Automating Your Accounts Receivable Processes

Introduction

What are accounts receivable? How does automating accounts receivable help your business? Let us start by defining the receivables process as a whole.

Accounts receivables refer to your collections for products or services that you have loaned to your customers. AR automation means automating accounts receivable tasks like verifying and processing invoices, rectifying account discrepancies, maintaining records of payment and account statuses, etc. Save most of your precious time, eliminate human errors, through AR automation. 

‍What are the Automatable AR tasks?

Now that we have dealt with what automated accounting is, let’s take a look at how it benefits your business. Here are some of the automatable accounts receivable tasks - 

Invoice Generation

As a business, if you have to send invoices to all your customers, it can be time-consuming. So this is a task that is ideal for automation and simplifies your life. This means you can now create invoices on the fly.

End User Support

Being available for your customers when they need help using your product is critical to your business's prosperity. Using the AR automation mechanism can help solve your problems.

Reminder to Pay

Timely payment reminders to your customers help your business maintain a healthy customer turnover rate. An automatic payment reminder system helps you focus on other important tasks.

Matching Invoices

Track all receivables your business owes through an automated invoice matching system. Check out CratoRev, designed to help you efficiently manage your business accounts receivables. 

Benefits of Accounts Receivable Automation

Faster payments 

 When your AR process is effectively streamlined, it allows you to generate invoices and bank account statements in no time, post customer payments received, and easily look for account inconsistencies, if any. The more efficient your payments receivable system is, the faster you can receive payments from your customers. 

Eliminating human errors 

There are fair chances of errors in manually-inputted invoices. For instance, an extra or misplaced digit alone can negatively impact your business. So, why not let automation do all the work for you? A delay in any aspect of invoice creation for payment can also affect your customer relationship. ‍

Save your time and finances

Not only is automation quick, but it also helps save loads of your financial investment, and helps you set up a cost-effective accounts receivable process in place. With speedy data generation, quick invoice scans, and a host of other user-friendly features, sit back and watch your business grow rapidly.

Accurate Data

With bills such as physical notes, spreadsheets, and digital invoices in the system, manual invoice processing may only get tougher. With automation, loads of that data can be processed in so little time. 

What Happens in the Accounts Receivable Automation Process?

For starters, or anyone seeking to understand what happens in an automated accounts receivable workflow and how it helps a business in the long run. 

Invoicing 

We all know how manual invoicing can go on for hours together, leaving everyone drained and with further scope of error. With automation, invoices are generated in no time, and you can boost your relationship with customers too. 

Dunning

Have you heard of the term dunning? Well, it refers to the systematic communication process with your clients or customers in collecting your accounts receivables due. However, it is not advisable to get aggressive in recollecting your due amount. With the help of automation toolkit, you can send timely payment reminders to your customers, with no hassles.

Receiving Payments

The penultimate step is collecting the payment for your product/service, on time. With an automated accounts receivables system, you can add multiple payment options to provide flexibility to your payers, such as debit/credit cards, ACH payments, etc. Not just that, users can also set up recurring payments at their convenience. 

Sending Reports

Finally, with all the numbers at your fingertips, all you need to do is scan the generated reports that let you make the best and smartest decisions for your business.

A Few Accounts Receivables Errors 

Incorrect information listing on invoice

 If your company is dealing with several customers, there are high chances of a heavier workload that may lead to invoice mistakes such as the wrong invoice number, wrong billing amount, etc. 

Miscommunication with AR team members 

If you have dedicated team members for accounts receivables, ensure they are not burdened with more than they can chew. It may lead to communications gaps between them, and in turn, may lead to internal escalations and probable business losses.

Failure to follow up on pending invoices

It is mandatory to follow up on dues yet to be received by your business. Without an automated AR system, your team may struggle to track overdue payments, which may mess your business up more than you would like. Most businesses operating without automation tend to face this issue. 

Wrong payment invoices and hard paying experience

As it is well known, customer user experiences are ‘sine qua non’ in these digital times. By providing as many flexible payment options as possible; letting them know your generally accepted payment methods, there will be no communication gap between you and your customers. Even if it is only a dot misplaced in your invoice, it may make a huge difference negatively to your business. Hence, automation is necessary, don't you think?

Impact of Accounts Receivables Mismanagement 

• AR errors can lead to confusion and declining customer trust and relationships.
• Insufficient or overstated accounts receivable can tremendously impact your business’s reputation. 
• The inability to maintain a balanced DSO can indicate your business flow direction. It may allow your customers to prolong their pending payments beyond the agreed period. 
• An AR system that is not well organized may lead to billing and invoicing difficulties, payment distribution errors, etc. 

Conclusion

Automating your accounts receivable workflow can tremendously benefit your business. You can begin by analyzing what your automatable AR tasks are. It is important to know how you are benefited, various types of AR issues, and how their mismanagement can impact your business. If you are looking for accounts receivables solutions, check out Cratoflow, an end-to-end automated accounting platform to help you resolve your accounting pain points.