Accounts Receivable Automation

The Key Components of Accounts Receivable Automation

Automation in accounts receivable assists businesses in optimizing the A/R process. Since this is especially important as companies scale, many turn to accounts receivable automation software to evolve from manual to automated processes.

The different A/R elements include:

Automated emails. Automate payments reminders to customers at specific times, following up with dunning emails after the due date. You should also be able to customize emails according to the different needs of your customers.

Reports and analytics. Get A/R data in one single point for better visibility and insights for the A/R team and upper management and any collaborating departments such as Sales.

Cash application. Automatically match invoices to payments, including complex ones such as partial and short payments. Eliminate manual errors and speed up processing times.

Credit management and monitoring. Streamline the credit evaluation process by identifying which customers pose a credit risk to your organization, and proactively automating their credit limits.
Disputes and deductions. See all the information that you need in one place in order to resolve disputes quickly. Automatically re-invoice customers after confirming disputes and analyzing patterns in past disputes to apply to future ones.
Invoicing. Distribute invoices in a variety of channels and schedule their delivery to enhance the customer experience and facilitate the timely payment of invoices.

Implementation Strategies for Accounts Receivable Automation

Organizations face a few obstacles when replacing their traditional accounts receivable process with automation. One of the main challenges in migrating to a new system is getting the organizations and employees to embrace change. You’ll need to sit down with internal stakeholders and explain to them how accounts receivable automation will directly impact their cash flow. After you get them onboard, you’ll then need to convince your employees. A good training program that familiarizes employees with the new system will also help employees better understand the benefits of A/R automation and how it can enhance their performance.

Another challenge for organizations is reducing any operational downtime involved in changing systems. To minimize this risk, it’s important to look for an accounts receivable automation solution that integrates with your other existing financial tools, such as ERPs, CRMs and accounting software. Another way of reducing the operational impact of changing systems is by implementing accounts receivable automation in small stages. You can then test and receive feedback from the organization after each stage of implementation.

Best Practices for Accounts Receivable Automation

Once you successfully onboard your new accounts receivable automation software, you’ll want to make sure you’re maximizing its effectiveness from day one.

Here are some tips:

Monitor your key metrics. By monitoring key metrics, you’ll have a good understanding of how well your A/R system is functioning, any issues that arise, and what needs to be done to minimize those issues for the future. Key metrics include but are not limited to: days sales outstanding (DSO), average days delinquent (ADD), accounts receivable turnover ratio (ART), collections effectiveness index (CEI) and bad debt ratio.
Automate your workflows. Save time by automating processes that are time and resource draining, such as analytics reporting, reminder emails, assigning tasks and setting due dates. Create a list of the tasks your collections team is spending time on and create a workflow to automate these tasks.
Develop collaboration across departments. A/R processes affect the entire organization beyond your financial department. Developing contacts in other departments such as H/R and Sales can both help improve A/R processes and demonstrate that your department is crucial in generating revenue for your business.
Switch to a proactive approach with customers. Many A/R departments have a reactive approach to collections: they wait until the invoice is late or overdue and then send an email or call. With accounts receivable automation, it is easier to take a more proactive approach, sending reminder emails to customers and personalizing them according to industry, customer risk, payment due date, etc.

The Main Accounts Receivable Automation Benefits

Although there are a few disadvantages to onboarding an accounts receivable automation solution such as cost or fear of change, the benefits tend to outweigh the costs.

Benefits include:

It streamlines the collections process. Streamlining time-consuming and error-prone processes such as invoice distribution, credit management, bank reconciliation and dispute management helps to reduce delays in payment, enabling a more reliable prediction of your cash flow.
It is more efficient. Automated processes eliminate human error, which can cause delays in invoice processing, leading to higher DSO and impacting your cash flow. More accurate A/R processes also lead to a better customer experience.
It improves the customer experience. Triggered reminder emails and automated workflows help speed up the payment process, reducing the need to chase customers for payment and improving the customer relationship.
It reduces cost. Scaling A/R with collections teams traditionally requires them to spend time tracking invoices and payments on Excel sheets, consuming time and resources that may be better spent on higher-value tasks.
It delivers more accurate A/R data. Since the A/R process is automated, companies can track and monitor data through a centralized dashboard. A/R teams can also use it to monitor performance with traditional KPIs such as total A/R, DSO, collections rate and customer risk.

How Gaviti Delivers Accounts Receivable Automation

Gavit’s invoice-to-cash A/R management and automation platform streamlines the entire A/R process, from invoicing and collections to credit management and monitoring. In addition, it connects with all major – and multiple – ERPs with limited IT involvement.

The platform modules include:

A/R management. Manage collections tasks and workflows. Create customized collections strategies to align with specific customer needs, such as prioritizing customers that pose a greater risk of late payment.

Collection analytics. Track traditional KPIs such as DSO, total A/R, collections rate and unique KPIs. Gain insight into A/R performance on both a team and individual level to see which collections strategies are working and which should be optimized.

Credit management and monitoring. Send online credit applications automatically to both potential and existing customers. Get real-time alerts when customers exceed their predetermined credit levels.

Cash application. Automate the process of matching invoices to payments, eliminating the need for manual matching, saving time and errors. Ensure precise cash allocation with single and multi-bank connectivity.

Disputes and deductions. Track, code, route and resolve customer disputes and deductions quickly by identifying recurrent issues and taking a proactive approach to future issues.

Self service payer portal. Enable multiple customer payment options such as credit cards, debit cards, ACH transfers, electronic wallets, and more. Allow customers to view past invoices and payment history and make credit requests.

Invoice distribution. Send invoices to multiple channels at predetermined times, enhancing the customer experience and facilitating timely payments.

Want to learn more about Gaviit’s invoice-to-cash A/R management and automation platform? Speak to a Specialist!