At some point during the business process, most owners ask the question: What’s the best way to transform our accounts receivable process? Over the years, business owners have focused solely on strategizing. This still plays a crucial role, but now they have a helping hand from the accounts receivable automation.
Automated Accounts Receivable Best Practices
Choosing an accounts receivable automation solution is only the first step in transforming your accounts receivable. Follow these best practices to ensure a seamless transition and a solid return on your investment:
1. Create Seamless Integration for Your IT Infrastructure
Your AR collections software will likely promise the best of all features needed to manage your collections process. Maybe, in time, it might be a good idea to utilize its features. However, this requires a total overhaul of your current practices and retraining your staff.
That’s why it’s crucial to find software that seamlessly integrates with your existing business infrastructure. This ensures you find the quickest and easiest A/R automation solution. It also gives you time to transition smoothly and gradually.
2. Create an AR Dashboard
Businesses rely on an abundance of software to manage several business operations. Developers tout integration as the ultimate solution to improve efficiency, but by itself, integration is useless. You also need a centralized dashboard. That’s because the average American employee wastes a total of 32 days per year just moving through different apps to get simple tasks done.
Centralized dashboards simplify the process of tracking A/R data in real time. They also display KPI data, so your team can track performance and take steps to improve it. These metrics include aging reports, which list the total amount due from each customer and the payment status.
3. Ensure Quick Dispute Resolution
Invoice and payment disputes are among the top reasons invoices remain unpaid for long periods. It’s important to resolve these disputes as quickly as possible to ensure you get your cash in full and on time. If the software can only handle invoicing and payment, it’s not the right solution for your business.
You should be able to execute your entire collections strategy via the platform. This includes automated messages, disputes monitoring, flexible payment options and ongoing negotiations. If the software has no options for these and other solution-focused activities, choose something else.
4. Involve Your Accounts Receivable Team
Managers and business owners make the final decision on technology and business infrastructure. Even so, involving the end-users ensures you choose a platform that actually suits their needs. Here are some important questions to ask:
- What are the most difficult parts of your job?
- What are the most tedious or monotonous tasks?
- What aspects of your job do you think technology might improve?
- What software features do you believe are most important to collection success?
Accounts Receivable Automation Benefits
If you’re still on the fence about whether an A/R automation solution is right for your business, consider the benefits. After all, the higher the return on investments, the fewer reasons you have to continue with inefficient manual processes.
1. Leverage Real-Time Tracking
Having access to your real-time AR aging data is game-changing. This report doesn’t only show you the effectiveness of your collections strategy; it can also predict the financial health of your company. It provides the A/R team with the ability to spot irregularities quickly and resolve those issues.
2. Improve Customer Experiences
According to one study, 75% of firms reported they were able to deliver top-tier customer experiences by automating A/R functions. Automated messages are sometimes better received than personalized ones when the subject is money. Prompt communications also reduce the need to hassle customers for payment, which results in better relationships.
3. Improve Process Speed
Manually tracking each invoice and determining payment status takes time. To add to this, professionals must create reports illustrating the full financial picture. Not surprisingly, 87% of firms improved their speed by automating A/R.
4. Reduce Your DSO
Days sales outstanding is one of the most important metrics for determining the effectiveness of collections efforts. Knowing how long it takes to convert sales and invoices into cash makes it easier to project cash flow. Reducing that number improves cash flow. Firms with automated A/R functions saw an average DSO of 40 days.
Trusted Accounts Receivable Software
Once you’ve considered the benefits of and best practices for choosing and using A/R software, it’s time to make a decision. There is a wealth of options on the market, but it’s important to choose a company that has a history of delivering results.
Gaviti clients see a 30% improvement in DSO. In fact, one client reduced the number of overdue invoices by sixty percent and reduced receivables-at-risk by 77%.
Book your free demo to see what results Gaviti will help you achieve.