What is Accounts Receivable Automation, and how can you leverage it for your business?

Introduction

The efficiency and accuracy of your financial processes play a pivotal role in the success of your business. One such critical aspect is managing Accounts Receivable (AR). This encompasses a range of tasks, from sending invoices and confirming their receipt to chasing overdue payments and updating customer records. Recognizing the potential for improvement, many businesses are turning to AR Automation to streamline these processes. But what exactly is AR Automation, and how can your business benefit from it? These are the questions we address in this blog. 

What is Accounts Receivable Automation?

Accounts Receivable (AR) refers to the money owed to a business by customers who have purchased goods or services on credit. The AR process includes tasks such as sending invoices, asking for confirmation that an invoice has been duly received, requesting payment of invoices that are becoming due, following up on overdue payments, reconciling payments received, and updating customer records. 

Most of these tasks can be automated to streamline the process of collecting payments on time, which is the main objective of your Accounts Receivable team. By automating AR processes, you minimize the manual effort needed to complete them, improve cash flow, and reduce the risk of missing invoices or missed payments – and these are just the headline benefits.  

Below we zoom in on how AR Automation can transform your business.

What are the benefits of AR Automation?

Implementing AR Automation software offers advantages such as higher efficiency, fewer errors, and better cash flow. Modern AR Automation solutions automate manual processes such as payment matching, invoicing, and collections, drastically reducing the time and effort required to complete these tasks. Below is a summary of some of the main benefits: 

1. Improved cash flow: AR Automation helps you to collect payments with more speed and efficiency, improving cash flow. For example, if you send an invoice that is not fully compliant or has been billed wrongly, your customer will reject it, and the invoice will be in dispute, with the result that you will not get paid when you expected. With automation, you no longer send out “wrong” invoices that could trigger late payments. 

2. Saving time: AR Automation minimizes the amount of manual work needed to manage Accounts Receivable workflows. These manually driven tasks often include forwarding invoices to customers via email or uploading them to the required platform; sending out statements of accounts; requesting the status and settlement of pending invoices; the cash application of incoming payments – and many more. Your AR clerks are too talented to spend most of their time on routine manual tasks; automation will allow them to focus on strategic tasks that add value. 

3. Improved compliance: By automating the AR process, businesses can minimize the risk of errors, such as incorrect billing information or missed payments. This helps improve customer relationships because the number of disputes and invoice rejections will be greatly reduced. 

4. Improved customer relationships: Another way that AR Automation enhances customer relationship management is by providing customers with accurate and timely information. In this way, you also simplify the process for them. AR Automation makes it easier for your customers to pay you – and to pay on time, without error. In the end, that is what everyone wants. 

Additionally, AR Automation software can provide new data insights, enabling businesses to make data-driven decisions to optimize their processes. 

To sum up, by leveraging the benefits of AR Automation software, companies can improve their financial operations and achieve better overall performance.

What are the different types of Accounts Receivable Automation solutions?

There are different types of AR Automation solutions on the market. Choosing one type over another naturally depends on the needs and goals of each business. You can also implement more than one solution type to automate more AR processes. Here are a few examples: 

Invoice management or invoice delivery: This type of solution automates the process of creating and sending invoices to customers. This can include features such as automated invoice creation, delivery, and tracking, as well as the ability to customize invoices and payment terms. 

Collections management: This type of software helps you manage your invoice collection more effectively by automating a cumbersome manual process of sending statements of accounts and payment reminders to customers. It also helps you to prioritize the collection of some customers based on their payment history. 

Payment processing: This software enables customers to pay electronically through different payment methods. It may include features such as payment reminders, payment tracking, and payment reconciliation. 

Analytics and reporting: When using analytics and reporting software, businesses get real-time visibility into their AR performance, allowing them to identify trends and patterns to make informed decisions. Make sure your choice of software has actionable features such as dashboards and reports.

The impact of invoice delivery automation on your accounting department and business

Implementing invoice delivery automation can impact your accounting department and business operations in different ways. Let’s explore some of them: 

1. Fewer late payments by reducing the amount of missing invoices and getting alerts in case of recipient errors. 

2. Improved compliance by validating invoice data against country-specific legislation and ensuring complete and correct invoice data information. 

3. Reduced errors by decreasing incorrect or missing information on invoices sent out. This can be done by setting up rules ensuring that required fields on invoices are not empty and by having invoice amount verification. 

4. Touchless AR invoice conversion and delivery process by auto-converting data to any required invoice format and auto-distribution to any invoicing platform or emails. 

5. Reduce manual effort and dependencies by automating and taking time-consuming and repetitive tasks out of the workload of your busy AR clerks. 

Let’s recap! 

Accounts Receivable Automation software solutions have many benefits for businesses, such as increased efficiency, reduced errors, better cash flow, and improved to name but a few. There are different types of AR Automation solutions available, including invoice management, collections management, payment processing, credit management, and analytics and reporting. 

At Cevinio, we have developed an advanced invoice delivery automation system. If you would like to learn more about how we can help you achieve your Accounts Receivable goals do get in touch.