Accounts receivable is arguably one of the most important business functions. If customers pay for a portion of their purchase on credit, this critical department (or individual) is often solely responsible for collection. The company may not survive if those payments not make.
What is Accounts Receivable Automation?
Accounts receivable automation is the process of sending invoices, tracking customer payments, and ensuring you collect payments owed to you using an application (hence the term “automation”).
Some AR automation tools go above and beyond, reconciling the transaction with your accounting ledger tool and doing a variety of other things to eliminate manual processes and improve payment acceptance.
Cash collection is the lifeblood of any business, and as an accounting firm, we must know how to assist our clients in collecting cash in the most efficient manner possible so that their businesses can grow.
Benefits of Accounts Receivable Automation
Technology has greatly improved the efficiency of accounts receivable management.
Here are the advantages of using this technology to demonstrate its effectiveness and how it helps in improving experience services. Use them to communicate with you and/or persuade yourself of the value of A/R automation.
Get Paid Faster with an Automated Accounts Receivable Process
In an advisory accounting firm, you assist your clients in taking control of their cash flow and getting their hard-earned money into the bank as quickly as possible.
Your business owner clients are likely to be slow to remind clients of outstanding receivables promptly, causing their accounts receivable to accumulate.
Accounts Receivable Automation Saves Time
Speaking of getting your hands dirty and sending emails or making collections calls, AR automation improves work-life balance and saves a significant amount of time in one of the most critical business processes. Set up the technology, connect it to everything, determine your communication cadence (how frequently you’ll email unpaid accounts), and you’re ready to go.
Better, Stickier Customer Relationships
Helping your clients collect their money more quickly will strengthen your relationship with them.
Not to mention, when you surround your client with more services, such as AR automation, it becomes more difficult for them to leave you.
How to Automate Accounts Receivable Processes
Here’s a simple 6-step process you can implement in your company to provide a secure automated accounts receivable service.
Step 1: Pick Your Tool
The first step is to select the A/R automation tool that will use. You can select from the options listed above.
Step 2: Connect to Your Cloud Accounting Software
You should then integrate your cloud accounting software with your A/R automation tool to sync overdue invoices and customers.
Step 3: Setup the Automated Payment Reminder Cadence
The main thing we’re attempting to automate is payment collection. This is accomplished through automated debtor reminders.
So you’ll need to configure the part of the app that controls the reminder templates and decide how frequently you want payment reminders to be sent out.
Step 4: Connect Payment Gateways
Different apps have different ways to collect money.
Step 5: Clean the Books Before Automations Run
These apps work by sending automated reminders based on outstanding invoices.
Payment reminders may sent out on payments that receive but not reconciled if your books haven’t been updated in a while.
So, before sending out payment reminders, make sure the books are up to date.
Step 6: Assess Collection Efforts
Depending on the outcome, you may want to experiment with different reminder templates and messages to see if your collection efforts improve in the future.
Accounts Receivable Automation is a Powerful Tool (and Service)
AR automation is a fantastic way to improve a company’s financial performance and cash position. And using an automated tool to follow up on, collect, and reconcile invoices makes it simple.
Stop Wasting Time And Resources, And Automate Accounts Receivable With Outsourcing Services Providers or any BPO Company.
Hopefully, this guide will be useful in assisting you in improving this critical aspect of your business.