Regardless of the scale, a business heavily relies on its accounts receivables, or AR, for even basic sustenance. People often generalize accounts receivables as the payment you receive for the goods or services your business has sold.
However, that’s not the case. AR refers to the cases where you’ve sold the goods or services but yet to receive the payment for it. However, some of the processes involving AR can involve too much effort for too little gains.
This is where AR automation comes in. In this article, we’ll discuss different accounts receivable solutions that can help you streamline the payment process of your business.
AR Automation might sound like a complicated techy term, but in practice it’s very simple. AR automation simply refers to automating certain tasks of the accounts receivables process so time and effort can be saved.
In AR Automation process, a software is introduced that takes over some of the tasks that, otherwise, had to be performed by an accountant. This in turn speeds up the credit-to-cash cycle.
Note that the credit-to-cash cycle refers to all the actions that are taken in between the purchase of a product to actually receiving the payment for it. The less time the credit-to-cash cycle takes, the more efficient a business becomes.
However, AR automation has many more benefits to offer. Let’s take a closer look at how AR automation can benefit your company:
One of the biggest benefits of AR automation is that it speeds up the payment process. Instead of manually processing invoices and waiting for checks to arrive in the mail, AR automation allows you to send invoices electronically and receive payments online. This means that payments can be processed much faster, which can improve cash flow and reduce the time it takes to get paid.
Another benefit of AR automation is that it reduces errors. Manual processing of invoices and payments can be time-consuming and prone to errors. AR automation, on the other hand, uses software to perform these tasks, which reduces the risk of human error. This can help to ensure that invoices are accurate and payments are processed correctly.
AR automation can also improve customer service by providing a more streamlined payment process. Customers can receive invoices electronically and pay online, which is more convenient than mailing checks. In addition, AR automation can provide customers with real-time updates on their payment status, which can help to improve communication and reduce inquiries.
AR can be used to create personalized payment experiences based on customer preferences and past behaviors. For example, a customer who frequently buys a certain product can be offered a customized payment option or discount.
AR automation can save time and money by automating time-consuming tasks such as invoicing, payment tracking, and payment reminders. This means that employees can focus on other tasks, which can increase productivity and efficiency. In addition, AR automation can reduce the need for manual processing, which can reduce costs associated with paper-based processes.
By implementing AR technology in payment processes, businesses can differentiate themselves from competitors and attract customers who value technology-driven experiences.
Now that we’ve discussed the benefits of AR automation, let’s take a closer look at how you can implement this technology in your company.
The first step in implementing AR automation is to identify your payment processes. This involves understanding how you currently process payments and where you can improve efficiency. For example, you may want to identify areas where you can automate invoicing, payment tracking, or payment reminders.
Once you have identified your payment processes, the next step is to choose the right AR automation software. There are many different software options available, so it’s important to choose a solution that meets your specific needs. Look for software that offers features such as electronic invoicing, payment tracking, and payment reminders.
After you have chosen your AR automation software, the next step is to integrate it with your existing systems. This involves connecting the software to your accounting system and other relevant systems. Make sure that the software is compatible with your existing systems to ensure a smooth integration.
Once the software is integrated, it’s important to train your staff on how to use it. Make sure that everyone who will be using the software understands how it works and how it can benefit them. Provide training materials and support to ensure a smooth transition.
While AR automation can provide significant benefits for companies, there are also some barriers that can prevent organizations from adopting this technology. Here are some common barriers to AR automation in payment processes:
One of the biggest barriers to AR automation is cost. Implementing AR automation can require significant investment in software, hardware, and personnel. For some organizations, the upfront cost of implementing AR automation may be too high, even if the long-term benefits are significant.
Some organizations may resist AR automation simply because it represents a change to their existing processes. Employees may be hesitant to learn new systems or processes, which can make it difficult for organizations to fully adopt AR automation.
AR automation involves the transmission of sensitive financial information, which can make some organizations hesitant to adopt this technology. Companies may be concerned about data breaches, cyberattacks, and other security issues associated with AR automation.
In conclusion, AR automation is a powerful tool that can streamline your payment processes, reduce errors, improve customer service, and save time and money. By identifying your payment processes, choosing the right software, integrating it with your existing systems, and training your staff, you can unlock the power of AR automation and take your payment processes to the next level.