When you sell to customers on credit, you’re participating in a common and important customer service approach that can ultimately increase your company’s revenue potential beyond cash sales. However, this potential also bears certain burdens; now you must manage and monitor the entire cash flow process, which can easily become cumbersome for even the lowest volume businesses. Any mismanagement can cause problems that result in critical cash flow issues and harm customer relationships.
For these reasons, businesses of all sizes are converting to accounts receivable (AR) automation, although the levels of said automation vary greatly from company to company, industry to industry. This is best shown by the wide range in the average cost to create, oversee, and file customers’ invoices—from $2 to $9, as told by the American Productivity and Quality Center (APQC). The organization attributes the difference to the level of automation that’s been implemented into the process. Certainly, this range is impressive, but the benefits of AR automation extend far beyond simple cost savings to improving entire AR processes.
So what exactly are these benefits? Let’s take a look.
1. Improved Speed and Efficiency
Automation drives increases in productivity, efficiency, and accuracy in AR processes. Your team can utilize digital templates to create more invoices relative to the time it would take to generate them by hand. Plus, online delivery places invoices into customers’ hands faster. This inherently speeds up the clock in terms of when you should expect to receive a payment back. If you operate with a complicated billing scheme, such as a consumption-based method, automation will help you calculate invoices faster and with greater accuracy.
2. Reduced Cost of Payment Processing
At the end of the day, every business is looking for ways to save cash, and eliminating repetitive tasks that software can do just that. Often, costs incurred by the simple act of processing payments can be minimized when AR is automated. These savings then flow back into your company in the form of enhanced productivity. When you want to reduce overhead, accounts receivable automation often serves as the most effective starting point, allowing your employees to give more of their time to strategic tasks.
3. A “Set It and Forget It” Approach
By definition, automation means you set it up to do its job, then you walk away and leave it alone. A solid AR system lets you set up automated invoice reminders and collection notifications at user-defined intervals. In doing so, your AR software will automatically send reminder invoices to anyone who’s forgotten to pay their bills in a timely fashion.
Additionally, most great accounts receivable automation software can create a call list so collection team members can easily determine—without exerting a ton of energy combing through spreadsheets or hand-written notes—which customers are past due and need to be nudged for payment.
4. 24/7 Reliability
Your business processes don’t have to keep standard operating hours when you implement AR automation. Today’s technology allows you to extend your operating hours in ways that ensure things are getting done 24 hours a day, 365 days a year.
Automation tools don’t sleep or need vacation time, so you can reach your customers whenever it’s most convenient for them, thereby increasing your chances of collecting any outstanding monies.
5. Easy Integration with ERP
Enterprise resource planning (ERP) systems assist small and mid-sized businesses (SMBs) in performing optimally, particularly where financial management, accounts receivable, project management, and inventory tracking are concerned.
When companies grow quickly, native ERP systems often can’t handle the increase in functional requirements necessary to take care of business. If this sounds like you, your organization needs to look for scalable and best-in-class solutions to ensure these concerns are handled before they turn into serious problems.
When your AR system is integrated with your ERP system, you’ll be able to create efficient workflows, minimized complexity, and bolster productivity and revenues. Cloud-based automation systems come with low maintenance costs and high scalability potential. They also tend to provide benefits such as visualization, data analytics, and reporting tools so you can better analyze your current information, identify trends, and forecast the future more accurately.
5. Enhanced Security and Compliance
Paper- and email-based accounts receivable processes are at risk for data breaches, phishing attacks, and fraudulent invoicing, just to name a few of the dangers. Let’s not forget, those methods are also not in compliance with GDPR, which could be a problem all by itself. The more risks you have, the more possible it is for you to experience fraud each and every day.
On the contrary, if your AR is automated, your outbound invoices are completely sent to your customers digitally by way of a single provider, no matter how the end customer chooses to receive those invoices on their side of the process.
Achieve AR Automation With NetSuite and MIBAR
Automating the AR process offers many benefits for companies of all sizes and in all industries. The most significant come from AR automation systems’ ability to generate and distribute more invoices more quickly and accurately, at lower processing costs.
NetSuite Accounts Receivable takes a holistic view of AR and AR automation, addressing each part of the AR process — from sending invoices to establishing credit terms to managing collections and compliance, enabling companies to gain the liquidity needed to shorten the credit-to-cash cycle and position themselves to be able to fund growth and act on investment opportunities. Configurable, real-time AR dashboards and reporting makes it easier to track the entire process and flag areas that need to be addressed.
As a leading NetSuite Partner, MIBAR provides superior knowledge of NetSuite’s features and functionality, allowing us to architect, configure, and implement NetSuite to meet your business needs. Schedule a free consultation today to learn how we can help you automate your AR processes.
Additional Financial Management Resources
Year-End Close: 7 Tips for Taking Back Control
The Hidden Costs of Manual AP Processes and 3 Huge Automation Opportunities