A successful business is one where the scale of growth is holistic where all the stakeholders are contributing as expected and are rewarded equivocally. The investors who contribute capital to the company should get their dividends in time with capital appreciation of their stake. Likewise, the vendors need to be paid on time so that they can continue to supply whenever there is a requirement.
Customers who are the star stakeholders who buy a brand’s products benefit from value propositions and discounts for their prompt payments. The amount that is due from customers accounts for receivables also known as remaining dues. This is usually an amount that is remaining after subtracting the discount and returns if any. As the company grows and the number of sales increases, it becomes tedious to oversee manual invoicing and check if all the dues are received or not. There are several other issues that delay the process which can be overcome if a business starts using managed accounts receivable services.
Customers may delay because of various reasons. The most common are forgetting the due dates, not having sufficient funds, receiving late or incorrect invoices, and customer dissatisfaction over an invoiced item. Despite a few genuine hardships, clients must be encouraged to pay up. If the managers are not assertive in getting the dues, the company will find a cash flow imbalance and there will not be enough money left in the register or reserves to pay to vendors.
In a world where people face challenges in managing their time, forgetting timelines and deadlines is possible. But the time-management skills of our customers should not impact our inflows. Sending them frequent reminders from multiple channels like email, automated phone calls with recorded messages, and short messages as alerts will not just engage the customers but ensure that they don’t miss paying what they owe to us. Interestingly, it is not possible to remind all the clients who owe money manually without missing some. This is where the automation of accounts receivable steps in to take over the burden of the process from human shoulders and sync it to an AI-driven system that correlates all the data and automatically sends the alerts.
Accounts Receivable Automation: A Game Changer
The challenges faced with manual processing of AR are tedious, labor-intensive, time-consuming, and susceptible to human errors due to fatigue or oversight. It is not possible to complete high-volume invoices without incurring some sort of errors or inconsistencies in a manual process. Automation of the process will alleviate challenges that cause delays in receiving the dues from customers. The entire cycle is streamlined with the existing enterprise and data from order placement, advance details, stock data, and delivery challans are matched to see that there is no error in the invoices. Here is a breakdown of how automated AR can tide over existing issues:
- Timely Alerts
Automation will take the load of sending reminders via emails and messages to clients. There will be follow-up messages as well so that sufficient time is given to the customers to clear their dues. It is a known fact that most paying customers miss a date because of a lack of time management or forgetfulness. A reminder helps them stay on top of their payment schedule.
- Proper Invoicing
Automation reduces errors in invoicing with details pertaining to order copy, returns, advances paid, information of the customer like name and address, etc. There is no delay in processing any number of invoices as the process relies on the work of integration of KPIs and machine learning with semantics and neural language processing.
- Pattern Recognition
Customers who pay in time regularly can be incentivized with loyalty discounts or brownie points that can be redeemed as cash prizes or discounts. There will be others who usually pay late but try to keep up their commitment. The data can point out some financial difficulties that the customer is facing. Offering a payment structure for such clients will help them and the business wins the trust of the customer for a long haul.
Best Practices To Implement Automated AR
After convincing your finance and accounts team about the benefits of using automated AR, it is time to implement it and optimize the system for better results. Here are pointers to make it happen:
- Gauge Requirements
Automation of AR is BPA and is available in suite format, cloud infra, subscription model, or enterprise integration. Depending on the needs of the business, the package’s features differ. Comprehensive tools are more expensive than basic versions. One should opt for specific AR based on their needs and budget. A company should only invest in a higher version if it aligns with business needs, not just because it can afford it.
- Smooth Integration
Even if your team is good at DIY, take the help of a professional to integrate the AR platform with current enterprise or CRM systems. Working in silos will complicate the matter further instead of solving an existing problem. The process will be smooth only when there are no data silos, workflow disruptions, manual entry requirements, and limited insights. Smooth integration will see to it that the data is cleaned before automating the same.
- Trained Teams
Automation does not absolve human influence completely from a process. Training the teams to use automation tools will help in troubleshooting during downtimes. Teams also maximize the use of a tool when they are trained to use it. Any lag can be identified and reported to the tech team for immediate corrective courses when staff is trained to use automated AR.
Conclusion:
Money management is a critical component of an operational cycle. If funds dry out before the inflow of money comes through, there will be considerable loss in time, reputation, and money. The first one cannot be earned back, the second is shaken for a long duration, and the third one cannot completely repair the loss unless the second one is regained. So if a tool eases the tasks for you, it’s time you automate the AR.
