ta The Ultimate Guide to Accounts Receivable Automation

The Ultimate Guide to Accounts Receivable Automation

Accounts Receivable
April 10th, 2018

Accounts receivable plays an integral role in bringing cash into the business and is fundamental to your company’s success. Without the quick and accurate stream of invoices to customers, cash flow would wane, impeding growth, producing instability, and ultimately strangling the business.

With that being said, your accounts receivable team has possibly been using the same processes for years. Sitting amongst all the advanced technology that surrounds them, they continue to spend time manually creating, reviewing, proofing, printing, and mailing invoices.

Time must then be taken to communicate with clients directly to set up digital payments.
This wastes your business’s time, energy, and resources. You have identified a problem and you’re now ready for a change.

But what can you do to fix this issue so that your team is more efficient?

Fortunately for you, and thousands of others in your position, automating your accounts receivable system is a relatively simple process and comes with a range of both immediate and long-term benefits to both you and your company.

In this comprehensive guide, we will cover everything you need to know about accounts receivable automation so you are one step closer in implementing it into your financial
department and being on the receiving end of the enormous benefits it can bring.

What Is Accounts Receivable Automation?

Your first step in the basic process of getting paid—and getting paid quickly—is to send invoices. While you create invoices with a precise due date on them, you can’t guarantee that your customer will pay by the deadline.

As you are well aware, most businesses typically face a wait time of receiving client payments that ranges from 30 to 90 days or even longer. However, those payments are necessary to support your business, employees, operations, and more.

Payment delays not only cause annoyance and often anxiety for both you and your company, but more significantly, they impact your cash flow.

You have an undoubtedly heard about (or are currently) automating certain business processes. By automating where possible, you are looking to where you can leverage technology to reduce labor-intensive administrative tasks, thus operating much more efficiently in the process.

For example, today most of us leverage technology for manual administrative tasks such as bill payment. Now, instead of walking a bill from desk to desk to review or follow-up on an approval process, we automate the process and move the bill from one individual to another electronically. Reminders and notices are all sent out effortlessly to those involved.

AR automation transfers invoicing efforts to a digital process. It automatically creates the invoices based on your company’s data, delivers them electronically at set dates, sends reminders for payment, and resolves payments with accounting systems and bank accounts.

Finally, it also supports numerous types of payment. Your AR automation can accommodate ACH, credit card, PayPal,or other forms of digital payments.

Accounts receivable automation can help your business get paid faster. Here is a quick review of how this works:

  1. AR automation takes the entire traditional AR process and transfers the administrative burden to technology. This means that paper is eliminated. You no longer have any need to continue to print and mail invoices. Your new e-invoices are emailed immediately to your customers, 100% online.
  2. AR automation automatically creates your invoices and sends them out at the set time and date. There is no longer a need to go through the time-consuming process of creating, reviewing, and proofreading invoices.

Benefits of Automating Accounts Receivable

We looked at what AR automation is and why you should consider implementing it into your business. Next, let’s take a deep dive into the benefits of accounts receivable automation. They are numerous and impossible to ignore after you have experienced them firsthand.

Here are four reasons to consider implementing them this year.

1. Faster Invoicing and Payments

If you’re accustomed to dealing with clients who tend to pay your invoices at their leisure, then you’re not alone. This is just one of many reasons to consider automating your accounts receivable processes as soon as possible.

The enormous benefit of automation is that e-invoices are made available for customers to pay immediately. This eliminates delays in payment that might have previously been all too common. AR automation can help you speed up your invoicing so you get paid fast like you deserve!

2. Reduced Costs of Payment Processing

We all want to reduce costs and save money on repetitive, menial tasks that software is capable of doing for us instead, right? Another benefit of AR automation is the reduction in costs of payment processing. These can be reduced by automating your accounts receivables, which thereby provides superior productivity.

AR automation will also help you reduce overhead. This allows your team to focus instead on more strategic tasks such as managing exceptions to the payment process, pre-empting payment problems, and other customer service-related issues.

