You just started reading this blog, because the title was relatable, right? If so, then the problem we addressed in this blog will be much more relatable to your company.
These unrecovered payment dues are something that is not even recognized as a problem unless the amount due is higher or there is an imbalance in the cash flow.
If you face that problem all of a sudden, you'll not be able to balance it, as you don't have a proper process to manage those payment dues. Do you know what consequences you'll face when you don't have a proper Accounts Receivable Management System?
Here it is. Scroll down and get aware!
The accounts receivable process is critical to every firm because it includes the recovery of money owed by customers. Yet, without automation, this process is prone to several issues that might jeopardize its effectiveness and efficiency.
The following are some of the challenges that might arise throughout the accounts receivable process in the absence of automation:
Mistakes in Data Entry: Without automation, manually entering data into spreadsheets and accounting software like QuickBooks, Xero, Sage, Zoho Books, Sage, etc., might result in errors. These mistakes can lead to invoicing delays, incorrect financial reporting, and anomalies in customer data.
Invoicing Delays: Without automated invoicing, generating and sending invoice reminders can be time-consuming and prone to delays. This can lead to missed payment dates, late payments, and unhappy customer relationships.
Improper Communication: The lack of automation might make it tough to maintain track of customer communications. This might lead to misunderstandings, lost payments, and collections that are delayed.
Payment Options Are Limited: Without automation, accepting payments from customers might be limited to traditional means such as cash, cheques, and bank transfers. Customers may find it difficult to make payments as a result, resulting in late collections.
Inadequate Visibility: Without automation, it might be difficult to gain insight into the accounts receivable process. This can make tracking the progress of invoices, monitoring customer payment histories, and identifying possible concerns difficult.
Manual Follow-Up: In the absence of automation, manual follow-up activities can be time-consuming and error-prone. This can result in missed payment chances, increasing the risk of bad debt.
Finally, the lack of automation in the accounts receivable process can cause several challenges that can reduce the operation's efficiency and effectiveness. You may eliminate mistakes, enhance communication, give additional payment alternatives, boost visibility, and speed up follow-up operations by automating your accounts receivable process, resulting in greater cash flow and improved customer relationships.
The following are some of the major challenges that businesses like you have been facing for decades without a proper accounts receivable management system:
In most cases, the organizations like yours don't have dedicated Account Receivable Specialists, which is one of the causes of situations like increased bad debts, and imbalanced cash flow.
With the Finance team working as part-time Accounts Receivable Specialists they may fail to follow up with the customers at regular intervals. Some of the organizations don't have fully trained staff to perform Account Receivables Management.
Finally, you'll face many challenges when the account receivables management system is not given due attention ending in issues with Cash flow and increased DSO.
The company should always rely on the process and not on people. But, when the accounts receivable process is performed manually, the entire process becomes "Person dependent", which is again a big threat. One small mistake committed there can have a very costly impact.
In this era of the Pandemic, People's availability and continuity have become challenging, and Accounts Receivable(AR) tracking takes the biggest clash when the person performing the activity is unavailable. There you can take only manual action with the data that is updated or available, which may be incomplete sometimes.
Accounts Receivable management system tracking should become a process that runs irrespective of the person's presence or absence. Only then, the company will be able to solve its accounts receivable problems without any errors or delays.
To perform the Dunning process effectively, people should pay attention to minor details, which is a tough call for a busy finance team.
"Dunning is an art where the level of follow-up and the tone of each follow-up message is key to its success."
The accounts receivable person, who is appointed to follow up with the customers, will typically be sending random gentle reminders and follow-up messages. He will not be aware of what the next step is when the customer is not responding to an earlier message. This often ends up in giving benefits to the Debtor.
Without proper Accounts Receivable Automation, the entire process is based on people's availability and takes a heavy hit when the people are unavailable.
In case, if there are too many follow-ups, then the respective person may miss one or two invoices, which will stand as a backlog at the time of accounting.
This is where proper accounts receivable automation takes a lead. You can able to automate most of your laborious time-consuming tasks like generating and sending invoice reminders, capturing payment promises, and having clear real-time insight so that you can spend your time more on your business development.
With a manual Accounts Receivable management system, there is no proper tracking of the overall status of your Collection index, DSO, Cash flow Forecast, etc. of your business. These accounts receivable metrics are the ones that facilitate the Managing Director of the company to take decisions and plan future investments.
The Dunning process is performed from discrete mediums like Outlook, SMS, WhatsApp, Call, etc. When there is a need for an audit or review of the tracking, the users need to run around scanning various devices and channels for the communications made through various channels.
This discrete storage of the dunning process, will not give the person a consolidated view of the follow-up that had happened and also to decide on the next effective steps.
But with our accounts receivable automation implemented, you don’t need to run behind multiple devices as all the communication made to your customers is captured and recorded for your audit.
Consider, that your company has multiple Accounts Receivable specialists! If there is no proper record of the tracking made, people will follow up with the same customer again and again. The Debtor will get several follow-ups for dues though he has given a "Promise to Pay" by the Date.
Often, the Debtor's messages are not responded to on time and there is no dedicated and real-time communication medium between you and the Debtor. Also, The Debtor needs to run around looking for the payment information with no real-time payment means.
Sounds very relatable, right? Even we have gone through all these struggles and were considering the above as "Normal One" until we were put in a tight spot when the accounts receivable delays lead to the situation where we don't have enough cash flow to continue our business. That's when the determination to start Maxyfi has been seeded in our minds.
Get your Cash flow, Collection Index, Forecast, and other financial insights from our Accounts Receivable Dashboard.
Automate your Account Receivable Management process.
Superior Customer 360 view that gives complete details of the Customer Dunning process so far and planned.
Industry best Workflow and Communication templates are preloaded to get you the AR skills at your fingertip.
Supports collaboration and Multi-user processing of the Account Receivables.
Dedicated Customer portal for seamless and transparent interaction with a host of Payment and Response features.
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