When purchasing accounts receivable software, making the right choice is crucial for achieving a high return on investment. Knowing exactly what to look for can help you weed out accounts receivable automation software options that might not have the specific tools your business needs to thrive. Use these points to refine your options.
Collections Teams’ Needs
Before you start looking for the perfect app to achieve full automation of accounts receivable processes, it’s important to understand what your AR team actually needs. The only way to identify these needs is to discuss the matter with your collections team. These are the employees who will use the software and whose work will be directly affected by its features, so there is no better starting point.
Use these questions as a starting point for getting a better idea of their main pain points:
- What are the top issues you need to resolve to boost collections?
- What are the most difficult issues you need to resolve to boost collections?
- What is it that makes these tasks more difficult than others?
- How do you think technology could help make your job easier?
- Which other internal stakeholders should we discuss this with before moving forward?
After completing your needs analysis, you still need to ensure the automated accounts receivable software you choose aligns with your collections’ strategy. This strategy reflects business goals and values.
For example, if your focus is on customer retention, then you want to ensure the tool does more than prompt customers for cash. It should also provide opportunities to communicate outside of invoice payments and build strong relationships, so you can boost payments without sacrificing customer relationships.
On the other hand, if your focus is boosting payments, you need to find AR collections software for which this is a core feature. This might focus exclusively on AR activities: invoicing, sending reminders, offering payment options and tracking paid vs. unpaid invoices.
When researching options, you might also notice some accounts receivable software developers tend to focus on specific markets. Others might attempt to reach all potential markets, but still seem to attract a specific sector.
Finding a software provider that caters to your specific niche is crucial. With this goal in mind, here are some questions to ask:
- Does the vendor have prior experience working with my products, my services, my industry or organizations of my size?
- Does the vendor have a solid understanding of the unique regulations that impact the way I do business and how I can seek collections?
- Is this accounts receivable collections software compatible with my existing accounting systems and IT infrastructure?
- What is the vendor’s strategic plan for the next three to five years and does it align with my plan for my business?
Legal Compliance and Standardization
Some industries and locations have strict rules regarding data management and use. For example, in California, businesses must consider any applicable regulations in the California Consumer Privacy Act. Across the country, businesses in law, insurance, health and accounting also need to follow specific regulations.
Additionally, accounting and collections follow specific guidelines. This is especially true when customers are natural persons and not other business entities. There are several consumer laws created to restrict the ways businesses can collect debts from consumers struggling to pay them. Violating these laws could lead to fines much bigger than the debt owed, so software must respect and follow these rules.
Consider Accounts Receivable Key Performance Indicators
When you make a decision, it’s important not to consider it final. After all, most software developers claiming to provide the ultimate accounts receivable tools introduce a demo. This provides the perfect opportunity for you to test different products over a predetermined period and determine whether it works well for you.
Using established KPIs will make it easier for you to make an objective decision. These are some of the main ones to consider:
- Accounts receivable aging
- Average collection period
- Average days delinquent
- Days sales outstanding
- Receivables turnover ratio
- Total amount recovered
The Bottom Line
Decreased manual tasks, automated workflow, reminders and better forecasting are just some of the immediate benefits when you upgrade to accounts receivable automation software. Book your free demo to see how Gaviti can help you achieve these benefits and so many more.