<img src="https://ws.zoominfo.com/pixel/pJ1J8IhmrGOFijyr86vW" width="1" height="1" style="display: none;">
Fri, Dec 4, '20

The Hidden Costs of Accounts Receivable to Accounting Firms

(Anduin Origin Story, Part 1 of 2)

 

“We just need something that unlocks our time and cash flow.”

The Managing Partner of a large accounting firm told me this over the summer.

I'd heard similar concerns from similar leaders before.

My 4 cofounders (Justin, Tanner, Ellen, and Chris ... and I'm Pat, by the way) had heard likewise. We had interviewed dozens of accounting industry leaders as we explored problems our team here at Anduin could solve. 

And we had started to see a trend in our interviews.

From national firms to regionals, from Managing Partners to support staff, everyone shared the same problem: Traditional accounts receivable (AR) was broken, and accounting firms needed a solution.

Our interviews often ended with an AR wishlist:

“Our firm needs to . . .

. . . to speed up cash flow and lower DSO"

. . . stop wasting so much time on manual invoice prep and collections"

. . . move to better online payment"

. . . get more insight and data we can actually use"

. . . figure out how to put AI to work, practically"

. . . create a billing experience that doesn't frustrate our team and confuse our clients"

So knowing the AR was the root case of a lot of pain and expense in the accounting industry, our cofounding team got together and asked ourselves three questions:

  1. Is “broken accounts receivable” a problem worth solving?
  2. What would a solution to the problem look like?
  3. Are we the right team to build that solution?

In this blog, and in one more to follow, I'll show you how we answered these questions.

 

So, to the first question... 

 

Is “broken accounts receivable” a problem worth solving?

To answer this, we needed to go beyond our interviews. We needed data to quantify the burden and costs of traditional AR. So we poured energy into broader research. And the answer quickly came back as a resounding and quantitative yes.

Our research found that the current-state of accounts receivable in the accounting industry—the wasted time, the revenue “left on the table”, the missed opportunities—can costs firms hundreds of thousands, often millions, in lost revenue and productivity each year.

What’s most jarring? Most firms don’t know it—and if they do, they don’t know where the leaks are (or know how to fix them).

 

Leaving money on the table

Consider this: one accounting firm we spoke to revealed that their partners spend 3+ days at the end of every month on invoice prep and collections.

3 days per month X number of partners X 12months = 6-7-8-figures worth of lost billable time each year (and that's just the tip of the AR iceberg).

And our research further validated this example: one industry-wide study uncovered that the leading cause of late payments by clients was not the client's behavior or inaction, but was actually internal firm oversights and delays (ex: firms forgetting to send an invoice).

(If you want to dig deeper into the data on the true costs of AR for accounting firms, drop me a line and I can walk you through our findings: patrick.morrell@anduin.ai)

Solution?

It’s one thing to ID a problem. It's another to build a solution.

And before we wrote a line of code or started working with our first customers, we went down the rabbit hole on the second question I mentioned above: “What would a solution look like?”

More specifically, what kind of technology solution could do the following?

  • save a firm from burning millions of dollars a year in lost revenue and productivity

  • automate AR tasks so partners and staff can focus time and energy to client service

  • deliver predictive intel and actionable data to firm leaders (fix issues before they start)

  • create a billing experience that leaves partners and clients feeling valued and fulfilled

  • motivate clients to want to pay on time, every time (and be happy about it)

  • (do all this, and play nice with existing PM systems)

 

For the answer, read our next blog later this week . . .

Other Posts

Mon, Dec 14, '20

"Anduin debuts AI-powered AR for accounting firms" (repost from AccountingToday)

Written by Ranica Arrowsmith from AccountingToday (originally published 12/10/2020)

 

"Startup...

Read whole article
Fri, Feb 5, '21

Anduin Recognized in AccountingToday's 2021 Top New Products

Written by AccountingToday (originally published on 2/4/2021)

 

"Every major area of technology...

Read whole article
Thu, Mar 18, '21

How to Create an AI-Ready Accounting Firm (repost from AccountingToday)

Written by AccountingToday (originally published on 3/15/2021)

"Accounting firm leaders have long...

Read whole article