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The Ultimate Guide To Automating AR

Accounts receivable llieat the core of well-managed accounting because it encompasses vital tasks such as collections, payments, billing, and tracking. A company’s proficiency in nurturing and navigating the AR lifecycle can influence its success or failure. Unfortunately, many businesses remain unaware of the potential hidden within automated AR processes despite their familiarity and widespread usage. 

In this guide, you’ll learn about the untapped world of AR automation, what can be automated, and how to automate, to help you streamline your strategy and improve your company’s bottom line. 

How Does The Traditional AR Process Work

The traditional AR process is a manual endeavor that a business manager or accountant handles. This labor-intensive task involves creating invoices, collecting payments, communicating billing information, and tracking the AR cycle. Human error often looms over this process, leading to costly mistakes and delays. 

Fortunately, the advent of technology has revolutionized the landscape. Through tintegratingcomputers, accounting software, spreadsheets, and emails, the AR process has experienced a leap in efficiency. This has led to increased accuracy, more automation, and a reduced need for manpower. The development of specialized AR software has also propelled automation to new heights. With this software, you can deliver unparalleled efficiency, mitigate the need for overhead costs or additional staffing and minimize errors. 

In the present day, installing an AR automation system may be a substantial investment. However, the returns far outweigh the initial expense. Invoice automation can pay for itself after about six months. This remarkable benefit is just the beginning.

Automating the AR process will also help you unlock greater efficiency and gain valuable insights into your financial operations. With enhanced accuracy and streamlined tracking, you’ll better understand your cash flow and make better decisions. Additionally, you’ll reduce your reliance on manual labor, and your team will become more productive because they’ll focus on more strategic tasks. The AR automation journey represents a transformative step toward financial success. 

The Common Challenges You’re Likely To Experience With AR Processes

Before learning the transformative benefits of AR automation, you need to know the common challenges your business will likely face with the processes. They include:

The Struggle To Have Invoice Emails Read And Acknowledged

Shockingly, Forbes reveals that about 60% of emails go unnoticed. The infamous “I didn’t see it” excuse is all too familiar, making it difficult to know the status of your communication. 

With automated AR services, knowing whether your email has been read is easy. The “client view” feature will deliver the client’s response directly to the recipient’s web browser. This feature can be used for pdf downloads, online payments, file attachments, comments, and more. Integrating a customer portal into your system can also enhance accessibility and let clients easily respond to invoices. The result? You’ll be informed at every click.

Failing To Be Firm When Requesting Payments

Another prevalent issue is the reluctance to assertively request payments, especially when deadlines pass, or payments are continuously late. It’s estimated that about 80% of invoices in the US are overdue by 30 days, adding unnecessary stress and disrupting the budget strategy. 

AR automation provides a remedy to this problem. Automating the invoicing process and follow-ups eliminate emotions from the equation. Also, customer portals empower clients with flexible payment options, reducing unintentional missed payments and discouraging intentional delays or excuses.

Payment Excuses

Handling payment excuses is a common headache businesses face during billing and collections. Atradius estimates that customers delay about 50% of payments due to excuses about misplaced invoices or inaccurate information. Fortunately, AR automation tools act as a defense against these excuses. Through automation, you’ll achieve accurate invoice delivery and keep track of successful receipts. 

Addressing these common AR challenges through automation will liberate your business from cumbersome manual processes and pave the way for smoother financial operations. You’ll also achieve increased accuracy and gain the confidence you need to nurture stronger client relationships, secure timely payments, and steer your enterprise toward sustainable growth and prosperity.

What Does The AR Automation Process Entail

There are several crucial aspects that you need to consider when switching to an automated process. Now that you know the challenges faced in the AR process, let’s look at some of the solutions that AR automation offers. 

Generating Invoices

Complex invoice generation tools form the cornerstone of AR automation. They streamline the invoicing process and customer experience. Through external datasets and built-in templates, these tools will give you the correct billing information according to each customer’s preferences. This personalization will foster your relationship with your customers and expedite payment processing. 

Tracking Payments

The laborious manual tracking of every payment can lead to errors. AR automation comes to the rescue by automating the cash application process, letting you effortlessly track and match each payment to its corresponding invoice. An ideal AR automation service should provide tools like multi-invoice applications, virtual lockboxes, cash application rules, and remittance acceptance advice. Adopting these features will guarantee you effective and accurate payment processing. It will also free your team from tedious tasks and minimize mistakes. 

Automated Collections

Bid farewell to the days of managing collections through sticky notes, spreadsheets, and endless emails. AR automation is designed with collections tools that perform real-time tracking and maintain progress visibility and transparency. Using these features means reducing your dependence on staff overhead and minimizing human mistakes. You’ll also reclaim valuable time and resources that you can use to build other aspects of your business. 

Payment Plans

Payment plans are indispensable for businesses offering high-value services like medical procedures or legal representation. AR automation should seamlessly incorporate payment plans within a cloud-based invoicing platform. Automating your plans will enhance your financial stability, foster consistency and increase trust. 

Customer Portal 

Simplifying payment processes and account management is paramount to AR automation. A customer portal enhances collection rates and consistency thanks to its ability to reduce customer service overhead. 

Invest in a cloud-based, PCI-compliant customer portal that offers ample customization options that align with your overall customer experience strategy. A user-friendly customer portal will let your clients control their accounts and improve your overall experience. 

Subscription Billing

For businesses with recurring revenue models like membership organizations, cloud software providers, or utility companies, automation extends its capabilities to manage billing and subscriptions seamlessly. An automated AR service should offer a flexible plan development and management that handles everything from proration to add-ons and contract renewal rules. Features like sign-up pages, extensive customization, and dunning management can boost your subscription business, optimize billing efficiency and increase subscriber satisfaction.

Simplify AR Processes With Automation

Having gained valuable insights into the significance of AR automation, it’s only natural to seek an automation service that meets your requirements. Fortunately, several companies provide a comprehensive suite of service tools accessible through a cloud-based platform. 

August 15, 2023