Any good business-owner knows that tightly-managed accounts receivable are important for the efficient day-to-day operation of your company.
But do you have a solid understanding of exactly what accounts receivable are? The fact is that there are ways through which your accounts receivable can become inefficient and end up being a massive waste of time, money, and energy.
Let’s go over a reminder of the ins and outs of accounts receivable as well as the reasons that you should automate yours as soon as possible.
What Are Accounts Receivable?
Accounts receivable (AR) is the balance of money owed to a company by their customers for the usage of goods or services that have not yet been paid for. These generally come in the form of an invoice delivered to the customer with a time frame for when the payment is due.
Accounts receivable are an important part of your bookkeeping and accounting process. When you offer credit to your customers, it’s crucial to represent these amounts even though the payments may not have been made as of yet.
That’s why accounts receivable are considered as business assets.
Although these invoices used to come by mail, many companies are modernizing their accounts receivable process through automatic electronic systems known as Accounts Receivable Automation.
As the name would suggest, this system allows for you to electronically set-up your invoices to minimize the time and effort needed to organize your balances. Ideally, an accounts receivable automation system sends your customers invoices seconds after they are created.
Benefits of Automating Your Accounts Receivable
Automating your accounts receivable is a no-brainer these days. There are so many benefits to doing so! We’ve broken down the top benefits to this type of automation, so you can understand exactly why you should get to it right away.
Benefit #1 - The “Pay Now” Link
In this day and age, the more efficient, the better. That’s why smart companies include quick-routing links to allow customers to easily pay their bill within seconds after receiving an invoice.
Studies have shown that companies that provide options for customers to easily pay their bills are more likely to be paid faster than those companies that don’t.
For example, companies that would pay for return envelopes back in the day when bills were sent by mail, found that this led to faster payments. This move to digital is just another step forward as more businesses are online than ever.
Nowadays, online business reigns, and you have to continue moving with the times if you expect to keep up with customer’s needs and the mechanisms by which they want value to be delivered.
If your goal is to receive payments quicker and more efficiently, provide customers with automatic links so they can do this within seconds of receiving invoices. Guarantee that they are given all the options they need -- if you make it hard for customers to pay you, they won’t.
Especially in circumstances where credit or extended payments periods are extended, it’s important to have as many options as possible so that payments are made as promptly as possible.
Benefit #2 - Automatic Reminders
How many times did you mean to respond to an email, or pay a bill right away, but got distracted? Life gets in the way—it happens to every last one of us, especially since our emails are continuously inundated with different tasks.
Setting up automatic reminders gives your customers a friendly prompt to ensure that your email doesn’t go into their mind’s (and email’s) spam folder.
No matter how organized you are, doing manual reminders will inevitably lead to some things falling through the cracks. You’ve definitely got better things to do then consistently ask your customers to make their payments.
In fact, customers expect you to bill them consistently. They do not like surprises, and it’s tough to stay organized unless you automate. Automating the process means that no one - neither you nor your customer - will need to keep this top of mind.
Benefit #3 - Thank You Email
Showing your customers that you appreciate their business guarantees to leave a lasting impression on them.
With AR automation, you can set up automatic thank you emails to not only express your appreciation, but to also confirm that their payment was received.
Similarly to setting up automatic reminders, this automation allows you to leave your customers assured that their payment was received without taking up much of your time to do it manually.
Benefit #4 - It Saves Money
Automating your accounts receivable frees up time and money spent on your employees manually organizing each invoice. This way, your employees can spend more time performing other tasks, ultimately saving you money.
Not to mention, these automated systems ensure that no payment goes unpaid. This will mean that customers pay their invoices more promptly and don’t leave things unpaid.
Benefit #5: It Gives You Better Control
AR automation systems have been proved to increase cash flow by placing the control of outstanding payments into the hands of you and your employees.
With all your staff members having easy access to this customized program, everything is available to whoever needs it. Customizing the receivable reports also allows you to choose what you want to see and how you want to measure payment collections.
Let’s wrap up what we went over:
- Accounts receivable are an essential part of your business that allow you to keep track of what your customers owe to you and when it’s owed. This account allows you to see a full view of your assets as a business, even if the payments have not yet been made.
- If they’re managed correctly, accounts receivable allow your business to be more organized and efficient with its time, and thus more profitable.
- Automating your accounts receivable has a number of benefits. Overall, it’s about moving with the times. There are no more excuses to not be online and flexible!
- Having more options, saving money, quicker responses, and far less manual work involved are just some of the reasons that you should get to automating your accounts receivable today.
Now that you understand exactly what accounts receivable are and how essential they are to the operation of your business, it’s time to get to automating yours today!
The more you can automate, the better. This will allow you to get things done more efficiently and have a better understanding of exactly what is going on in your business.
If you need some help getting started reach out to one of our InvoiceSherpa specialists to help you automate the entire process.