3. Improved Customer Service

As we saw, a benefit of AR automation is enhanced customer service. Your team is now better able to focus on more strategic and detail-oriented tasks. When it comes to AR-related customer data, you know the more you can do to merge things, the better customer service you can provide. When it comes to inaccurate or misplaced invoices, accounts receivable automation technology allows you quickly to correct any issues that may arise.

By implementing technology in your accounts receivable processes, you are giving yourself a valuable tool that allows you to provide stronger customer service. Because of this enhanced customer service, you can expect improved customer retention and a decrease in customer service-related problems.

4. Reduction of Human Error

Automation naturally leads to a reduction of human error since we transfer over the burden of the most repetitive tasks to software. AR automation allows us to avoid many of the small human errors that add up, adding a significant margin of both cost and complication over time. With that being said, people will always be vital to the accounts receivable processes.

By reducing the amount of manual work, you are also reducing the time needed to correct human mistakes. You also decrease the number of unhappy clients affected by those mistakes. As we have seen, automation technology is at its best when human oversight is integrated into daily processes to combat issues when they arise. Never assume you can depend solely on technology to get through the work week!

Benefits of Electronic Invoicing (E-Invoicing)

After learning about the core benefits of AR automation, we feel it is valuable to zoom in and inspect a few of the core benefits of e-invoicing. Central to any AR automation project is the consideration of electronic invoicing or e-billing. By looking at every angle of this facet of automation, you can better determine if it is the right option you.

1. Sizeable Cost Savings

Studies have shown that e-invoicing saves approximately $8.00 per invoice sent. This cost reduction might come as a surprise. However, if you look closely you see that the decrease reflects several cost savings in the following areas:

  • Paper consumption
  • Postage costs
  • Manual handling of paper invoices
  • Cost of equipment used in the printing and posting process

By implementing invoice automation, your company can cut costs where you never could before. In time, the sizeable cost savings will be worthwhile to leverage technology to your benefit.

2. Improved Cash Flow

Collecting money fast is always a major competitive edge for your business. E-invoicing enables faster payments, less hassle, and less negligence of payments due. Businesses who use e-invoicing report faster payment of invoices, resulting in a superior cash flow, enabling business growth and added financial stability over time.

3. Easier Access

Electronic invoices and other financial documents can be stored securely online. This provides easy access for your customers to complete their own copy requests. This can often reduce call volumes to customer services teams. Online storage also supports internal document search, retrieval, and analytics.

4. More Control

The last benefit of invoice automation we will look at is the added control you and your team will gain. E-invoicing allows you access to real-time visibility of invoicing status, including notifications for delivery and read statuses.

Improved visibility provides insight you and your team can act on. With e-invoicing, you are able to take action on things such as supporting credit controllers in reducing late payments and dealing with disputed payments.

Integration of e-invoicing with credit collection software allows for seamless and secure access to sensitive documents and messaging workflows, to accelerate credit collection.

Overcoming Fear of Automation

Despite all the knowledge you have now gained on accounts receivable automation up to this point, you may still have reservations about making the switch. The manual processes you’ve always known may feel comfortable and familiar.

We get it; change can sometimes be scary!

For managing the financial well-being of your business, it’s natural for you and your team to instinctively resist new processes. Understand, however, that these doubts are likely based on misconceptions, not facts. Let’s examine a few common fears of AR automation so you and your team can confidently move forward to begin the process of implementing AR automation technology into your business as soon as possible.

Losing Control of the Process

It’s a common fear for many businesses that by putting an automated workflow engine behind the AR process, they will lose control of how the process is handled. Fortunately, for you and countless other businesses, this is not the case.

AR software leaves room for human interaction where necessary, giving you complete control over what the system does and when it does it. You will find you actually have more control over the AR process with automation than without it.

Complicated Automation Implementation

Implementing accounts receivable automations might sound complex at first, but it’s a rather painless process. All that is required is for you to get implementation help from your IT department and some user training for your team.

