As businesses expand into international markets, A/R teams face new challenges
As businesses expand globally, Accounts Receivable (A/R) teams play an increasingly important, but often overlooked and underestimated, role. To better understand the perspectives, challenges and opportunities companies face as they grow to manage international accounts receivable, Flywire commissioned an independent survey with Ernie Humphrey, CEO at 360 Thought Leadership. We surveyed 263 A/R and finance professionals at U.S.- based businesses with accounts receivable across at least two different international borders.
Some clear messages come through in the survey:
A/R teams are playing a more strategic role amid ongoing supply chain dynamics, an inflationary environment and geopolitical uncertainty.
- 84% of A/R teams at the companies surveyed have the attention of the CFO and are influencing strategic matters.
- With the right people and technology, A/R professionals can offer and communicate more value to play a bigger role as their companies expand internationally.
Identifying, measuring, and managing the right success metrics is critical to optimize the value delivered from AR.
- Days Sales Outstanding (DSO), cited by 30% of the respondents as a key metric, and past due A/R (25%), can be especially challenging with international business due to unique invoicing requirements, FX considerations, and slower international payment flows.
- Similarly, the cost of A/R operations (30%), is also important as businesses look to maximize the profitability of their new revenue streams.
- Cash projection accuracy (26%) was also cited as a key metric — highlighting the importance of A/R collaborating with Treasury to deliver predictability of cash inflows to manage working capital.
A/R teams must overcome some fundamental obstacles to ensure success.
- At least 30% of the companies surveyed indicated that a lack of visibility into customer interactions (34%) or a lack of strategic alignment between A/R and Sales (30%) significantly impact their ability to deliver on their success metrics.
- 20% cited a lack of visibility into their own A/R processes.
- Many don’t believe they have the systems, data or reporting they need to manage to the metrics they use to define A/R success.
Different countries present unique challenges for businesses and their A/R teams.
- Countries that are typically high on businesses’ expansion targets because of proximity and language can also present some of the biggest challenges when it comes to A/R.
- Mexico (24%), the United Kingdom (12%) and Canada (11%) were cited as the countries that presented the highest challenge when it comes to managing AR. The specific challenges presented by each vary widely, reinforcing how hard managing international A/R is.
Sign up here to receive a sneak peek of the report, International A/R Management: Benchmarks, Challenges, Technology, Opportunity. The results will be debuted at NY Cash Exchange on Sept. 13, and include:
- The evolving role of A/R teams in international expansion
- Specific international A/R challenges by company size and country/region
- A/R data requirements and systems by company size
- Recommendations for businesses and their A/R teams to overcome these challenges
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