Why You Need an Accounts Receivable Process Flowchart

May 12, 2023 by Brandon Jones

Consider creating a flowchart if you're looking for ways to improve your accounts receivable process. Accounts receivable flowcharts visually represent the collection process, highlighting areas of inefficiency and opportunities for automation.

Flowcharts are excellent for helping accounts receivable departments to visualize their processes. They often help pinpoint which areas are ripe for automation or improvement.

Not only can they effectively keep your team on the same page and train new employees, but they can also help you see areas of inefficiency.

 

How Accounts Receivable Flowcharts Give Structure to the Department

The larger the organization, the more complex and unwieldy the AR process flowchart becomes. Each business unit has different processes. This makes managing and tracking accounts, invoices, and payments more demanding.

Although the accounting and finance departments' main activities are similar, their approach to handling collections differs. They use different systems (ERP and CRM) and have unique priorities and problems with customer relationships.

Besides, most AR departments find that flowcharts illustrate a non-linear process, adding complexity to its operation.

An AR process flowchart documents and summarizes each step throughout the collection process. It clarifies to employees and managers what tasks are needed at each stage to ensure the company gets timely payments.

When you see a visual flowchart, it's clear that even a single invoice can follow a non-linear path and involve many people and organizations. The process grows in complexity as more suppliers are added to the process. Directions can be more easily sorted out and managed using this tool.

 

Accounts Receivable Flowcharts and Automation

The strength of technology is automating repetitive, manual processes, which is abundant in AR departments. Although many solutions are designed to automate collections, they should integrate to avoid data re-entry within larger systems.

Automation allows AR staff to relinquish repetitive tasks to computers, which are more efficient and less error-prone than humans. Besides, it will enable your team to focus on more challenging and meaningful work, which improves morale and retention. This helps your company to reduce operational costs, gain efficiencies, and scale to generate growth, improve cash flow, and maximize profits.

 

How Accounts Receivable Flowcharts Improve Payments

Some improvements found through many AR process flowcharts include more efficient invoice payment methods. Consider the following areas:

Make It Easy for Customers to Pay

The faster you can collect money from your customers, the shorter your DSO will be, improving your cash flow. One way you can do this is by offering multiple payment options to ease payment submission.

Paystand allows you to incorporate a "Pay Now" button into electronic invoices and email communications like payment reminders. When customers click the button, they're taken to a screen that allows them to pay by credit card, electronic funds transfer, or ACH. This short process means customers can pay as soon as they see the invoice. There's no need to open an envelope, manually process the invoice, cut a paper check, and mail the payment, which takes time and labor.

Encourage Early Payments

With the right automation tools, managing flexible and varied payment options is easy. Most organizations charge late fees for payments made outside 30 or 60 days, but you can also incentivize early payments. For example, you can discount current or future invoices for early payments.

Keep Communication Lines Open

Automation software can provide a simple channel for your AR staff to communicate with customers experiencing payment problems. Whether they need more time or have a dispute, easy and transparent communications can ease a potentially tricky process.

Streamline Reconciliation

Once invoices, disputes, or other roadblocks are in process, keeping track can be challenging. Reconciling payments as they come can be a heavily manual process. By automating it, reconciling can be immediate and real-time for better decision-making.

Improve Audit Trail

Having all the details for a potential audit can be nerve-racking for accounting professionals. The right solution can automatically generate an audit trail without painstaking customer notes. It can record all customer interactions, helping you resolve and document disputes. You'll also have an accurate record of credit terms, agreements, payment deadlines, or fee structures.

 

The Paystand Solution

Paystand can automate your AR process, simplifying your flowchart and eliminating manual tasks. Free up hours for higher-level tasks, cut human-created errors, reduce late payments, and drop fees with Paystand's bank-to-bank payment network. It also accepts legacy payments such as ACH, credit/debit, wires, EFT transfers, virtual cards, and checks.

Here are some ways that Paystand can streamline your accounts receivable process flowchart:

  • Comprehensive Dashboard. This feature lets you quickly see collected and pending receivables using standard or custom periods. It's easy to group your receivables into status and type categories to view the clearest picture of all your receivables in one place.
  • Smart Receivables. Create and edit digital receivables to gather critical customer data within the record. This allows your staff to track and securely store data about the item and tie it directly to its standard or custom collection plan. You can manage related workflows, review payment events, or communicate with necessary parties.
  • Payment Links. You can simplify how your customers pay by providing easy-to-use payment links with electronic invoices or email follow-up communications. You'll have Venmo-like functionality, so customers can pay upcoming bills and choose their favorite payment options.
  • Recurring Subscriptions or Invoices. Many businesses operate subscription-based companies, accept payment plans, or deal with repeat invoices. Paystand allows you to schedule invoices in advance, create automatic payment options, and build customized payment schedules to collect on various invoices.
  • Payment Portal. Fully customize the payment experience for your customers. White-label your checkout experience, invoices, and other customer-facing interactions for brand consistency. Payment rails can be turned on or off based on your company's specific needs.
  • Real-Time Visibility. After a payment is made, Paystand immediately records that transaction against the appropriate invoices within your ERP system.
  • Automatic Reconciliation. The system also books payments to your invoices, statements, and sales orders and immediately updates your records. You'll receive automatic transfer reports with deposit details and know immediately which invoices and sales orders are affected by the deposit.
  • Flexible Integrations. With a rich, flexible, and restful API, Paystand allows easy integration of this fully functional payment component in your unique platform. Whether you're a high-growth startup to a major corporate enterprise, Paystand can support your payment needs. Connecting the platform to your specific ERP, eCommerce, mail, CRM, and accounting systems is easy.
  • Zero-Fee Payment Rail. With Paystand, you can accept legacy payment options such as ACH, debit cards, or credit cards or use Paystand Bank Network, which charges zero fees. This network provides access to real-time fund transfers, automated payment settlements, and real-time verification and payment tracking. As a result, companies can see if a customer has sufficient funds to pay an invoice.
  • Least-Cost-Routing. This proprietary technology from Paystand helps customers reduce payment processing costs by encouraging customers to use the payment method that incurs the lowest cost to the merchant.
  • Payer Convenience Fees. While Paystand negotiates wholesale rates on its customers' behalf, it also allows you to determine who pays transaction fees for other payment options. Customers can choose to absorb the entire cost, share it with their customer, pass it on entirely to the customer, or set a minimum invoice amount threshold that makes the decision.
  • Virtual Terminals. It's easy to allow your staff to pay on your customers' behalf through Paystand. Using the dashboard feature, you can enter payment information from existing forms, contracts, or previous payments.
  • Fund-on-File Tokenization. This secure method gives you control to authorize, charge, and re-use your customers' payment methods. You can do all this without accessing their private information directly. Paystand is a PCI Level 1-certified payment processor and adheres to the latest security and fraud prevention standards.
  • Payment Assurety. Finally, every payment made using Paystand's network is recorded on the Assurety blockchain. This notarized record trail is secure, verified, and digitally auditable, as these records cannot be altered. This assures transactions are valid and free of tampering.

By establishing an accounts receivable process flowchart, you can easily visualize how your existing processes work. At that point, finding spots ready for automation and process improvement becomes much easier with solutions such as Paystand. Contact us today for more information on streamlining your accounts receivable process flowchart.