How to scale your AR process with your growing business

Nov 2, 2021 by Brandon Jones

Business growth is great, but things can get messy as your business expands. Chances are that as you grow, you’re going to outgrow your original business structure. This is why scaling is so vital to your business.

Scaling can take place in many different areas of your business, including your accounts receivable process. With a greater number of customers, your financial team will have a greater number of invoices to process. If your business doesn’t have a good plan for scaling, your AR department will suffer. However, putting the effort into scaling your business will have immense benefits in the end.

What is Scalability?

You may have an awesome business that’s fulfilling a real need for your customers. But no matter how much potential you have, your business will never be able to become truly successful without good scalability.

A business with good scalability has the ability to take on more work and more customers while still remaining efficient. Growth is essential to success, but good scalability is essential to efficiently maintaining that growth. The ability to scale helps provide a solid foundation that readies your business to withstand any amount of growth.

Most new businesses won’t have the scalability or the resources to handle quick growth, and there’s no problem with that. However, once growth begins, improving scalability should be one of your main focuses, as good scalability will have a great impact on the success of your business.

Is Your Business Scalable?

If your business is experiencing sudden growth, it may be time to take a closer look at the scalability of your business, particularly in the accounts receivable department.

Invoicing is an integral part of your business and an area where scalability is necessary. When your business grows, the number of customers you serve increases. This means more purchases, more invoices, and more accounts receivable. Efficiently running your financial processes is absolutely essential at this point.

Look at your accounts receivable process. If rapid growth continues, is it going to be able to handle additional accounts receivable? If it’s not, take immediate steps to improve scalability in your AR department.

Ways to Improve AR Scalability

With a growing business on your hands, you’re going to want to take some serious steps to scale up your AR processes so that you can efficiently manage the extra business.

Improve Cash Flow

Business scalability is an investment, and you’re going to need financial resources to improve scalability. Businesses often underestimate the financial strain a growing business undergoes.

Growth causes business needs that are often expensive. In the beginning, these needs tend to outstrip profits. For example, you may need to upgrade equipment, increase inventory, hire additional staff, attain more facilities, and/or improve marketing. Oftentimes, these expenses are present before revenue starts increasing. As a result, you’re going to need good cash flow to manage business growth.

Adding payment links to invoices, billing reminders, sales orders, and statements through a service like Paystand can encourage customers to pay immediately and quickly. Flexibility in payment methods can add to the convenience factor, and scheduled payments can be triggered automatically, all of which can improve cash flow.

Cash flow is mainly the responsibility of the AR department. It may seem like a circular cycle, but if you have efficient accounts receivable processes, you’ll have the resources to scale them up. Focus on improving your AR department if it isn’t where it should be. This will have exponential benefits in the long run.

Check Communication and Integration Issues

Small businesses generally have fewer struggles with communication. If only three people are involved, calling, texting, or emailing them is not a problem. However, when a business grows, everyone in it is affected. Specialized jobs open up and more employees come on board as everyone struggles to adjust to new jobs and increased work.

Growing businesses tend to struggle with communication. Oftentimes existing employees are unsure exactly what their jobs are, especially as more specialized personnel become involved. Growth also results in new processes that are often unfamiliar and unclear. As a result, team members may not even know what they’re doing or what they’re supposed to be doing.

In the AR department, both customer communication and team communication are essential. As you work on improving communication, defining new processes, and training new personnel, your ability to communicate with your clients can suffer. For example, a customer may call with a simple question, only to be referred repeatedly to a dozen other employees who still can’t answer the question. Disorganization results in communication failures like this, and customers won’t put up with this kind of customer experience for long.

Paystand helps improve communications by providing seamless integration. Our software helps companies easily connect payment systems to ERP, eCommerce, mail, CRM, and accounting systems, putting critical information at your staff’s fingertips.

Improved communication can save your business time and money. While a growing organization can’t develop a perfect communication system overnight, you should realize that poor communication is a major obstacle to good scalability. Take steps as soon as you can to eliminate communication issues as much as possible.

Fill Knowledge Gaps

New businesses often only need a small number of employees who can handle a variety of jobs within your company. Knowledge gaps exist, but they’re manageable. However, as your business grows, reducing knowledge gaps is vital.

You probably realize that you’ll have to bring in more staff as your business experiences growth. However, more specialized team members will be essential to reducing those knowledge gaps. For example, as you computerize and automate AR processes, consider hiring IT professionals to troubleshoot tech issues.

Another problem that growing organizations experience is poor records. During business startups, employees often forget to document progress, relying on what they can remember. All the knowledge they’ve gained is lost when they leave the company.

To prevent this problem, start encouraging healthy documentation habits in your team. As you begin documentation, you’ll want to start developing templates for different processes in your business, such as spreadsheets, checklists, or blog posts. In the long run, templates like these save hours for your team.

Evaluate Security

As a company grows, security and compliance issues can expand as well. Be sure that you are keeping information, especially customer payment data, protected.

Paystand has fund-on file-tokenization, which is a secure method that gives you control to authorize, charge, and re-use your customers' payment methods without accessing their private information directly. We are a PCI Level 1-certified payment processor, adhering to the latest security and fraud prevention standards.

In addition, every payment made using Paystand's network is recorded on the Assurety blockchain, creating a notarized record trail that is secure, verified, and digitally auditable. Since these records can't be altered, you can be assured that transactions are valid and tamper-free.

Build a Strong Team

As you bring new personnel on board, you’re going to want to create strong teams by providing good leadership and taking advantage of the existing talent. In all departments of your company, especially the AR department, your employees are essential to keeping your business running.

As a business owner, it’s up to you to have management skills. You’re responsible for recruiting your team members and keeping them satisfied. If you can recruit employees that will each contribute to overall team ability and morale, your company will be well prepared to handle growth.

You’ll also have to master the art of promotions. Rewarding good performance is key to happier employees. But just because people show enthusiasm and drive doesn’t mean that they’re a good fit for leadership positions. Additionally, too many people in leadership may prove inefficient. An answer may be to raise salaries without promoting employees to a higher level. However, solutions vary between companies and it’s important to choose an option that works for you.

When you hire new employees, make the most of their talent by placing them in roles where they can shine. Suppose you have an overall talented team, but no one is performing tasks they’re good at. Not only will your team be much less efficient, but employees are going to feel resentment and team morale will be poor. Take advantage of team talent by placing personnel where they belong in your company.

Standardize and Automate Processes

Most processes within the AR department of your business are completed over and over. Making sure that these processes are standardized and automated as much as possible will save time and reduce errors in the long run. This not only includes things like issuing invoices but also reconciling payments.

Paystand automates the entire Accounts Receivable process, which means removing hours of repetitive tasks from your AR staff’s workload and eliminating human errors. This process often results in a reduction of late payments. In fact, Paystand customers usually decrease the number of overdue receivables by 62% within the first few months.

Standardizing processes is another way to reduce team confusion and time spent. When certain processes are done exactly the same way each and every time, team members won’t have to struggle with figuring out how to do them.

Want to learn more about AR best practices for your business? Take a look at this post on why you should keep your hands off your AR process.