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How to Start Automating Your Accounts Receivable Process

November 25, 2019 by Eduardo Lopez

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Why are some finance teams slower to adopt automation? Some are concerned that automation could cost them their jobs. There’s comfort and a sense of security in number-crunching. But all those calculations take time away from strategic thinking that businesses so desperately need.

Take a look at this staggering statistic from CapGemini: CFOs spend 90% of their time on financial closing duties and a mere 10% on analysis. Automation can actually reverse those numbers. When robots do the number-crunching, finance staff can focus on providing the high-level insights that drive business decisions and enable growth. 

Keep reading to learn how to turn today's manual Accounts Receivable (A/R) function into an automated, well-oiled machine.

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Do This Before Automating Your A/R Process

When moving from a manual to an automated accounts receivable process, it’s critical to start the journey in an all-encompassing, collaborative way.

Imagine a pilot landing a plane in a busy airport. Before descending the plane, the pilot will take into account any conditions that could affect the landing. She will communicate with an air traffic controller to confirm expectations.

Wherever possible, pilots take in all the inputs at their disposal and collaborate with others in order to insure a safe landing. Finance leaders should aim to do the same with A/R automation.

Here are 4 actionable tips:


  • Start with a clear goal in mind. Do you want to simplify processes, automate tasks, gain insight, etc.? The answer will determine your next steps.

  • Build a team of omnivores. Look for people from varied backgrounds, that are comfortable trying new tools and approaches, and bias toward smart action steps rather than becoming mired in analysis.

  • Make cross-collaboration a norm. When people work together, they better understand each other's challenges and capabilities, which improves collaboration.

  • Encourage experiments. You might not find the digital tools that work for your team on the first try, and that's okay. Identify small projects for quick experiments and shorter feedback cycles.

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Understand Your End-to-End A/R Process

In order to improve any process, it’s imperative to understand how it currently works. Otherwise you might slap uninformed “solutions” on a problem - and lose opportunities to improve.

Given that, you’ll need to map out the entire A/R workflow. This may be the most time-consuming part of the exercise, especially if you business has layers of invoicing complexity.

Use these questions to help you document your A/R process:


  • How does A/R receive information on customers and invoices?
  • What are the data inputs we capture for customers and invoices?
  • How many different billing configurations do we offer?
  • How do we send invoices to customers?
  • How do we process customer payments?
  • How do we know when a payment is late?
  • What do we do with late payment alerts?

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Involve Staff in the Decision-Making Process

That list of questions and corresponding A/R workflow might have your head spinning. How will you ever carve out the time for this work? Rest assured: you don’t have to do this alone.

Your staff is already extremely familiar with how A/R operations work. Take advantage of their knowledge and have them walk you through it.

And while you’re at it, give them the space to explain what the most arduous parts of their job are. Chances are good that the biggest time-drains for them are also the most inefficient A/R tasks - and the ones most desperately in need of a change.

Lastly, make sure they share with your what their ideal workflow would look like. If they could design a process that would really simplify their work, what would it be? And even if their vision isn’t 100% possible, what would get them halfway there? Take their feedback into account.

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Communicate Goals and Requirements Clearly

By walking through current A/R processes with your staff and creating a workflow, you’ve got a running start on the path to receivables automation. Now it’s time to articulate your overarching goals and requirements.

You might already know about some huge inefficiencies at the outset. However, reviewing them after understanding the full workflow will give you the opportunity to add anything that was missed.

Try on these common goals for size:

  • Reduce inefficiency
  • Decrease transaction fees
  • Improve the customer experience
  • Increase organization-wide visibility
  • Connect to critical business systems
  • Scale as the business grows

Requirements will vary greatly depending on your business’s unique A/R functions. Here are a couple of examples from Paystand customers:

  • Choozle wanted to maintain their user experience relative to payments while transitioning to NetSuite.

  • Elenteny Imports needed to replace their manual same-day payment processing workflow with an online option.


Having goals and requirements clearly defined will make the evaluation process much easier to perform based on information - not your gut.

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Evaluate Your Options with Empirical Data

Now that you know what you want and need in A/R automation, it’s time to review options. Start by looking at reviews of A/R automation software, best of lists, and talking to peers in the industry about their preferences.

Make a short list of A/R platforms and reach out, asking them to either vet your list or provide an RFP. For those that make the cut, request a demo of the functionality you need and pricing based on your requirements. Take it a step further by loading some of your own A/R test data to see how things function.

And don’t forget to mention your existing systems so they can give you an estimate of the transition time, development work, and associated costs. All these inputs will help you compare A/R automation platforms and quantify future costs.

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Get Buy-in from Decision-Makers

If you’re not the only one who signs on the dotted line for sweeping changes, it’s important to gain buy-in from those who do - like peers and superiors. The key piece of this puzzle is contextualizing your request so it fits in with the goals of both the organization and individual decision-makers.

Let’s say your company has a goal to decrease operational costs by 10% in the next year. The CMO wants to create a unified brand presence, the CTO wants to ensure PCI Level 1 compliance, and the CCO wants to improve NetPromoter scores by 1 point. It’s up to you to demonstrate how automated A/R will support these goals.

Making sure you address the “what’s in it for me?” question will help persuade peers and superiors, but that’s not all:

  • Timing is everything. Consider when you ask based on a big opportunity to present, a new corporate goal that aligns with A/R automation, or a change in the company’s financial status.

  • Involve others in your pitch. Demonstrating that superiors are already on board with your recommendations will help lend weight to your cause.

  • Always offer solutions. One of the best ways to drive change is to demonstrate that you’ve found a solution. All your audience has to do is say “yes”.

 

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Your Automation Approach Influences Your Results

Know that the time and effort you put in to automating A/R will deliver big returns. Just ask these Paystand customers:

  • Choozle decreased Days Sales Outstanding (DSO) by ⅓ in 6 months
  • Elenteny Imports doubled invoice volume in a year with no new headcount
  • Covetrus dropped transaction fees by a whopping 98%

Check out our free On-Demand Webinars to learn what types of A/R automation tactics drive these significant changes: How to Automate Your Accounts Receivable Process. If you use NetSuite, watch this one instead.

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Do you want to reduce overhead costseliminate transaction fees, and streamline collections? Schedule a free demo with one of our experts or call us anytime at 1-800-708-6413.

Tags:   Payments, Accounts Receivable, Digital Payment, automation