by Sophia Riley | Oct 17, 2023 | Accounts Receivable, Automation
Accounts receivable lies at 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. Knowing what can be automated and how to automate them will 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 integrating computers, 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, including:
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 quickly 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 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 price 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 companies 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 goals 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 improves 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 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.
by Sophia Riley | Oct 10, 2023 | Accounts Receivable, Automation
In this digital era, where time is more precious than ever and competition knows no bounds, groundbreaking automation solutions are replacing antiquated manual approaches to managing accounts receivable. Although there have been concerns surrounding the impact of automation on the job security of AR teams, your company should embrace automation to boost its odds of success.
AR departments across the globe grapple with a common challenge – the scarcity of time. This invaluable resource always seems to be in short supply. Research estimates that CFOs and their teams spend 90% of their time dealing with financial processes. Engaging in manual tasks, such as rectifying billing errors and mailing invoices, leaves these professionals with limited time to devise better workflow strategies and analyze data.
And there’s more. The drawbacks of manual processing extend beyond time constraints. Finance professionals frequently need help with compliance violations, diminished productivity, and misplaced documents.
Moreover, investing time in repetitive processes does not guarantee positive outcomes. Irrespective of the industry, your organization may need help to secure payments. The era of relying solely on manual AR management is ending. Fortunately, there’s a glimmer of hope through AR automation. Throughout this article, you’ll learn AR automation and how to implement it in your company.
What’s AR Automation?
Transitioning from a manual to an automated AR process requires a collaborative approach. The journey towards successful accounts receivable automation involves intricately interwoven components, and it’s not just about converting your manual process into a digital format resembling an ERP.
While investing in a state-of-the-art ERP may appear alluring, actual efficiency gains stem from incorporating an automation component into the system. Mere digitalization may not unlock the full potential of automation.
To achieve remarkable results, you must reorient your payment processing method, streamline your operations, and enhance efficiency. This transformation requires cohesive efforts from your IT department, AR and management team, and third-party vendors. Each should contribute their expertise to the endeavor.
Here are three crucial steps that will make your AR automation implementation a resounding success:
- Identify Pain Points And Set Clear Objectives
Begin by pinpointing the specific pain points in your existing AR process. Analyze the bottlenecks, delays, and errors that hinder your team’s efficiency. Once this is done, set clear objectives for the automation initiative that outline your desired outcomes.
- Select The Right Automation Tools
Choosing the appropriate automation tools is pivotal to your success. Research and explore different solutions in the market, considering factors like scalability, integration capabilities, and user-friendliness—partner with reliable vendors who understand your unique requirements and can tailor their offerings accordingly.
- Empower And Train Your Team
Automation is most effective when your team is well-prepared to leverage its capabilities. Invest in comprehensive training programs to familiarize your AR team with the new tools and processes. Encourage a culture of adaptability and continuous improvement, ensuring your team stays updated with the latest advancements in AR automation.
Why Is It Vital To Automate Accounts Receivable?
The decision to automate accounts receivable transcends digital payment options and timely client payments. An effective AR automation solution goes beyond the surface. It aims to curtail costs, unleash working capital, decrease DSO (Days Sales Outstanding) time, and deliver invaluable data-driven insights.
Furthermore, AR automation should create a flexible and seamless customer experience. The more effortless it becomes for customers to settle invoices, the faster their AP (Accounts Payable) department will expedite the payment process.
The best AR automation software can also minimize the time spent on financial tasks and enable your team to focus on more critical initiatives. A B2B payment research revealed that companies implementing AR automation successfully shave off 20 days from their DSO. Through automation, AR teams can accelerate the processing of functions and improve their efficiency.
Achieving optimal outcomes from your AR automation journey may require you to integrate data security with your existing systems seamlessly. Seek AR automation solutions that offer secure data management and compliance with industry regulations. Also, prioritize data security and privacy to safeguard sensitive financial information.
What Are The Steps For Setting An Accounts Receivable System?
Setting up an efficient and automated accounts receivable process requires a strategic approach that begins with mapping out your existing workflow, identifying key objectives, and pinpointing critical bottlenecks. You need to go through these steps to comprehend the specific features and functionalities required from an accounts receivable automation software.
