How accounts receivable improves after automation

When hunting for ways to free up working capital, the company board often looks to the accounts receivable department to collect money faster. But how can the accounts team shine if their processes are stuck in the dark ages?

Even with dedicated people putting in time and effort to manage debtors, chasing payments can feel like an exercise in chasing your tail.

Accounts receivable professionals may be working hard, but the cash remains locked in the land of the lost.

Luckily, modern software combined with sound business processes can turn the wilderness that is accounts receivable into a well-manicured garden.

Accounts receivable duties are ideal for automation

We know workplace productivity improves with automation.

And accounts receivable tasks are ideally suited to automation because they satisfy the following automation criteria:

• The task follows the ‘if…then…’ rule. For example: If an invoice payment is three days overdue, then send a first reminder.
• Actions are workflow based. For example: Step 1 is to email a payment reminder at two days overdue, Step 2 is to send a second reminder at day 10, Step 3 is to call the debtor at day 14, and so on.
• Generates a high volume of output. For example: 59 percent of invoices are paid after three reminders – that’s a lot of communication a business needs to generate before the cash is recovered.
• Can be customised from templates. For example: reminder messages can follow a similar template, then be customised for each debtor’s account.

Three key benefits of automated accounts receivable

1. Value staff: When talented staff have the right tools to do their jobs, expect them to achieve even greater success. When the repetitive manual tasks are automated (like issuing reminders), valuable staff time is freed up for duties that require a more personal touch. That’s more time for phone calls to debtors, dispute resolution and customer service.
2. Collect money faster: Your average collection time improves drastically when you move through the invoice-to-collection process efficiently. Automation can issue new invoices, chase overdue payments, and accept online payments. The end-to-end nature of automation clears the backlog along every aspect of the AR spectrum.
3. Reduces costs: An inefficient accounts receivable system wastes human labour on routine tasks – businesses that access finance to overcome cash flow shortages are paying fees on loans and bad debts need to be written off the ledger. Your business shouldn’t be incurring more costs to simply get paid.

Your receivables: before and after automation

So, how does the accounts receivable process change with automation on board?

Productivity and cash flow both improve with the automation of accounts receivable.

And, as no industry is immune from technological transformation, those businesses that get ahead of the curve will reap the benefits.