Accounts receivable is a key component for every business, but not all have the resources or patience to manage the process smoothly. Those looking to save time while cutting ahead of its competitors are turning to accounts receivable automation. And it's no surprise, given the game-changing benefits it brings to financial processes. This blog will explore the transformative power of AR automation and how it can drive businesses towards greater growth and improved productivity.
The critical role of accounts receivable (AR)
Accounts Receivable (AR) refers to the money that a company is owed by its customers for goods or services sold on credit. It can also be defined as the total amount of money that is yet to be collected from clients who have already received products or services from a business.
In other words, accounts receivable represents risk - the leeway a business owner has given its customers by allowing them to pay for goods or services at a later date. It relies on both trust in others and a strict tracking system for all transactions.
Your business needs a strong accounts receivable process
In a world where no person or company gets far without funds, a productive AR process is critical to both sustenance and growth. Failing to follow up on payments leads to cash flow issues - where the business has to delay payments, borrow money, or even default on its own debt due to lack of money. It's a recipe for disaster with the potential to have game-ending consequences for organizations of every size.
What’s at stake with accounts receivable?
Some leaders make the mistake of assuming the risks don't apply to them. How much more important than other core business functions could the AR process really be? Well, as it turns out, quite a bit. AR is relevant to everyone because late payments are pervasive and on the rise. A report by Atradius shows exceptionally deteriorating conditions in the B2B market, which has seen a 13% increase in late payments during the past year alone.
Why managing accounts receivable without automation is difficult
With it being as important as it is, you might wonder why accounts receivable isn't always given the attention and resources it deserves. The reality is that finance professionals are often handling a variety of other tasks as well - from billing and invoicing to customer service and more. It doesn't help that many processes within accounts receivable are manual and time-consuming, either. For example, manually inputting invoice data and tracking payments can be both tedious and prone to human error. Every single line item and payment must be entered correctly, or the entire process can fall apart.
Smaller organizations are even more likely to struggle with managing accounts receivable, as they may not have a dedicated finance team in-house. This can lead to delayed payments, missed invoices, and ultimately impact cash flow and the overall financial health of the business.
Supercharge your way to streamlined accounts receivable with software
The accounts receivable process is about much more than simply sending invoices and collecting payments. It requires a strategic approach, proactive communication with clients, and timely follow-up on outstanding invoices. Easier said than done when you’ve got a business to manage.
Luckily, there’s technology like Chaser available today to help you. Automated accounts receivable software is designed to streamline and simplify the process of managing and tracking outstanding payments from customers. These tools automate various tasks, such as invoicing, payment reminders, collections management, and reporting.
Think of automated software as a digital assistant for your accounts receivable department – it takes care of the repetitive and time-consuming tasks, allowing your team to focus on more valuable activities.
In the following section, you will learn how leveraging automation in AR can literally and figuratively pay off for your business.
Streamlined invoicing process
The first and most impactful benefit offered by automated accounts receivable software is efficiency. While humans have certainly proven themselves capable of handling repetitive tasks, they are not immune to error. They're also far from 100% efficient. Automation, on the other hand, can perform these tasks without error and at a much faster pace.
The invoicing process is a perfect example of where automation can truly shine. With accounts receivable automation, generating and delivering invoices becomes a streamlined process. The need for manual data entry is virtually eliminated and invoices can be generated and delivered with just a few clicks. This not only saves time but also reduces the likelihood of human error.
Businesses further benefit from the faster invoicing cycles and improved cash flow that come with automation. Investing in a strong AR process can mean cash in hand rather than waiting weeks or months for payments to come through. That's great from a perspective of both stability and growth. Every company could use more liquidity in its coffers to pay staff, upgrade equipment, or even just set aside a reserve for a rainy day.
Improved cash flow management
Cashflow management is key to any business's success. But at the same time, it's far from easy. While every business owner wants consistency, the reality is that monitoring and controlling inflows and outflows of cash requires a level of meticulousness that most aren't equipped to handle. Fortunately, technology can assist businesses with managing their cash flow more effectively.
Automated AR software provides real-time insights into accounts receivable, allowing for better visibility and informed decision-making. With a clear picture of cash flow, business leaders are empowered to easily identify areas that need attention and take proactive measures to maintain a healthy cash balance.
