring, improve cash flow forecasting by analysing internal and external financial data, and so much more. And the rise of agentic AI, which can independently perform complex tasks in line with users’ objectives and adapt to their changing needs, will revolutionise the financial world even further.
But such technologies require substantial investment, and to secure that, the board needs to get behind and approve this. CFOs are in a unique position to use their board seat to stress the vital role of AR in a truly agile, high-growth enterprise. This will not only set up their organisations for greater success in an uncertain world but highlight the CFO as the architect of business transformation.
Beyond automation: The competitive advantage of financial intelligence
Many experts tout automation as the key to improving operational efficiency in the finance department. But the truth is that while automation is an important part of forward-thinking finance departments, it alone won’t lead to financial transformation.
The secret sauce is the vast financial intelligence unlocked through an effective AR strategy. By leveraging this data, CFOs will increase their businesses’ competitive advantage through redefined liquidity planning and greater financial resilience. It will give CFOs an accurate prediction of client funds, allowing them to spot and prepare the business for looming cash shortfalls.
CFOs can also use the data provided by these tools to anticipate higher periods of cash injection, which can be invested directly into business growth and revenue generation activities. They can also ensure regulatory compliance by detecting fraudulent payments and improve customer satisfaction by ensuring their payments are received quickly and correctly.
As customer expectations change rapidly, global financial structures become more complex, and economic conditions worsen, real-time payment visibility achieved through comprehensive financial data is now a competitive necessity for businesses. It bolsters liquidity and financial resilience, making businesses stronger and more successful. And CFOs have an immense role to play in igniting this paradigm shift.
Rami Chahine is Chief Product and Technology Officer at Serrala
