Outsource accounts receivable services for manufacturing: Automation vs Outsourcing

As manufacturing companies look to modernize their accounts receivable (AR) processes, they must evaluate whether outsourcing or technology automation better serves their goals. While outsourcing may seem like an obvious solution to handle growing transaction volumes and complex customer requirements, modern technology platforms are compelling alternatives that can transform AR processes while maintaining internal control.

Just as days in AR vary by industry, from healthcare and life sciences to transportation, each sector has distinct requirements. For manufacturing companies, improving cash flow has become increasingly important in today's market. This guide explores how manufacturers can evaluate their options and choose the AR approach that best serves their business needs.

Understanding the manufacturing AR landscape

Manufacturing AR teams manage unique challenges that traditional manual processes or basic outsourcing can't easily address. These include:

• Complex pricing structures and contract terms.
• High invoice volumes across multiple locations.
• Diverse customer-specific requirements.
• Multiple payment methods and channels.
• International compliance requirements.
• Integration needs with existing systems.

These challenges have led many manufacturers to reevaluate their AR approach, considering either outsourcing to third-party providers or implementing modern automation technology.

Read the blog → Accounting outsourcing: The new key to accounting success

Understanding your AR modernization options

When evaluating how to modernize manufacturing AR operations, finance leaders typically consider two main approaches: outsourcing to third-party service providers or implementing modern automation technology platforms.

Traditional outsourcing approach

Outsourcing AR services involves transferring responsibility to external providers who manage:

• Basic invoice processing.
• Payment processing.
• Collections calls.
• Customer service inquiries.
• Standard reporting.

While outsourcing can reduce internal workload, it often means sacrificing control over financial processes and customer relationships.

Technology-driven AR automation

Modern AR automation platforms offer a different approach, enabling manufacturers to maintain control through:

• AI-powered cash application.
• Automated invoice delivery across multiple channels.
• Digital payment acceptance and processing.
• Intelligent collections management.
• Real-time analytics and reporting.
• Direct ERP integration.

This approach combines advanced automation with maintained internal oversight of important processes.

Key factors in your decision

While both outsourcing and technology solutions can address AR challenges, key decision factors show that modern AR automation platforms deliver superior results for manufacturing companies. Understanding these factors - including costs, control, integration, and customer experience - helps clarify which approach best serves your long-term business objectives.

Cost considerations

While outsourcing may seem cost-effective initially, modern AR technology platforms typically deliver superior long-term financial benefits through scalable automation and reduced per-transaction costs:

Outsourcing costs:

• Transaction-based fees that increase proportionally with business growth, often including premium charges for high-volume months or special handling.
• Additional overhead from managing vendor contracts, service level agreements, and ongoing relationship maintenance.
• Hidden costs from communication inefficiencies and time spent coordinating between your team and the outsourcing provider.
• Increasing costs per transaction that don't benefit from economies of scale as volume grows.

Technology investment benefits:

• Transparent, predictable monthly subscription that includes all features and capabilities without hidden fees.
• Significantly lower per-transaction costs as volume increases, with automation handling additional load without added expense.
• Elimination of manual processing costs through AI-powered automation of invoice delivery, payment matching, and cash application.
• Measurable productivity gains through automated exception handling, reduced errors, and faster processing times.

Control and visibility requirements

Technology solutions provide the oversight manufacturing operations need, offering advantages that outsourcing simply cannot match:

Outsourcing limitations:

• Loss of direct control over critical AR processes, with changes requiring provider approval and implementation.
• Delayed access to AR data through periodic reports rather than real-time visibility into transactions.
• Reliance on standardized provider reports that may not capture your specific business metrics.
• No ability to monitor transactions in real-time or make immediate process adjustments.

Technology advantages:

• Full control over AR processes with ability to adjust workflows, rules, and automations instantly.
• Immediate access to real-time AR data, enabling proactive cash flow management and quick decision-making.
• Custom dashboards that track your specific KPIs and provide actionable insights into AR performance.
• AI-powered analytics that predict payment behavior and identify optimization opportunities.

Integration capabilities

Modern AR technology platforms excel at system integration - a requirement that outsourcing services often struggle to deliver:

Outsourcing challenges:

• Restricted integration options that may not align with your existing ERP and business systems.
• Complex interfaces requiring manual intervention to transfer data between systems.
• Time-consuming manual reconciliation between outsourcer's reports and internal systems.
• Information silos created by gaps between provider systems and your business tools.

