Accounts receivable (AR) is a major pain point in many organizations, and we were happy to come across an excellent AR white paper titled “Receivables Document Management: Maintaining Tight Control Over the Entire Order-to-Cash Process” from our friends at PayStream Advisors that was quite insightful. The report does a nice job of discussing various components of a well-constructed quote to cash process, and it identified four key drivers of receivables automation:

1. The growing demand for electronic settlement

2. The need for invoice accuracy

3. The pain of dispute resolution

4. Increased attention to compliance issues

We agree that all of these drivers are essential parts of an effective quote to cash process, but we want to focus specifically on “dispute resolution” and “compliance.”

We find in working with many of our quote to cash clients that disputes often revolve around the issues of goods receipt, returned goods, and rebates. Many times this information needs to be captured from third-party vendors. For example, when it comes to proof of deliveries, to validate delivery and who received it within a customer’s organization, you need access to information housed in third-party systems, primarily the major parcel carriers (FedEx, UPS, DHL, etc.). This information demonstrates and proves that the goods that were billed for were actually received by the customer.

Imagine being on the phone with a disgruntled customer and having the ability to instantly access all of the information and paperwork related to their account. That’s what an automated Software as a Service (SaaS) AR solution can do—it gives you the ability to resolve a dispute at the first point of contact. SaaS brings together a unique collection of capabilities—it provides all associated documents and data (regardless of vendor or system) that impact the resolution of a dispute to be housed in a central location and contributes greatly to the collector’s resolution efforts, eliminating the frustration and hassle frequently associated with these kinds of customer calls. To be able to share these documents with anyone represents a significant improvement in your collection process – as it defuses confrontation and stress that is associated with past due accounts. In addition, it makes a collector’s job that much easier and it improves their quality of life, reduces turnover, and enhances efficiency. Getting these issues resolved as early in the process flow as possible leads to improved AR efficiency.

A topic that we believe requires additional discussion concerns compliance. The Sarbanes-Oxley Act of 2002 requires publicly traded companies to demonstrate and attest to a strong internal control environment over financial reporting (ICOFR). Therefore, the need to have a well-documented and adequately controlled order to cash process with the ability to monitor the transactions is critical to demonstrating controls are in place and operating effectively. This process typically receives more attention from auditors because of their role in revenue recognition and cash application. 

Brandon Loeschner, Partner at RubinBrown LLP, a firm specializing in internal audit, advises that steps should be taken by management to truly understand the quote to cash process and the related controls. Doing so will allow management to design an integrated control environment that works for them. 

For Sarbanes Oxley, evidence of the ICOFR for the quote to cash process can be obtained through a Service Organization Control Report 1 (SOC 1). External auditors often rely on these reports. Depending on the process flow, a SOC 1 may be needed for the SaaS vendor as well as the data center hosting/managed service provider.

For independent testing over security, availability, processing integrity, confidentiality or privacy, a SOC 2 report would be necessary. Management will often rely on these reports.

Read more about the Service Organization Reports here.

Nearly all organizations have to meet compliance requirements by their own auditors, and AR automation can ensure that there are clear audit trails in your quote to cash process. In addition, as the report mentions, automated processing can provide clear evidence of control within your system, which is critical to auditors and regulators, and it also comes with superior security measures as compared to a paper-based environment, which we outlined in our recent Internet data security blog.

Our own experience with Sony Pictures Entertainment (SPE), a DataServ client, supports many of the findings that are included in this report. SPE’s Vice President of Customer Finance, Michael Schillo, will discuss the benefits of DataServ’s quote to cash solution in an educational breakout session at the annual Fusion conference put on by The Institute of Financial Operations. This year’s event takes place in Dallas, Texas from May 5-8, and on May 7 at 3:15 pm Michael will elaborate on the biggest benefits Sony has seen from DataServ’s automated quote to cash process, which include having all sales cycle documentation instantly available and exportable to clients. This has helped SPE reduce their outstanding AR deductions balance from $250 million to $25 million.

We would love to hear your comments or questions on AR automation, so please email us at

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