6 Benefits of Accounts Receivable Automation
The experts agree—automation is quickly becoming the most popular and beneficial business strategy.
More and more companies are finding ways to streamline monotonous, time-consuming tasks to save time, money, and their employees’ sanity.
One of the areas business owners automates before any other is accounts receivable.
Today’s market offers a variety of software for accounts receivable automation, each with unique abilities.
Before you begin your hunt for accounts receivable software, let’s discuss the top six benefits of accounts receivable automation.
Enhances Customer Relations
Customers don’t enjoy collectors chasing them down for a bill they already paid, being charged interest for a past-due invoice they never received, or multiple employees contacting them about the same invoice.
Billing actions are a customer touch point and therefore, an opportunity to improve customer relations, not wreck them.
Today’s customer relationship experts advise businesses to reduce friction between them and their customers by providing convenience from start to finish. Customers expect an easy and smooth process. Accounts receivable automation offers them just that.
Good software for accounts receivable automation will build your customers’ perception of you by creating a consistent and accurate billing process.
- Allowing them to view and pay invoices immediately
- Documenting unique customer billing terms
- Ensuring customers only pay for what they received
- Keeping the company and customer on the same page
Improves Cash Flow
Cash flow is the amount of money that goes in and out of your business within a specific time frame.
Maintaining a positive cash flow is crucial to the success of a business as it ensures you have money to pay for employees, suppliers, equipment, and more.
Because your invoicing process plays a significant role in cash flow, automating accounts receivable is one of the best ways to improve it.
Software for accounts receivable automatically sends past due accounts reminders and points out who they are so you can personally reach out if necessary.
It also allows employees to utilize invoice templates rather than manually creating them. Not only does this get the invoice into the customers’ hands quicker, but most software also permits the customer to pay securely online rather than sending a check or cash in the mail.
More advanced software also has inventory management features to provide business owners with a complete view of cash flow. This allows them to take the steps necessary to maintain a positive cash flow, such as borrowing money or negotiating payment terms with vendors.
It Saves Time and Money
Business owners that have automated their AR processes report a 40 percent increase in efficiency.
Removing time-consuming tasks, like sending payment reminders or manually generating invoices and reports, will clear up time for more productive, money-generating tasks.
For instance, collectors can spend more time rectifying exception errors, evaluating real-time aging reports, making decisions based on said reports, and communicating needs by evaluating cash flow.
Software for accounts receivable automation also meets scalability needs. As your company grows, your accounts receivable department typically does, too.
However, AR automation reduces the need for overhead, saving employers’ costs on salaries and benefits.
AR software also makes it easier to keep track of new customers’ credit eligibility and billing terms.
Reduces Human Errors
Research shows that monotonous tasks lead to errors, and while this seems inevitable in accounting, such errors are costly.
Not only do employees have to spend valuable time correcting mistakes, but these mistakes can slip through the cracks until they can no longer be rectified and affect a company’s bottom line.
The most common accounting errors include
- Errors of omission: Failing to record an item
- Errors of commission: Entering an item incorrectly, such as to the wrong customer account
- Data entry errors: Transposing numbers or sending an invoice to the incorrect address.
Automated accounts receivable software strives to eliminate monotonous tasks to reduce errors.
Doing so allows companies to optimize company time, maintain an accurate view of cash flow, and eliminate unpayable invoices.
Most automated software also notifies employees when a credit card has expired or an email address is inaccurate, preventing a compilation of debtors.
Standardizes Data and Processes
The days of relying on a repository of undocumented knowledge from your senior accountant and angry customers receiving conflicting information from various employees are over.
Software for accounts receivable automation keeps track of must-know data, like past due status, customers’ credit card information, billing terms, and more.
Automation software also standardizes invoicing, so customers know what to expect when they purchase a good or service from you.
Not only does this eliminate frustrating guesswork, but it also builds trust between companies and their customers.
Trust is invaluable. Studies show that 41 percent of consumers list consistency as the primary reason they remain loyal to a business.
AR automation software provides business owners with a bird’s eye view of their accounts receivable processes.
The software can help employers make difficult decisions regarding their finances. For instance, it provides a view of underperforming collectors, frequent late payers, or customers who regularly dispute charges.
As previously mentioned, automation software also provides a real-time view of cash flow to ensure the company can continue turning a profit.
This assists them in making adjustments to their billing and paying cycles.
It also generates reviews that would otherwise be manually computed in tedious spreadsheets and not reflect real-time data, such as:
- Aging reports
- Customer credit reports
- Transaction reports
- Reconciliation reports
- Sales reports
- Cash flow forecast report
Automated accounts receivable software does the heavy lifting for business owners, ensuring they have everything they need to take control of their financial health.
Before You Go
There are countless benefits to accounts receivable automation software.
Good software will enhance customer relations, improve cash flow, save time and money, reduce human errors, standardize data and processes, and provide complete visibility.
However, each accounts receivable software offers unique benefits. The type of software you choose will depend significantly on the size of your business, as well as the types of services or goods provided.