Is your business still printing and mailing paper invoices?
If so, you're missing out on some significant benefits of accounts receivable invoice automation.
Regarding the efficiency of your organization, there’s no doubt that automating your accounts receivable (AR) process is a step in the right direction. Streamlining your AR functions can improve accuracy, reduce the time it takes to collect payments, and enhance customer relationships.
Keep reading to find out more about how AR invoice automation is an investment that can help you get paid faster and manage your receivables.
What is accounts receivable?
Accounts receivable (AR) is the total amount of money customers owe a company. This could be from sales that have been made on credit, from services rendered, or from other sources.
To manage accounts receivable, companies often set up policies and procedures, including:
- Extending credit only to customers with good credit histories.
- Setting up direct debit payments.
- Offering discounts for early payment.
Many businesses also outsource their accounts receivable management to specialized firms.
Accounts receivable is essential to a company’s financial statement, as they can show how much cash you will receive shortly.
Plus, you can improve your cash flow and profits by effectively managing accounts receivable.
What is the AR billing process?
In any business, cash flow is king. And one of the most significant factors impacting your business's cash is accounts receivable.
Traditionally, businesses have managed their AR manually, which can be time-consuming and error-prone. But with the advent of accounts receivable invoice automation, companies can now manage their AR much more efficiently - with less time and effort.
What is the accounts receivable bill process?
- The first step is to create an invoice using accounting software or a simple spreadsheet.
- When the invoice is created, the customer receives it either electronically or by mail.
- Once the customer receives the invoice, they will have time to pay the bill. A late fee may occur if payment is not received within the specified time frame.
- Finally, once a customer pays their bill, the payment must be recorded in the accounting software.
The AR billing process is integral to running and growing a business. It helps ensure your receive payment for your bills on time and that customers are up to date on their payments.
How does accounts receivable do invoicing?
Accounts receivable is the department responsible for ensuring that a company receives payment for the products or services that it has delivered. Businesses use invoicing to keep track of accounts receivable.
Invoice processing involves:
- Sending a bill to the customer for the amount owed.
- Typically including details such as the date of purchase.
- A description of the goods or services delivered and the total amount due.
The invoice also provides information about when payment is due and how to pay. Once the accounting department sends an invoice, the customer has a set time to pay the amount owed.
The accounts receivable department ensures that invoices are accurate and sent out promptly. They will also follow up with customers who have not paid their invoices to ensure payment is received. If a business does not receive payment by the due date, the account becomes overdue, and the business may take steps to collect the debt, such as hiring a collection agency or taking legal action.
Your accounts receivable (AR) team plays a vital role in ensuring that a company receives payment for the work that it has done. Without them, your company would likely struggle to survive. In addition, by tracking accounts receivable and invoicing promptly, you can ensure you receive payment quickly for the goods and services you provide.
What are the benefits of AR automation?
Accounts receivable e-invoice automation is a game-changer for businesses. Why? Because electronic billing and payments can speed up your cash flow. With this technology in place, you can streamline your accounting process, save time and money and improve your bottom line.
Below are five ways that accounts receivable invoice automation can benefit your business:
1. Increased efficiency and accuracy
Accounts receivable invoice automation can help increase your invoicing process's efficiency and accuracy. This is because the system can automatically generate invoices based on sales data, meaning that there is no need for manual input. Automation can help to reduce errors and save time.
2. Improved cash flow
Optimized cash flow is one of the main benefits of automating your accounts receivable invoicing process. This is because you can send invoices as soon as you make a sale, meaning you are more likely to receive payment shortly. In addition, you can set up automatic payments so that customers can make payments immediately after receiving their invoices.
3. Reduced costs
Another benefit of automating your accounts receivable invoicing process is reduced costs. This is because there is no need to print and post invoices and likely fewer errors, meaning that you will save on administrative costs.
4. Enhanced customer satisfaction
Automating your accounts receivable invoicing process can also help enhance customer satisfaction. This is because customers will receive their invoices more quickly, and they will be able to make payments immediately. In addition, automated invoicing can help reduce the number of customer queries, as all information will show on the invoice.
5. Increased visibility
Finally, automating your accounts receivable invoicing process can also help to increase visibility and control. This is because you can track all invoices and payments using the system, meaning that you can identify any areas of concern quickly and easily. In addition, you will be able to generate reports on your accounts receivable to monitor your performance over time.
What are the four steps to managing accounts receivable?
Remember that accounts receivable is the money that's owed to you by your customers. If you're not careful, it can start to pile up. That's why it's essential to have a system for managing accounts receivable. Here are five steps you can take to get started:
- Keep track of who owes you money. This may seem like a no-brainer, but it's essential to keep a close eye on who owes you money and how much they owe. Otherwise, it's easy to let things slip through the cracks.
- Send invoices as soon as possible. The sooner you send an invoice, the sooner you'll get paid. So make it a point to send invoices out as soon as the goods or services reach your customers.
- Follow up on outstanding invoices. Don't be afraid to follow up with customers who haven't paid their invoices. A simple phone call or email can often prompt them to take action.
- Offer incentives for early payment. If you want to encourage customers to pay their invoices sooner, consider offering a discount for early payment. This can be a powerful motivator.
By following these steps, you can get a handle on your accounts receivable and avoid letting the money owed to you slip through the cracks.
Download the ultimate guide to digital accounts receivable
Reduce manual work with AR invoice automation
Accounts receivable invoice automation is a smart investment for any business that wants to improve efficiency, accuracy and cash management. By automating the process of sending invoices, you can eliminate the need for manual data entry. This can free up your staff to focus on other tasks and also help reduce the chances of errors.
In addition, automating invoicing can help speed up the payment process by providing customers instant access to their invoices. As a result, you can get paid faster and improve your cash flow. Accounts receivable automation can also help you to track payments and keep tabs on customer spending.