Have you ever tried to fetch your keys, mobile, glasses, mask, and purse from five different places even as you realize that you are running late for an appointment? Do you think that is the right way to function? Of course not!The more centralized all your belongings are, the quicker and easier it is to gather them and step out. The same principle applies to your accounts receivable data but at a much higher and more critical level. Imagine taking decisions around finance while drawing accounts receivable data from various sources! Not only would it be chaotic but also result in many errors and misses.
As the Chief Financial Officer (CFO) of a mid-sized company, you wear many hats and juggle many responsibilities. Accurate and updated data that is accessible from a single source is one of the essentials that will enable you to make timely decisions in the right direction.
At HighRadius, our customers often reach out to us asking us to help with creating a single source of truth for all aspects of AR. Our advice to them is to identify and implement the right AR solution that will help them with easy access, cloud access, sync with their ERP, and provide complete support.
In this blog, we will define what a centralized data repository means, what challenges it helps you solve, and how you can optimize its usage with the right repository.
What is a Centralized Data Repository?
A central repository is a collection of stored data from existing databases merged so that your team can share, analyze or update it as required. It is usually deployed by consolidating the data from multiple sources. Once completed, you can easily organize, access, analyze, enrich, and secure the stored data.
Why do You Need a Central Data Repository for Finance?
It is easier to gather insights to make decisions when you have collated the data sources to a single location. You can get a 360-degree view of client credit trends, invoice payment history, invoice dispute figures, and business forecast from clients in an integrated dashboard.
Also merging data into a single intelligence source gives your finance team a noteworthy advantage. The finance department will be able to obtain an up-to-date depiction of the individual portfolios from a single aggregated data source.
Furthermore, the central data repository would immensely contribute towards building a risk scoring model, thus solving the riddle of a comprehensive risk assessment model especially its design and deployment.
Thanks to the centralized data repository, data, insight, and risk score predictions would be available in the form of historical as well as present data, while still enabling periodic revisions and changes.
What Challenges do Finance Departments Typically Face?
- eInvoicing challenges- The Accounts Receivable (AR) team and the customer’s finance team can find it challenging to collect e-invoices from various sources in varied formats like EDI, XML, and CSV, and upload them into their respective ERPs. You can manage format options during import and storage with a central repository.
- Invoicing data stored in multiple tools- It becomes difficult for your finance team to collect data stored in various platforms, emails, web portals, and decentralized repositories. Trying to get meaningful insights from varied datasets is not only a waste of time, but it is more likely inaccurate and unreliable as the data will be subjected to manual data crunching and haphazard integration.
- Regulation Compliance- Alternative data storage as most Invoice Registration Portals (IRPs) store invoice data for 24 hrs or less: Most IRPs store invoice data for about 24 hours or so, where certain regulations like the Sarbanes-Oxley Act require the data to be kept for not less than 5 years in public interests. So the need for a centralized repository is inevitable for keeping data safe for a significant amount of time.
- Client credit history is scattered across platforms- Imagine your AR teams wasting more than 60% of their productive time to search, collect and put together client history data which is scattered across excel sheets, ERPs, and other data sets. A CDR can provide your AR team to get the client’s credit history data under one unified platform for easy access, retrieval, enrichment, and usage. Also, client data stored in several places tend to be inaccurate, faulty, and missed out due to manual collection and placement.
- Crucial information is lost in email, notes, and calls- This is usually a common yet critical challenge for your finance team to gather all important information from emails, notes, client call recordings, and from other media. Instead, a common data platform would negate all these hurdles and enable data to provide an accurate picture.
- Unstructured credit management process- Inaccurate credit risk assessment, slow dispute resolution, ineffective client behavior or trend monitor and bad complaint management can result in an inefficient credit management system. These discrepancies could easily be dealt with by a unified data repository with requirement-based access rights.
Cash Reconciliation Challenges-
- Difficulty in data portability and database administration- Flexibility is need of the hour and AR teams need to store data so that it can be ported out to other repositories or integrated with other ERPs. Failing to add the portability aspect will result in database management challenges.
- Mismatch of bank statements with internal records- Electronic charges and deposits that appear on the bank statement but are not yet recorded in the company's records. This turns out to be a major problem when the bank statements are stored in different repositories.
No centralized insight for reporting and analytics- Imagine a scenario where your AR team has to interpret and visualize data from data silos and sources to provide insight for critical decision-making. Such insights often will only cater to an individual business aspect and not depict an overall business scenario.
- Hard to track or update client correspondence history- Your finance team would find it easier to follow up payments or monitor disputes within the centralized data repository when the correspondence data is collated in one place.
With scattered correspondence data, the finance team may have to work on data that is not updated and be unable to identify trends from the past data.
Benefits of Centralized Data Repository for Finance Teams
- Effortless and uncomplicated data retrieval- Your finance team would find it easier when crucial client data like credit history and behavior patterns are available at the click of a button instead of different data sources. The concept of real-time financial data will make more sense if it is available in a unified repository.
- Setting up an easy cash reconciliation ecosystem- In cash reconciliations, it is a good practice to reconcile in sections every month to avoid doing the work all over again in case of errors. A centralized repository will help the AR team by providing a regular and convenient reconciliation process.
- Historical data improves customer credit management- Customer credit management depends on the historical data of existing clients. Normally, credit professionals work on multiple spreadsheets with the dunning process in their ERP to manage debtors. These processes are time-consuming and ineffective. You can replace them with a centralized data repository.
- Central Data Records leads to higher ROI- Studies show that companies that deploy CDRs will boost their ROI manifold as opposed to organizations that do not. Data is the fuel that helps you run a business and you need to create effective data management to ensure success. By migrating to a unified repository, businesses will have better decision-making capability and an augmented ROI with a distinct competitive advantage.
- Improves compliance- Today, compliance laws require data to be retained for an extended period and most scattered data storage facilities may not offer that option.
- Centralization helps data integrity- A recent survey conducted by the British Royal Mail revealed that the annual revenue of around 6% of businesses makes losses due to poor data. Developing data hygiene measures and policies are critical for any business and data centralization will help establish an image of the business house as a ‘thought leader’ in your industry.
Data is a critical asset for business, and its effective management is crucial for success and survival in the global market. A central data repository is a solution for businesses to embrace, improve efficiency, and grow faster.
Data That Caters To Your Every Need with RadiusOne AR Suite
Most midsized companies (especially those on the lower part of the segment) have small teams of 5 people or less. They have common organizational challenges but have neither the manpower nor the budget to meet the above challenges.
The RadiusOne AR suite enables your finance team to process AR faster, improve productivity, and lower days sales outstanding by enabling-
- A single source of truth for everyone- Finance teams need visibility into key AR information such as credit limits, invoice details, and collaboration history before collection activities for customers. Often, this information is stored across multiple, disconnected tools such as google docs, ERP, excel sheets, personal notes, etc. This results in a time-taking process of collating all information manually before every collection activity call or email.
- Easy access to actionable details- RadiusOne AR suite helps finance teams access all AR information including credit data, invoice details, notes, and call logs, which the finance analysts need before initiating any customer correspondence.
- Real-time visibility into customer data- Having access to real-time monitoring could be the difference between huge bad debt and negligible bad debt. The real-time credit monitoring system in the AR suite helps to significantly reduce bad debt by providing real-time alerts related to bankruptcy, a downgrade of payment rating, and news.
- Proactive Credit Management- The RadiusOne AR Suite provides standardized workflows for credit management to ensure that important credit decisions are approved through the right hierarchy including approvals for new credit applications and periodic reviews and credit requests for existing customers.