All businesses look forward to being paid for their products or services. The cherry on the cake is, getting paid on time. However, as the manual invoicing process is long and cumbersome, the accounts receivable tend to get accrued. This is where accounts receivable automation comes to rescue. As you can make out from the term itself, AR automation helps you automate all repetitive and time consuming tasks which are otherwise done manually and are prone to errors.
Benefits of automating the accounts receivable process
By automating the AR process you will be able to streamline the collection process, comply with legislations and send out all invoices in an electronic format. Here are some of the benefits of automating the AR process:
- Faster and more efficient handling of invoices
- Quicker payments
- Improvement in cash flow
- Better accuracy or lesser errors
- Enhanced security
- Better relationships with customers
- Reduction in distribution cost
Let us understand some of the tangible benefits in more detail:
Reduced cost: All resources have a cost associated. Delays in payments lead to losses and all missed invoices mean loss of revenue. AR automation helps the business cut down all these costs. The business can also save manpower cost as the manual tasks are reduced. Distribution costs are also reduced as all invoices are distributed digitally.
Higher efficiency: With an AR automation tool you can automatically generate invoices, reminders and credit memos. This will make the process more efficient and also free up resources. By automating the process you will see impact in the entire spectrum from forecasting cash flows to handling any overdue payments.
Greater accuracy: Automated process are less prone to errors as compared to manual processes. AR automation systems are capable of performing risk assessment and have a real-time response to prevent losses.
Enhanced compliance: AR automation systems like Monite have a tiered access, which gives access to only authorised accounts. By offering a single source of truth and a unified dashboard the business can easily comply with all local laws.
Faster payments: Through AR automation you can ensure that all your payments are on track. Regular follow-ups and reminders minimise delays and help businesses maintain a working capital reserve. With all the information at your disposal you can forecast the cash flow and reduce accrual of bad debt.
How to automate the accounts receivable process?
If you wish to embrace automation for your accounts receivable process, below is the roadmap you need to follow:
- Onboard your accounting team : Transformation of AR process is a major project and you must involve the accounting team at each step. They will be able to give insights on end-to-end AR process, audit the existing process, advise on common obstacles and mitigation strategies.
- Decide the goal and record the requirements: AR automation for large businesses is usually rolled out in phases. You must focus on the ‘must haves’ for your business and set clear milestones. This will help you define clear project timelines and also stick to them throughout the roll out.
- Select a reliable partner: The market is currently bustling with AR automation system providers. This makes the task of picking up a vendor overwhelming and tricky. This will be one of the key decisions you need to take.
- Identify a champion or leader: Identify a leader who will monitor and review the automation project. They will also act as the SPOC for all stakeholders and work closely with the chosen solution provider maintaining a high-touch communication, address all concerns and clarify confusions.
- Roll out the changes: Before you go-live, make sure you test the entire system thoroughly. The new system should be seamlessly integrated with the existing systems and workflow. Train the accounts receivable team to familiarise them with the new tool and environment.
Factors to consider while selecting an AR automation solution provider
As mentioned earlier, decision of finding the right solution provider is an important and tricky one. While evaluating the different vendors, consider the below factors and make sure your preferred choice ticks all the boxes:
- Open platform: Pick a solution that is compatible with other platforms as the solutions your current and future customers use will be dynamic.
- Global support: If your business has a global presence or you intend to expand, it is good to have a solution which supports the countries where you operate.
- Compliance and legal requirements: Ensure that the system meets all legal requirements as defined by the law of the land.
- Seamless and complete integration: AR automation should seamlessly integrate with your ERP system.
With accounts receivable automation your goal will be to simplify the issuance and distribution of invoices. Even if your customers do not have similar digital capabilities, you can still fully digitalize your process.