Understanding which manual processes to automate and which not to automate will help you tailor your strategy to suit your unique business interests. When setting up an accounts receivable system, start with a clear and defined goal in mind. Do you want to simplify complex processes, gain valuable insights through enhanced analytics, or automate tedious tasks? A well-defined objective will set the tone for your subsequent steps.
Collaborate with your staff when creating workflows or walking through the current processes. This way, you’ll achieve your accounts receivable automation within no time.
Some goals you should consider when developing an AR automation system include:
1. Minimizing Inefficiency: Streamline your AR processes to reduce manual interventions and expedite operations.
2. Reducing Transaction Charges: Identify opportunities to minimize transaction fees associated with payment processing and optimize your financial operations.
3. Eliminating Doubtful Accounts: Enhance risk assessment and credit management practices to reduce the risk of doubtful accounts and potential bad debts.
4. Accelerating Payment Processing: Expedite payment collection by offering convenient digital payment options and optimizing invoicing procedures.
5. Enhancing Customer Satisfaction: Foster a customer-centric approach with a smooth and user-friendly payment experience. This will ultimately enhance customer satisfaction and loyalty.
6. Maintaining Healthy Cash Flow: Implement attainable payment terms and strategically manage cash flow to ensure your organization’s financial stability and growth.
7. Enhancing Visibility: Establish transparent and real-time visibility into your AR processes to facilitate better decision-making and operational control.
8. Linking with vital systems: Integrate your accounts receivable automation with other essential business systems like ERP and CRM to streamline data flow and enhance efficiency.
Selecting The Best AR Automation Software
Regarding accounts receivable automation, the right software can work wonders. It will reduce invoice processing costs by 80% and accelerate payment cycles. Businesses that invest in this automation solution witness faster payment receipts and thrive in the financial landscape.
Your efforts to automate AR will yield substantial returns and help your business increase operational efficiency. Are you ready to leap into the future of finance? Book a complimentary demo with a seasoned expert today and elevate your financial prowess.
by Sophia Riley | Oct 5, 2023 | Accounts Receivable, Automation
AR Automation
Selling services or products and collecting customer payments are key business roles. However, handling these tasks can be challenging if your AR professionals process payments and send invoices manually. They may need help with a lot of paperwork and get frustrated, especially if they’re tracking customer payments.
The good news is that AR automation can revolutionize your finance department and make your business successful. It will streamline your accounts receivable process, accelerate cash flow, and reduce human errors. Ultimately, your AR team will have more time to analyze other aspects of your company’s finances and increase its bottom line. Keep reading to learn more about AR automation.
What’s AR Automation?
AR automation uses cutting-edge technology to optimize financial processes. It automates tiresome and repetitive tasks and helps businesses collect money customers owe. It also speeds up a company’s approach to receiving payments from customers who purchase services or goods on credit. Businesses that use automation systems are likely to witness improved sales outstanding, profitability, and cash flow.
Before automation, employees performed accounts receivable tasks manually, following several details and steps. AR automation systems eliminate this laborious process, giving employees time to work on other vital tasks. This increases the rate of collecting money owed and minimizes billing errors.
How Does Accounts Receivable Automation Work?
AR Automation relies on sophisticated algorithms and software to handle repetitive and time-consuming tasks. Every company has variations in its workflow. However, AR automation relies on three elements: payment collection, invoicing, and reconciling accurate information.
Automation simplifies the process of generating invoices required to meet customers’ needs. It reduces the process of entering data manually, thanks to its features that allow it to take and store payment terms, invoice details, and customer-specific information. When inputting data during purchase, it remains in the customer’s account throughout the payment journey. For instance, if a client is supposed to be billed on a particular date, say the 5th of every month, it will automatically generate and deliver invoices on that day.
Moreover, AR automation can manage payment methods, track collection, match sales orders with invoices, and identify expired credit cards. Companies can also use it to encourage early payments and discourage late payments. AR databases provide real-time reports on payment statuses, making it easy to communicate with customers. This technology will enable you to accelerate your workflow, slash pesky human errors, and ensure the utmost accuracy in your financial dealings.
