The Criticality of AR Efficiency in Times of Economic Volatility

The effects of today’s economic climate are starting to show: 82% of financial decision-makers see a recession as likely or possible within the next 6-12 months, and 60% of them are reducing discretionary spending and capital investments in response. But accounts receivable (AR) is one area where financial leaders should think twice about making cuts. If anything, they should be making investments in AR efficiency to better mitigate risk. Here are four reasons why:  

• Proactive AR Approaches Deflect Negative Impacts: Recent recessions have lasted about 18 months with impacts on the financial markets lingering much longer. Potentially 6 consecutive quarters of rough terrain could create a compounding effect for the unprepared. Research from Q1 2025 shows companies better suited to face economic headwinds take preventative measures to protect their financial health. In fact, 97% have specific preparations at-the-ready when a downturn strikes. These include building cash reserves (59%) – the primary goal of AR departments – as well as offensive and defensive moves. 
• Offensive AR Moves Counteract Financial Hits: Financial liquidity – cash availability – is the gold-standard strategy for remaining financially resilient in the face of volatility, particularly as it relates to market demand or unexpected expenses. The AR team is the operational arm that actively influences a company’s cash flow. 
• Defensive AR Moves Protect Your Financial Position: Credit and collections losses rose 250% during the 2008 recession. Bad debt, delinquent payers, and more defaults are impending threats during any downturn. Those who manage credit and collections activities serve as frontline defenders.  
• Rising Demands on AR: With trends in inflation and tariff policies, many buyers are purchasing more goods and services to hedge against price hikes. This means higher volumes of invoices and payments for AR teams to track and process.  

Heading off macro-level trends requires a sharp focus not just on tackling challenges but getting ahead of them. In taking a proactive stance, AR departments need the ability to assess more areas of risk more frequently, leveraging visibility into credit scores, buyer behaviors, and cash flow forecasts to predict and prevent risk. 

But here’s the common roadblock. . . 

Inefficient AR Operations Can’t Level Turbulence 

The root problem arises at execution. How many AR leaders can tell you that they have room in their operation to do more? Moreover, how many can say they have the AI tools to generate financial health insights with the click of a button? Most are so buried under mismatched data and manual workloads that shifting into strategic mode is not an option. This is the crux of the issue. It’s why a company’s AR operational excellence can mean the difference between surviving a recession or becoming the next casualty of an economic crisis. 

AR efficiency can mean surviving a recession or becoming the next casualty of an economic crisis.  

Showcase Your Strengths 

As a financial leader myself, I can tell you it’s all too easy for us to bury our heads in the data, analyzing risks from 10 different directions only to be blindsided by the bigger problem -- our operational ability to handle volatility in the first place. As “numbers people” it’s human nature to delay work that may not come naturally to us, like fixing technical problems and finding ways to enhance operational efficiency. 

Now is the time to showcase our broader talents. 

As financial leaders we’re responsible for being prepared for downturns in every way -- not just with data-driven forecasts addressing the tariff scenarios of the week but with getting our team and technologies ready to fight for corporate financial health. It’s our jobs to:  

• Foresee financial risk and be prepared for it 
• Counteract risk by proactively protecting and strengthening financial resilience 
• Ensure your team and technologies are prepared to support and amplify this effort 

Now is the time to showcase broader talents, addressing tariff scenarios as well as getting our teams and technologies ready to fight for financial health. 

Overcoming Roadblocks: Automating AR Work to Offset Volatility 

The good news is, AI is proving to be a valuable aid, generating quick wins in the areas of cash flow protection and financial insights. A new study from Vanson Bourne shows 92% of finance teams say AR automation software has helped them effectively mitigate financial and compliance risks. This helps explain why research shows CFOs are prioritizing AI investments despite today’s budget cuts and market volatility. 

Billtrust’s AI-powered AR automation platform, for instance, offers a variety of advanced capabilities driving success for CFOs. Let’s take a look.  

A Stronger Financial Position: Making Cash Flow More Predictable  

Cash flow predictions leverage buyer behavior data to estimate future inflows and outflows of cash, anticipate liquidity needs, and forecast financial stability. These capabilities are powered by advanced AI analytics and when combined with your buyer behavior data they deliver predictive intelligence.  

Moreover, the Billtrust Payments solution helps customers get paid faster and more efficiently by automating the entire payments lifecycle and allowing suppliers to set granular payment acceptance policies customized to each buyer segment. Companies across every industry report that AR automation accelerates payments by +40%, according to Vanson Bourne research. 

AR automation accelerates payments by +40%. Get the research. 

Less Default Risk: Driving the Effectiveness of Collections Operations 

Collections effectiveness index (CEI) measurements deliver much needed visibility into the efficiency of the AR team’s ability to collect on their outstanding invoices. CEI is considered a superior measurement when compared to Days Sales Outstanding because CEI indicates performance, whereas DSO focuses on timing. Last year, bad debt write-offs doubled, totaling $20.00 per $100,000 of sales. We could easily see that figure rise due to a more difficult economic environment. This potential makes CEI strategies all the more urgent.  

CEI metrics and collections dashboards help by prioritizing actions and automating routine tasks with workflows backed by Agentic AI virtual assistants. I invite you to reach out and see how Billtrust is driving innovation for collectors specifically, pushing new boundaries with autonomous capabilities.  

A good CEI is typically above 70 or 80 with the median CEI for 2024 hitting 85. How does your company compare?  

A Partner Helping You Optimize Financial Health 

A major reason I am so passionate about Billtrust is that we're more than a software solution. We’re a consultative partner helping financial leaders and teams drive their financial stability forward. For instance, our account teams work continually to leverage our client’s financial data to optimize their B2B payment policies and terms with the aim of incentivizing the right buyers to pay early and think twice before paying late. In 2024, Billtrust identified over $100M in savings for our clients, giving them concrete ways to preserve their cash flow. 

In 2024, Billtrust identified over $100M in savings for our clients, giving them concrete ways to preserve their cash flow. 

Act Now – the Window is Quickly Closing for a Proactive Approach 

While digital innovation in AR can smooth the choppy waters of 2025 and build financial stability, timing is a key factor for success. Data shows a proactive approach works best, and it takes time to digitally transform financial operations with AI. Much like steering a large ship, leveraging AI automation to drive financial resilience is a process. As the months pass, addressing risk effectively – without overburdening AR teams – will only become more difficult for CFOs. With AR departments and their tools becoming the vital levers for navigating today’s headwinds, everything is at stake.  

Start your AR transformation today with Billtrust.