Maintaining a healthy cash flow is crucial in today’s competitive and fast-paced business landscape. But without efficient systems for managing accounts receivable operations, many businesses struggle with misaligned credit, collections, and accounts receivable processes. This can lead to delayed payments, increasing bad debt, and compromising customer relationships. Especially if you need to contact customers multiple times to check in on the status of payments, the downtime for the process can be severely affected.
CFOs can benefit immensely by using automated accounts receivable software that helps in building a streamlined and data-driven approach to connect the aforementioned vital tasks under a unified strategy and centralized interface.
How automation organizes and speeds up AR and allied processes
The workflow for AR may differ from one company to the other. Still, the general steps for accounts receivable are pretty similar in most cases: creation of invoices, collection of payments, reconciliation, and finally reporting. Here is how an automated software solution for accounts receivable aligns the processes:
- Invoicing: After a sale is done, automated software will directly generate and send an invoice to the customer, either via email or any other method of communication, like a text message. This lays the foundation for improved collections.
- Payment collection: The system will also present customers with different electronic payment avenues, like online portals or integrated gateways for payment. It may also send them automated reminders for any pending or overdue payments to the concerned parties. This increases the predictability of cash flow and supports the credit collection team.
- Reconciliation: As and when the payments are received by the system, automated software will directly match the data with the corresponding invoices. Thus, the AR ledger is updated in real time. This reduces manual error and ensures accounting data is aligned perfectly with actual collection performance.
- Reporting: Detailed reports and dashboards can be automatically generated, which can offer you a direct insight into the AR details of your company. You can also have a look at the cash flow and customer payment patterns via this feature, ensuring perfect integration with credit policies and risk assessment.
Benefits of integrating AR automation for businesses
Automated software for AR helps businesses to make their accounting activities more precise, consistent, and efficient. With advanced software, companies can gain a deeper insight into the real-time status of AR, thus staying updated about proceedings at every step. Moreover, by automating routine tasks like invoicing, payment collection, and financial reporting, they can manage their finances in a more organized and efficient manner. Here are some of the principal benefits of automated AR software for businesses:
- Streamlining workflow: Automated software reduces the time AR teams have to spend on processing bulky paperwork and payments. This creates a more efficient workflow and allows the team to provide more attention to strategic work that can help the business excel.
- Organized cash flow: Advanced software for AR automates the time-consuming routine tasks, which leads to faster invoice updates, automatically resulting in faster completion of payments. This improves cash flow within the organization. It also helps to reduce the company’s daily sales outstanding.
- Reduced costs: One of the most prominent advantages of digitized AR systems is that they reduce the heap of papers generated in a physical invoice system. Implementing the practice of e-invoicing helps the business to save on ink usage costs as well as increase storage space in the workplace. It also drastically cuts down associated delivery fees and postage costs. Because of the greater speed afforded by the automation of key tasks, companies can also lower labor costs and cut down on the number of write-offs for unpaid invoices.
- Increased accuracy: Automated AR systems greatly lower the margin of human error, which improves data consistency. This helps to reduce the number of duplicate invoices and minimizes billing disputes.
- Enhanced reporting capabilities: Automated AR software provides reporting dashboards that can indicate the status of customer payments and help to track AR aging. This is the method where unpaid customer receivables are categorized based on the length of time the debts have been past due. Thus, business managers can take timely action based on these automatically tracked insights. This increases the likelihood of the company being paid so that it can avoid losses.
Conclusion
Integrating automated accounts receivable software into the working systems of your organization allows your AR team to achieve maximum efficiency by automating key tasks and providing tracking capabilities. Invoicing and collection of payments getting automated means AR teams no longer have to write hundreds of invoices manually and match the payment status individually, saving time and increasing accuracy. On the other hand, monitoring dashboards providing real-time insights on the status of invoices and payments allows businesses to stay in the loop and avoid losses due to incomplete payments.
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