Advantages Of AR Automation
Improved Cash Flow
Cash flow is the lifeblood of any business, and AR Automation knows how to keep it pumping. Automating your invoice and payment processes will enable you to receive payments faster. It will also let you reduce your company’s DSO. In 2021, about 60% of surveyed businesses witnessed an improvement in DSO after AR automation.
Streamlined Workflow
Say farewell to the chaos of scattered paperwork and endless back-and-forth emails. AR Automation is your secret weapon for a smooth and organized workflow. It works like an expert conductor orchestrating your financial symphony. With everything in perfect harmony, you’ll have more time to focus on growing your business.
Increased Accuracy
Human errors are difficult to avoid, and they can cost you dearly. AR Automation eradicates these slip-ups, ensuring every “i” is dotted and every “t” is crossed. Automation will enhance your data consistency, minimize billing disputes and instances of duplicated invoices, and ultimately make your customers happy.
Reduced Costs
As they say, “Time is money,” and AR Automation can save both. It eliminates manual tasks, frees valuable resources, and reduces operational costs. Through AR automation, your business will use e-invoicing to keep you from using paper and ink and reduce postage charges. Automation also reduces the need to write off unsettled invoices.
Better Reporting
Clear, concise, comprehensive reports are the backbone of sound financial decision-making. AR Automation equips you with real-time data and visually appealing reports, offering real-time insights into customer payment statuses. With automation diligently monitoring open receivables, managers can proactively take measures to increase the likelihood of receiving timely payments. This can boost the company’s financial health.
Increased Compliance
Staying compliant with financial regulations can be as tricky as untangling a knot, but AR Automation can make you stay on the right side of the law.
As your business expands its markets, you may be required to adhere to several geographical-specific requirements. Each state or country may have distinct laws and regulations that must be followed. Automation software acts as a vigilant guardian. It will meticulously track these complexities, ensuring compliance.
Improved Customer Relations
Customers are the heartbeat of your business, and AR Automation knows how to keep them happy. Through timely reminders and efficient handling of accounts, it will help you build rock-solid relationships that last a lifetime.
Disadvantages Of AR Automation
Challenging To Use
As with any new technology, using AR Automation systems might be challenging. Your employees may require some time to learn how to use the software. However, they’ll get the hang of it with practice, reducing their workload.
Expensive To Implement
It’s true; quality comes at a price. Implementing AR Automation might require some investment upfront. Nonetheless, these costs typically balance out with the company’s substantial savings through heightened efficiency and productivity.
What Processes Can Your Company Automate?
Invoicing
Tired of manually sending out invoices and tracking payments? AR Automation has your back. With just a few clicks, you can automate the invoicing process and watch payments roll in like a gentle rain shower on a summer’s day.
Processing Digital Payments
Cash and checks are so yesterday. AR automation can handle digital payment processing, increase convenience and security, and enhance payment flow.
Customer Outreach
Communication is vital, and AR Automation ensures you never miss a beat. Through this technology, you can send personalized reminders, thank-you notes, and gentle nudges to customers effortlessly.
Key Features Of An AR Automation System
Automating Emails
AR Automation systems are masters of email wizardry. They can automatically send reminders, acknowledgments, and follow-ups while maintaining a personal touch.
Distributing And Generating Invoices
Remember the days of printing and mailing invoices? Those days are long gone. AR Automation can distribute invoices electronically, saving you time, money, and paper.
Matching Transactions
Reconciling transactions can be a tedious task. However, AR Automation can handle it with finesse. It matches your payments to invoices and ensures that your books are always balanced.
Several Payment Options
AR Automation gives customers choices. From credit cards to digital wallets, your customers can pay in ways that suit them best.
Data Reporting
Data is the heart of intelligent decision-making. Thankfully, AR Automation systems are designed with several data reporting tools. Visualize your financial landscape with charts and graphs that make tracking and analyzing payments easier.
Managing Credit Risks
Staying on top of credit risks is essential for a healthy financial ecosystem. AR Automation will monitor credit limits and alert you of potential risks.
Wrapping Up
AR Automation can be your financial ally. If you install this software, you’ll conquer your accounts receivable challenges and revolutionize your economic landscape. Implement this technology in your business today and watch it soar to new heights.