Technology benefits:

• Integration with major ERP systems ensuring continuous data flow and accuracy.
• Direct connection to established B2B payments networks for streamlined transaction processing.
• Automated synchronization of invoice, payment, and customer data across all systems.
• Real-time updates ensuring all systems reflect current AR status without manual intervention.

Customer experience impact

When it comes to maintaining strong customer relationships and providing superior service, technology solutions offer clear advantages over outsourcing approaches:

Outsourcing implications:

• Loss of direct customer relationships as interactions are managed by third-party representatives.
• One-size-fits-all service approach that can't accommodate customer needs or preferences.
• Basic self-service options limited by outsourcer's technology capabilities.
• Extended resolution times as issues must be coordinated through the service provider.

Technology advantages:

• Branded self-service portals that give customers 24/7 access to invoices, payments, and account management.
• Flexible payment options including ACH, credit card, and virtual card payments to match customer preferences.
• Instant access to current and historical invoices, with real-time visibility into payment status.
• Automated payment processing with immediate confirmation and update of customer accounts.

Read the blog → Accounts receivable services for a more efficient business

Why technology-driven AR automation delivers results

Modern AR platforms offer specific advantages that address manufacturing challenges through sophisticated automation and intelligent processing capabilities that outsourcing services simply cannot match.

Intelligent automation capabilities

Advanced technology transforms core AR processes by eliminating manual tasks and improving accuracy:

• AI algorithms that automatically match payments to invoices with high accuracy, even with complex remittance data.
• Smart capture technology that extracts payment information from any format, including emails, PDFs, and paper documents.
• Collections workflows that use AI to prioritize accounts based on payment history and risk factors.
• Automated invoice delivery that selects optimal delivery methods based on customer preferences and behavior.
• Predictive analytics that forecast payment timing and identify potential payment delays before they occur.

Payment processing optimization

Modern platforms streamline payment handling through integrated networks and automated processing:

• Support for all payment methods including ACH, credit cards, and virtual cards through a single platform.
• Automated payment acceptance rules that enforce company policies while maintaining customer flexibility.
• Tools to encourage electronic payment adoption, reducing paper check processing.
• Intelligent reconciliation that matches payments to invoices without manual intervention.
• Access to established business payment networks that simplify B2B transactions.

Complete process visibility

Technology solutions provide oversight through real-time data access and advanced analytics:

• Dynamic dashboards showing current AR status, aging, and key performance metrics.
• AI-powered cash flow forecasting based on historical patterns and current trends.
• Detailed metrics on collections performance and team productivity.
• Deep analysis of customer payment behavior and trends.
• Fully customizable reporting that aligns with your specific business needs.

Manufacturing-specific features

Modern platforms address industry needs with specialized capabilities:

• Centralized management of invoicing across multiple manufacturing locations and distribution centers.
• Support for complex pricing structures including volume discounts and customer-specific terms.
• Automated handling of contract terms and special pricing agreements.
• Workflows designed specifically for manufacturing payment and reconciliation processes.
• Built-in compliance with industry regulations and payment standards.

Manufacturing companies seeking to modernize their AR operations have important choices to make. AI-powered automation can transform invoice delivery, cash application, and collections processes. While outsourcing may seem like a quick fix, modern technology platforms offer the ability to transform AR processes while maintaining control, improving customer experience, and scaling. By carefully evaluating options against business needs, manufacturers can choose a solution that positions them for long-term success.

For over two decades, Billtrust has been at the forefront of transforming accounts receivable operations for businesses worldwide. As a leading provider of order-to-cash solutions, we help companies gain grow revenue and increase profitability through innovative technology and deep industry expertise.

We understand that every industry faces unique challenges in managing their accounts receivable processes. That's why we've developed deep expertise across more than 40 industries, allowing us to provide tailored solutions that address specific sector needs.

Whether you're a mid-market company or a global enterprise, Billtrust provides the expertise, technology, and support needed to transform your accounts receivable operations. We're more than just a service provider – we're a partner in your financial success, dedicated to helping you achieve your business objectives through improved AR processes and enhanced customer experiences.