How to Automate Accounts Receivable: Benefits and Strategies

Introduction

Accounts receivable automation is a valuable tool for businesses of all sizes. It can help streamline the accounts receivable process, increase cash flow, reduce manual data entry, improve accuracy, ensure prompt payments, easily send and track invoices, and reduce delinquencies. In this article, we’ll explore how to automate accounts receivable, the benefits of doing so, and the strategies you can use to get started.

Establish an Automated Payment System

The first step in automating accounts receivable is to establish an automated payment system. This involves streamlining the accounts receivable process and increasing cash flow. Streamlining the accounts receivable process can be done by simplifying the way customers pay their bills. For example, you can allow customers to pay online using credit cards, debit cards, or bank transfers. This will make it easier for customers to pay their bills, which will in turn lead to faster payments for your business.

Increasing cash flow is another important benefit of establishing an automated payment system. This can be done by offering discounts or incentives for customers who pay early. According to a study conducted by the University of California, Irvine, businesses that offer discounts for early payments can see an average increase in cash flow of 9%.

Leverage Software Tools

Software tools are another key component of automating accounts receivable. These tools can help reduce manual data entry, improve accuracy, and provide valuable insights into your accounts receivable process. For example, you can use accounting software to automatically generate invoices, track customer payments, and generate reports. You can also use cloud-based software solutions to give customers real-time access to their billing information.

Using software tools can also help you reduce manual data entry. This can be done by integrating your accounting software with other third-party systems, such as your customer relationship management (CRM) system or your ecommerce platform. By integrating these systems, you can avoid the need for manual data entry, which can save time and reduce errors.

Implement Payment Reminders

Another strategy for automating accounts receivable is to implement payment reminders. Sending timely reminders to customers can help ensure that payments are made on time. According to a survey conducted by the American Institute of CPAs, 63% of respondents said they would be more likely to pay their bills if they received timely reminders.

Payment reminders can also help you build strong relationships with customers. Customers appreciate timely reminders, as it demonstrates that your business values their business. Additionally, sending payment reminders can help reduce delinquencies, which can improve your business’s overall cash flow.

Utilize Online Invoicing

Online invoicing is another valuable tool for automating accounts receivable. Online invoicing platforms make it easy to create and send invoices, as well as track payments. Many of these platforms also offer features such as payment reminders, recurring payments, and payment plans. This can help you ensure that customers pay their bills on time, which can increase your business’s cash flow.

In addition, online invoicing platforms can help you save time and reduce errors. Instead of manually creating and sending invoices, you can quickly and easily generate them with just a few clicks. This can save you valuable time, as well as reduce the risk of errors due to manual data entry.

Utilize Automated Collections

Finally, you can utilize automated collections to help automate your accounts receivable process. Automated collections tools can help you identify delinquent accounts and take action to collect payments. This can include sending automated emails or text messages to remind customers to pay their bills. Additionally, automated collections tools can help you reduce delinquencies by flagging high-risk customers and taking proactive steps to ensure timely payments.

Using automated collections tools can also help you improve customer relationships. By taking proactive steps to ensure timely payments, you can demonstrate to customers that your business values their business. This can help build trust and loyalty, which can ultimately lead to increased customer satisfaction.

Conclusion

Automating accounts receivable can provide numerous benefits for businesses of all sizes. From streamlining the accounts receivable process to increasing cash flow and reducing delinquencies, automating accounts receivable can help your business save time, reduce errors, and improve customer relationships. To get started, you should establish an automated payment system, leverage software tools, implement payment reminders, utilize online invoicing, and utilize automated collections.

By following these strategies, you can begin to automate your accounts receivable process and reap the many rewards that come with doing so. With the right tools and processes in place, you can ensure that payments are made on time and reduce delinquencies, all while improving customer relationships and increasing cash flow.