Automating your account receivable process means you will use software to do tasks that were otherwise done manually. These tasks are time-consuming, repetitive and carry huge risk or error.
It would have been a walk in the garden if we lived in a world where you don’t have to give constant payment reminders and all your customers comply with your terms and payment plans without fail. However, in the real world we have to deal with a myriad of customers; some will adhere to payment plans, others will need repetitive reminders. Then there is the organization of scattered data, which can become a very tedious task. Automating your account receivable process will ensure the delivery of operational efficiency and reduce risks of any human errors that are likely to occur.
Why is Manual Account Receivable Not Efficient Enough?
Imagine using a hand-saw over an electric saw; you’ll think why would you even consider a hand-saw if you have an option of using a saw that requires comparatively zero energy and will reduce the time you spend in getting the job done, with perfect cut as a bonus. Choosing a manual account receivable process is like choosing a hand-saw over an electric powered.
Anybody with common sense would want to have a more efficient process in place for a process such as AR; which is the driving force of their whole cashflow system, cash flow is what determines the success of a business. If the inflow of your cash is less than the outflow, your net cash flow is negative which means you’re doing something wrong.
Cashflow and account receivable go hand-in-hand, when you manage your AR manually your employees are spending more time on a process which can be done in minutes. This comes with an increased chance of human error and reduced efficiency.
Why is an Automated Account Receivable Process Better?
Imagine you have 20 employees who have to deal with 200 customers; deadlines are near and work is repetitive and strenuous. Does not sound like a very great situation. With a manual AR process, you will end up with employees who are drained and yet unable to meet their targets. In this case you either lose money or you hire extra collectors; either way your cash flow is going towards a negative figure. This is where an automated account receivable process will come to the rescue, with automated processes such as a predictive dialer that redials automatically upon the availability of the contact or CRM technology that organizes customer data, your AR management becomes more efficient. Now you enjoy profits, your employees are less strained and can better focus their energy on other important tasks such as putting in place better strategies for collection etc.
Top 6 Reasons Automation Should be Used for Mitigating Risks in Account Receivable Process
Automation will reduce processing time and errors, it will allow your employees to spend less time on a certain process giving them time to go ahead with other tasks. Time in business is money. Lesser resources will be able to get more done in a lesser amount of time. Cutting down your costs incredibly.
When invoices, credit memos and reminders are generated automatically your resources will be freed up and put to better use. Automation at every step ensures a seamless, error free account receivable process from the beginning to end.
Cash Flow can be forecasted
The OTC cycle is how your business receives, processes, manages, and completes customer orders, in a manually managed AR process this cycle can be increased by 90 days. Whereas, when you automate, you streamline the process. Saving time and reducing the number of people required to do a task as well as eliminating the need for overtime work when deadlines are near; will save up to 80% of your costs which results in generating sizable liquidity for your company. Coupled with a good revenue management system you can enjoy full benefits of an automated AR process.
With automated AR processes you mitigate any chances of error, whereas, when the process is manual there is a high risk of human error. With highly sensitive software that can perform risk assessments accurately and maintain response in real-time you avert losses.
With a tiered access center that maintains security only not everyone can access account receivable details. This maintains privacy and security for both you and your customer.
Account receivable automation will ensure your payments are done within the designated timeframe extended to your customers payment plan. The risk of customers going into the debtor category is highly reduced. This is achieved by routine follow-ups and reminders that result in reducing delays and increasing the influx of cash.
Once you understand that an automated process is preferable, you should consider outsourcing your account receivable management to a company that specializes in the process. They are designed to do the job. It will save you money, time and effort. AR is a crucial area in any business; the right BPO uses the latest technology and automated processes that makes the whole process efficient and gives you your desired results.