For many companies, the effectiveness of their accounts receivable (AR) process determines how strong their cash flow and working capital is. For those relying on cash to pay bills, pay employees, and stay profitable; it’s important to have an AR automation process in place.

Why AR Automation?

Accounts receivable automation transforms the traditional invoicing process into a streamlined digital process. According to a report from The Credit Research Foundation, 61% of late payments are due to compliance or administrative problems such as incorrect invoices or receiving the invoice too late to process the payment on established credit terms. As a way to reduce late payments and save time, many companies have turned to AR automation tools.

AR Automation tools offer different benefits, but some of the key benefits are as follows:

  • Improved Customer Service – A customer portal provides independence to customers to be able to view outstanding invoices, pay them, and look at history. AR automation tools work with your customers to encourage them to create portal logins. With that, they can take ownership of their invoices. This feature is a time saver and can go a long way. Not only does it improve cash flow, it helps maintain a solid customer/vendor relationship. Additionally, customers can view invoices and even set a future date for payment to remove the task from their list while maintaining proper payment cadence.
  • Simplified Online Payments – As mentioned above, the AR tools with portals allow customers to pay invoices via credit card or ACH, or even by noting that a check has been mailed. The latter avoids the issue of that collections call where the reply is “The check is in the mail.”
  • Dunning and Collections – Most AR tools have an alert system whereby customers can set up dunning cadences. This reduces the amount of uncomfortable collections calls the finance team has to make since the dunning emails provide gentle reminders to customers that a payment is due. In addition, the AR tool embeds a link in the dunning emails to enable customers to pay easily.
  • Eliminating Paper – AR tools cut the paper needed to print and mail invoices. Additionally, they make online payment methods secure and user-friendly to reduce the need for mail handling. Credit card payments can yield points or rewards to the payers, making the arduous task of bill payment beneficial.
  • Enhanced Security – Credit card information is tokenized and secure, so that customers can pay faster with saved card information. Look for the seal of PCI compliance when choosing an AR tool.

By implementing an AR automation solution, your organization can seamlessly automate your customer invoice process to save time and money. Additionally, AR tools also allow full time work from home measures. No one needs to pick up office mail, unless the system alerts you that a check is coming.

AR automation tools integrate with popular accounting systems like Sage Intacct, so that customers do not need to change invoicing software. Once the tool is integrated, invoices are pushed into the AR tool for clients to review and plan for payment. This process not only alleviates paper handling; it also eliminates duplicate data entry and inquiries made by customers to the finance team.

The current crisis has accelerated the need to cut the paper by leveraging technology advances in accounting and financial processes. Integrating an AR automation tool with advanced accounting software offers a great advantage for companies looking to increase cash flow and reduce their DSO.

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Author: CBIZ CompuData

CBIZ CompuData is the premier technology solutions provider for small and midsize organizations. With over 50 years of experience in delivering innovative technology solutions, we are leaders in Managed Cloud Services, Accounting/ERP Solutions, and Managed IT Services. We offer holistic technology solutions to enable our clients to scale, protect, and streamline their organizations.