However, when you compare this with the alternative—years of tedious manual tasks dealing with spreadsheets, reports, paper invoices, and more, it’s clear what the simplest route is…

Fear of the Cloud

Many of today’s accounts receivable automation tools run in cloud software. Many businesses today are still wary of cloud technologies despite the fact that there is no longer any real reason to fear it. There are just as many examples of cloud security breaches as there are any other types of compromised systems. So, don’t let your fear of operating out of the cloud stand in the way of integrating AR automation at your company!

Expensive Software

Implementing your accounts receivable system will neither be free nor cheap. However, for most companies, it can be quite affordable! It’s vital that you keep in mind not only the costs but also how automation will help you save money in the long term.

E-invoices help limit late payments and bad debt write-offs. You will no longer need to hire new employees to keep up with manual processes. Cost of manual printing and mailing of invoices or notices will be an expense of the past.

Employees & Customer Perspective

Ultimately, the point of automation is not to replace human contribution, but to enhance it. AR automation allows your team to work better, faster, and smarter. The key is to provide the proper training for your team so they understand the key aspects of the changes in their workflow because of automation.

Not only will your employees see improvements in their workdays, but customer satisfaction will also experience an increase in response to automation. This often leads to better customer relations, thus making them easier to work with. For example, with automated emails, communication improves, giving your customer a fast and easy way to ask questions about an e-invoice.

Hopefully, now you feel both knowledgeable and confident automation is right for your
business. Let’s now look at some best practices for AR automation and automation

AR Automation Best Practices

You are now ready to choose, implement, and benefit from your own AR automation solution. Let’s take a glance at some of the best practices for implementing and getting the most out of your new automated system.

1. Get Your Team Involved in the Process

The better you integrate your team into the implementation process, the better. By getting your team involved early and as soon as possible, you are increasing your odds for a smooth transition.

Everyone needs to be on the same page about what to expect and fully understand their contribution to the overall plan. Get everyone involved in learning the new system before you deploy it so you can see results on day one of your new automated system.

Getting your team on the same page simply means educating them on what to expect, how the new system works, and how it will improve their daily work efficiency. In any new process integrated into a business, everybody on the team must understand their role beforehand so that the process goes smoothly.

2. Designate an AR Solutions Leader

Another best practice to consider in the early stages of implementation of your new accounts receivable solution is to designate a team leader. This person will be responsible for organizing the preparation steps, vetting the product, deploying it, and optimizing its performance. Every team needs a leader to succeed, and a team implementing AR automation into their workflow is no exception to the rule.

The advantage to designating a leader to your AR team is that it will allow only one person other than yourself to work with your solution provider. This will help to streamline communication, eliminate confusion, and quickly tackle issues should they arise. This person will also serve as the main point of contact when your team has questions.

3. Start Small and Take it Slow

When automating important processes in your business, we believe in starting small and taking it slow. It might be tempting to finish reading this guide, feel a sudden wave of inspiration, and attempt to implement your AR automation solution all at once.

As we mentioned before, this process implementation is just that—a process! Therefore, you should be looking implementing your new solution in slowly. For example, begin with 1-2 customers that are aware you’re making the shift as a pilot and work to streamline your process on a small scale first. There is no need to consider full implementation from day one. Keep this in mind, or you might find yourself overwhelmed!

The advantage of implementing this way is that each team member will be able to feel
comfortable working with their new automated solution, process by process. So, remember, start small and take it slow. By doing so, you will gradually increase your efficiency and cut costs in your AR department.

4. Incorporate New Technology With Your Current Technology

Make the most of your accounts receivable technology integration by looking for ways to
incorporate your AR technology with the current tech used by your business.

Your AR solution will not be the sole technological answer to all of your team’s needs.
However, it is a very effective tool for lowering costs, human error, and increasing client
satisfaction. Incorporate it with your existing technology for the most optimized automation process possible.

What To Do Now: Next Steps

Congratulations! If you have made it this far you are nearly prepared to begin implementing AR automation in your business. You now have an important decision to make—choosing an AR automation solution provider.

Have questions?

We’re here to answer them. Contact us today to get started!

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