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Top Benefits of AR Automation Software

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No matter how great business is–record breaking sales, a rapidly expanding customer base, HR busily recruiting–you can still have cash flow challenges. AR automation software is a valuable tool that many accounts receivable teams use to gain visibility and take control of their AR processes. Not only does automation increase efficiency, it’s an effective way to ensure that customer payments are collected when they’re due, every time.

Before AR Automation Software

Let’s take a look at what can go on in a typical accounts receivable department that relies on manual processes. First, a paper invoice must be created for the goods or services sold. All the necessary data is collected and inputted–except that new terms were negotiated for that particular customer and the details weren’t passed on to the person creating the invoice. So there’s the first problem.

The invoices are completed. Stuffed into envelopes, sealed and sent out via snail mail, which like many things is costing more these days (up 6.5% since the first half of 2022). All the debit and credit amounts are recorded into the company’s accounting system. But two numbers were inverted, so that’s going to be an issue to correct at a later date. Oops. 

Payments that are received are entered into the accounting system. Hopefully, no errors during that process. Someone has to make a trip to the bank to deposit the checks. Another person is on the lookout for a payment that was supposed to come in but finds out that somehow the payment reminder never went out…you get the idea. 

Each step of the AR process is riddled with time-consuming, tedious manual tasks that are prone to human error. Errors bog down an already slow process and can make a poor impression on customers. Despite how hard the AR team works, they can’t stay on top of things and benefit from real-time insights into the receivables.

Now let’s see how AR automation software can transform those inefficient workflows into streamlined processes that lead to higher productivity and accuracy and better customer relationships.

After AR Automation Software

That same team has now implemented AR automation software. Electronic invoices are automatically generated and issued through email. The AR team can relax knowing that all the information is accurate–they won’t have to deal with upset customers or chase down the right information. In fact, they’ve discovered that because they’re not spending time correcting errors or stuffing envelopes, they have extra time to work on initiatives that will contribute to the company’s growth–a much more worthwhile use of their time.

Because the software integrates with the accounting system, the information is accurately entered into the books, again without need for human input.

There’s also no need to worry that a payment reminder was overlooked because the software takes care of automatically sending out payment reminders.

The AR team has noticed that payments are received faster now that customers can view and pay their invoices through the self-serve portal…The efficiencies just keep adding up.

The Benefits of AR Automation Software

As you can see, automating your AR workflows has a profound impact on your AR team. But it’s more than that. Your whole business stands to gain from more effective AR processes and the insights the software can provide.

Faster invoices and payments

The truth is the longer it takes a customer to receive a payment, the longer they will take to pay it. AR automation software ensures that invoices are sent as quickly as possible. Customers are able to pay immediately, especially if there’s an incentive to do so. Automation reduces the gap between the time an invoice is sent and the time a payment comes in. 

Time savings

Whether your receivables are run by a team of professionals or it’s a one-person show, there are countless daily accounts receivable manual tasks that can be expedited with automation. Using your staff to complete these processes manually wastes hours each month. Leverage their expertise on other aspects of their jobs such as reaching out to customers and working on projects that are more strategic to the business. With automation, they’ll get more done in less time which is the very definition of efficiency.

Cost savings

By replacing the paper-based processes in your AR with automated digital ones, there’s more to be gained than just time savings. There’s opportunity to reduce overhead. The amount of paper and ink you need to purchase goes way down. You’ll have lowered equipment expenses and a decrease in postage costs. Going paperless also means you’ll have less need for storage space and furniture. 

Automatic reminders

Most AR automation software systems will allow you to set up automated payment reminders at intervals you choose. No more keeping track of who has or has not paid. If a customer has failed to pay on time, the software will automatically send a notice reminding them that payment is due. And instead of culling through spreadsheets, or worse–handwritten notes–to determine which accounts are past due and need to be called, most AR solutions will generate a complete list in a fraction of the time.

More accurate reports

When AR teams have to manually piece together data from multiple sources such as spreadsheets, accounting systems and random documents, there’s a good chance there will be inaccuracies and omissions. Beyond the problem of errors, this manual approach takes time and then once the reporting is done, the data isn’t even real-time, so its usefulness is another consideration. How many times have a few overdue payments come in the day after an AR team member has spent a significant amount of time to produce an aging report that is now not actually up-to-date?

Decrease in human errors

No one is saying that human beings should be removed from AR processes, but the impact of human error is no small matter. It takes time to identify and correct the error. It slows down approvals and collections. And, as mentioned before, even one error can result in an unhappy customer. 

Automation decreases the instances of potential errors and ensures that all invoices are traceable. AR automation software is most effective when humans are integrated into daily processes and are available to handle any exceptions that come up.

Centralized database

When everyone is working from their own spreadsheets, the risk of inconsistencies and communication breakdowns is highly likely. A centralized database minimizes the risk. Everyone can literally be on the same page. And if your primary AR person is sick or sunning on a beach somewhere, it’s easy for others to take care of business without missing a beat.

Standardized processes

Having your AR processes standardized by AR software takes the guesswork and stress out of collections. The whole team is kept current on each customer’s payment status. And here’s something that many businesses don’t think about until it hits them. You may have someone in AR who’s been with you for years and has a wealth of knowledge gained from a history of communicating directly with your customers. It’s valuable information–but undocumented. Unless you get all that insight documented into your AR software system, you risk losing it if that employee is no longer with you.

Improved customer service

Simply sending timely, accurate invoices and reminders on a consistent basis is good enough reason to implement AR automation software. However, you can improve your customer service immensely by providing your customers with a self-serve portal where they can find answers without having to make a call and make payments without having to write a check. 

Payference Provides All the Benefits and More

Any way you look at it, AR automation software is a convenient and predictable tool to gain more effective and streamlined workflows which result in AR teams benefitting at every step of the AR process:

  • Invoices go out faster
  • Collections are accelerated
  • Time saved turns into higher productivity
  • Paperless processes cost less
  • Automatic reminders help ensure on-time payments
  • Reports are more accurate
  • Data is in real-time and accessible 
  • Processes are standardized and customizable

The AI-driven Payference AR solution delivers on all the benefits above, plus it can help you identify high risk accounts and better forecast expected payments and drive collections closer to terms. 

We founded Payference to meet the needs of companies that want to leverage all the benefits of AR automation software that enterprise level companies enjoy–but none of the extras they don’t really need. Reach out today to see how Payference can give you uncomplicated cash control.