Writing for Payment Expert, Brian Greenfield, CFO at BlueSnap, analyses how companies can utilise accounts receivable (AR) to enhance their automation processes.
It’s a new year and for large enterprises, scattered data across multiple systems is still complicating the process of reconciling outstanding invoices. This puts unnecessary strain on time, effort, and resources for businesses. Managing these tasks manually is also a challenge, and often causes “balance sheet blues”.
Could accounts receivable (AR) automation be the gift that keeps on giving for finance teams?
By automating AR, accounting departments can make collections more efficient, improve visibility into cash flow, reduce dependence on manual workflows, and execute year-end reporting more effectively.
Streamlined Collections
Manual invoicing processes are costly, time-consuming, and error-prone. Any one of these issues can lead to payment delays. Such setbacks prevent 37% of companies from accurately predicting their cash flow, resulting in poor financial decisions and missed investment opportunities. In extreme cases, they can cause perceived cash shortages, exposing businesses to liquidity crises or insolvency risks.
However, AR automation simplifies payment processes for customers and provides businesses with greater flexibility in payment methods and currencies. Customers, through a portal, email, or mobile access, can view invoices instantly and settle payments from anywhere. They also have the option to save billing information, streamlining recurring payments and improving acceptance rates for businesses.
For businesses, automation means enabling features such as automated late fee calculations, along with streamlined charging and payment collection. AR automation allows payments in multiple currencies and through various methods, such as ACH, SEPA, and digital wallets. This not only expands their reach but also removes payment barriers for international customers.
Improved Visibility
For any business leader, real-time visibility into cash flow and outstanding balances is a basic necessity for informed financial decisions. AR automation provides accounting teams with dashboards that consolidate all data related to cash flow, including receivables statuses, aging reports, and forecasts. This eliminates the need to juggle multiple data points or spend time aggregating information manually.
Automation-generated reports also enhance accuracy by reducing manual data compilation. These regularly updated insights help prioritize overdue accounts and manage high-risk classifications effectively, allowing companies to reduce liabilities and improve balance sheets before year-end.
This avoids a last-minute rush to reconcile data, making the process faster and more efficient. Enhanced visibility also empowers businesses to prepare for increased demand by controlling expenses and inventory. Additionally, presenting accurate financial forecasts sets a positive tone for the new year, positioning the company for long-term success.
Reduced Manual Workloads
AR automation solutions often integrate seamlessly with existing CRM and ERP systems. By automating data entry and matching payments with invoices, automation reduces the time finance teams spend on manual reconciliations, speeding up the year-end closing process.
Automation also offers long-term advantages, like eliminating repetitive tasks. For example, recurring invoices for long-term clients can significantly reduce time spent preparing invoices manually. Tools that send payment reminders at preset intervals ensure timely settlements without manual tracking.
By automating these processes, companies can free up manpower to focus on higher-value objectives and effectively respond to additional client requests.
With all this in mind, automating accounts receivable is an investment in a company’s future—one that boosts efficiency and optimises resource use. By streamlining collections, enhancing visibility, and reducing manual workloads, AR automation helps finance teams avoid the “nightmare before Christmas” and manage year-end reconciliations with ease.
