AR automation simplifies an accountant’s job by taking the most monotonous and repetitive parts of accounting off your schedule. Find out more about AR automation and the five most important automations you should already have.
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Why Should You Automate?
Accounts receivable automation does not replace a skilled accountant. Instead, it takes the most monotonous and repetitive tasks in the accounts receivable process and ensures they are done quickly and accurately.
Automation in accounts receivable makes it possible to:
- Streamline the accounts receivable process. Automated tasks make the process happen smoothly and remove long delays.
- Focus more time on meaningful tasks. Accountants are skilled workers who have years of schooling and experience. Stop wasting their time by forcing them to deal with menial data entry. Automation does the humdrum tasks for them so they can focus on more critical projects that deserve their full attention.
- Get paid faster. Manually creating and delivering an invoice can be a complicated process that is slowed down more by waiting on your customer to review, approve, and send payments. At each step, there is more potential for human error and delay. Automation can change the payment timeline from weeks to minutes.
- Reduce errors. With each manual process there comes a risk of human error that can carry expensive consequences. A misread figure or piece of data can result in overcharging a client, not having the inventory your business needs to function, or significant delays in fulfillment. Automation removes the chance for error. As long as the information is inputted correctly at the start, it will be consistent throughout the entire process.
- Improve retention in your finance team. Even the most dedicated accountant dreads piles of data entry. Automation removes the most common pain points in finance teams, which helps keep your team happy and loyal to your business.
What Happens if You Don’t Automate?
If you don’t have AR automation, you might recognize a few of these pain points and complaints from your finance team.
- Slow invoice processing. Waiting longer than 10 minutes to create and deliver an invoice is too long. A backlogged invoice process means money isn’t moving, which can significantly impact the functionality of the rest of the company.
- Burnout and high turnover. With no automation, accountants are directly responsible for every part of the AR process. This can lead to a high-stress environment because a single mistake could lead to major complications. The pressure on the finance team to perform perfectly every day will lead to burnout and a high churn rate.
- Overdue and forgotten invoices. Even a small to medium-sized business can deal with hundreds of invoices a month. Asking your finance team to remember and track each invoice and its progress manually will only lead to forgotten and overdue invoices falling through the cracks, and even the smallest overdue invoice is forgotten money that should be yours.
What Should You Automate?
While the AR process can be slightly different for each company, there are five tasks every company should always automate.
1. Creation and Delivery of Invoices
There is absolutely no need for manual creation and delivery of invoices. It is repetitive, boring, and the biggest area of human input error. Automation helps you remove human error and streamline the invoice process to completion in only a few clicks.
2. Reconciliation
Reconciliation is managing the number of unpaid customer billings to the accounts receivable total stated. This is an essential procedure because it ensures your company isn’t getting short-changed and that all outstanding invoices and debts are paid in full. Automation quickly searches the ledger and invoice records and what has or hasn’t been paid.
3. Credit Management
Your business should have a plan to track and guard against late payments or defaults. Without automation, some businesses find it difficult to evaluate and track the credit of their customers. Automation streamlines that process and can automatically send reminders of past due payments and outstanding balances to customers.
4. Early Payment Discounts
Special discounts for early payments can be hard to track because each vendor and customer can have different rates. Automation removes the burden for the finance team to remember and implement any unique pricing, ensuring all discounts are processed accurately, which raises customer satisfaction and makes sure you get paid the amount you deserve.
5. Tracking Payments Due
Tracking payments due allows your business to know which invoices have and have not been paid. Manual management of tracking payments due takes time, and it quickly gets complicated to manage and organize each invoice. Automation takes care of the process for you. It can automatically send reminders to clients who are past due.
Automate from End to End
All of AR can benefit from entire or partial automation, but starting with these five points will help your business save money and streamline the AR process. Download our ebook to learn more about accounts receivable automation best practices and how automation can benefit your business.