Automated payment reconciliation processes can also help streamline cash flow management by identifying potential bottlenecks or discrepancies before they become serious issues. This reduces the chance of errors and delays in the payment process while simultaneously improving accuracy and efficiency.
Enhanced customer relationships
It's easy to get caught up in the internal advantages of automated accounts receivable software and forget that there's an entirely different side to consider - customers. Whether businesses or consumers, the clients who pay a company ultimately determine its success. If they're unhappy, brand reputation suffers and prospects become bleak. AR automation's potential to reinforce customer relationships is a crucial benefit that shouldn't be overlooked.
The key to fostering stronger customer relationships lies in providing a seamless and personalized invoicing experience. Advanced AR software vendors know this and create systems that come with customizable templates. These templates enable businesses to create professional-looking invoices that reflect their brand image and messaging. Doing so adds a personal touch to the billing process, which helps customers feel more valued.
Another way automated accounts receivable software helps enhance customer relationships is through improved communication. AR automation allows businesses to send out automatic payment reminders, reducing the likelihood of late payments and associated disputes. This proactive approach not only ensures timely payments but also improves transparency between businesses and their customers.
Empowering financial insights
A company's future success is only as good as its ability to effectively manage its accounts receivable. In today's fast-paced business environment, simply tracking payments and invoices is not enough. Organizations need full visibility into inflows and outflows, as well as the ability to step back and take in the bigger picture. What's working? What isn't? And perhaps most importantly of all, what can be done better?
Automated accounts receivable software provides clear answers to these very questions by collecting performance data and presenting it in a digestible and actionable format. Through features such as real-time monitoring of metrics like Days Sales Outstanding (DSO) and customer payment behavior, businesses can proactively make decisions to improve their financial standing.
But the true power of this software lies in its ability to forecast cash flow projections. Looking into the past, this technology enables companies to look ahead and prepare for potential challenges by considering factors like historical trends, seasonal fluctuations, and upcoming expenses. The more data that is fed into the system, the more accurate and reliable these projections become.
That's an incredibly valuable tool in today's fast-paced business landscape, where financial stability is crucial for sustainable growth. With the ability to anticipate cash flow gaps and surpluses, companies can make informed decisions about when to invest in new projects, hire more employees or suppliers, or even negotiate better payment terms with clients.
Simplified operations
Businesses today have more than enough things to worry about. They're pressed for time, short of money, and facing increasing competition at every turn. In this environment, the last thing they need is to spend hours on manual tasks. The company that organizes itself to run efficiently and effectively is the one that will survive.
Automation can improve AR by assuming some of the process' most tedious and time-consuming tasks. But that's not all it can do. By reducing manual intervention and administrative overhead, automation allows finance teams to shift their focus from day-to-day operations to more strategic initiatives and value-added tasks. It's not just a matter of avoiding wasted time, but rather of freeing up resources to focus on what really matters.
Even beyond improving AR-specific tasks, automation has the ability to drive operational efficiency across an entire organization. The right software can integrate with existing systems and streamline data management to ensure accuracy and consistency throughout all departments. Imagine how much smoother your business could run if data was automatically transferred between departments - no more manual data entry, no more discrepancies between systems. Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems, when integrated with AR automation software, can create a seamless flow of information that leads to better decision-making and overall business success.
Automation also brings transparency to the AR process. Real-time data and reporting allow finance teams to have a clear view of outstanding invoices, payment histories, and customer behaviors for better forecasting and decision-making. The stringent regulatory environment of today's business world also requires accurate and transparent financial reporting, which can be easily achieved with AR automation.
Leverage your accounts receivable process with Chaser
Life is chaotic, and you have better things to do than chase after payments. That's why Chaser is here to help. Chaser is the accounts receivable market's foremost software solution, with the aim to stop your late payments and streamline your entire accounts receivable processes.
Chaser's intelligent software takes care of everything from credit checks to payment reminders and follow-ups. That means no more time-consuming and manual tasks, no more missed payments or forgotten invoices, and most importantly of all, no more wasted resources.
To find out more about how Chaser's all-in-one credit control platform can benefit your business, book a demo with us or start your no-obligation 10-day free trial today. Let us help you take your receivables management to the next level.
