On average, 24% of the monthly revenue of small and medium businesses in the US ends up tied in the overdue invoices. After investing countless hours of work to deliver an invoice, the incidence of the non-paying client is a huge drag and is a trigger for a slew of cash problems. Now that your accounting department has to follow up with emails, phone calls, and other manual methods, they will also have to spend an additional amount of time, work and money to get the payment through.
But that is not all, over time the AR problems summate and turn into the wound that causes revenue leakage and impedes the business growth. A lax and inefficient AR is detrimental to a firm cash flows, result in liquidity mismanagement, and raise bad debt and worse, error in projections that are key to business growth.
High Accounts Receivable is never desirable but how can a business, especially small and medium ones radically improve their Accounts Receivable process and collection?
As one of the leading remote accounting firms in the business that has helped many businesses improve their AR process, we recommend one simple way – Automation of Accounts Receivable.
What is Accounts Receivable Automation?
Automated Accounts Receivable is the automation of repetitive, manual and time-consuming AR tasks to save time, improve accuracy and efficiency of cash flow.
Today’s AR automation software and tools can be leveraged to automate key AR tasks, from credit management, invoicing, reconciliation to collection and servicing. Automation streamlines the entire process, almost eliminates manual dependency, human error and cuts down revenue leakage to pave way for improved cash collection and business growth.
In short, automation solves all the problems AR specialists have been facing for years now to improve cash at hand. How does automation do that? Read on to know:
How does automation simplify Accounts Receivable and boosts collections?
Automation creates many opportunities that were since been dormant due to manual workflow in the Accounts Receivable process. As a remote accounting firm specializing in Accounts Receivable Services, Back Office Accountants has played a crucial role in the automation Accounts Receivable process of many businesses and some of the collection improvements we have encountered over time are as follows:
1. Timely payment and collection notice to customers: The simplest way to improve the AR collections is to deliver prompt invoices and collection notices which most businesses fail to do. Being proactive in invoice management and periodic follow-up process will greatly improve the collection process and bring a method to the madness. However, most accounting departments are either short-staffed or lack a standard procedure for collection and follow up resulting in delayed collections. Automation gives businesses power to set firm rules and guidelines which enable timely invoice and follow-up procedures with minimal manual intervention. This also reduces human errors, overtime cutting down the DSO and improves the cash flow.
2. Enhanced tracking & reporting:With complete information for the end-to-end Accounts Receivable process on one centralized platform, you can track and monitor the process like the back of your hands. But where this centralized platform truly shines is in its ability to belt out customized reports with essential KPIs. Today’s AR software and tools enable different types of filters for customized reporting. Instant access to data, tracking and customized reporting – this is a massive level-up from the days of manual data compilation that used to take days and is riddled with errors.
3. Improved prediction and planning: Not being on the same page and taking days to know what went wrong has been the hallmark of the manual Accounts Receivable process. Given how unorganized manual processes can be, it is highly difficult to make sense, analyse or even predict the cash flow for a business and this is where automation lends a helping hand.
At Back Office Accountants, our Accounts Receivable using the latest automation tools seamlessly classify and categorise your AR accounts based on their payment patterns. Fast, slow, at-risk, strategic are some of the categories we use to help us make predictions and further optimize the process based on the cash requirements.
While the above three aspects resulted in staggering improvement, automaton, on the whole, takes Accounts Receivable to a new level. It gives greater visibility to the teams, provides more control over the Receivable process, reduces DSO, and stabilizes cash flow, cuts down manual dependency and chance of error. That said automation of Accounts Receivable like every other key accounting process is easier said than done. And this is where Back Office Accountants can help.
How Back Office Accountants can help?
Every business’s AR policy differs based on the industry niche, their cash requirements and also the capability of their accounting department. And automation is far from plug and play; many aspects of AR had to be taken before selecting the right software and integration tools that cater to the requirements and goals of the business.
As one of the best remote accounting firms in the business specializing in the Accounts Receivable Process, Back Office Accountants has mastered the art of automating the Accounts Receivable process. We can strategize and execute a customized AR process from the ground up and then can provide customized automation based on the requirements. For more information on Accounts Receivable automation, you can contact us here: https://www.backofficeaccountants.com/
