Speed Up Your Cash flow With Accounts Receivable Automation

Speed Up Your Cash flow With Accounts Receivable Automation

Cash flow management has become increasingly important for businesses in the last two years. Due to poor cash flow, many small and medium-sized businesses have struggled to stay afloat or have even closed their doors. Poor cash flow is the leading cause of small business failure 82% of the time.  

Meanwhile, the move to remote work has made accounts receivable (AR) teams realize that their manual processes won't cut it anymore. Their old processes seem inefficient and tedious now that they have access to accounts receivable automation software.  

We will discuss how Accounts Receivable Automation software helps you speed up your cash flow by collecting and posting payments faster.  


Manual Cash Flow Management and the Struggles  

Cash flow management is the act of monitoring and controlling an organization's cash inflow and outflow to ensure that there is always enough cash on hand to satisfy financial responsibilities. Cash flow management is crucial for every organization to survive and flourish. 

Managing the accounts receivable process is an important component of cash flow management. The accounts receivable process includes tracking customer invoices and payments and ensuring that payments are received on time. This process is important for guaranteeing a consistent flow of funds into the organization, and any delays or errors in this process can lead to serious financial problems.  

Many organizations like yours are still using manual cash flow management systems for their accounts receivable process, which can cause a slew of problems. One of the most significant problems of manual cash flow management systems is that they are time-consuming and prone to errors. In a manual system, invoices and payments are maintained using spreadsheets or paper-based systems, frequently liable to errors or misplacement. These errors might result in late or lost payments, affecting the company's financial flow.  

Another problem with manual cash flow management systems is the inability to expand. The manual system gets more difficult to handle as the business grows and the number of invoices and payments increases. This might cause delays in the accounts receivable process, affecting the company's ability to pay its invoices and costs.  

Eventually, manual cash flow management systems lack the real-time visibility required by organizations to make educated cash flow choices. It might be difficult to track cash flow daily using a manual approach, which can lead to surprises and unanticipated financial problems.  

Finally, cash flow management is essential for every organization like yours, and controlling the accounts receivable process is an important part of cash flow management. Manual cash flow management solutions can cause several issues like  

  • including time-consuming processes,  

  • inaccuracies, scaling difficulties,  

  • and a lack of real-time visibility.   

You could consider introducing automated cash flow management solutions to improve your accounts receivable process and give real-time visibility into cash flow to prevent these challenges from occurring.  


What is Accounts Receivable Automation?  

The use of technology to expedite and enhance the invoicing and payment collecting process is known as accounts receivable automation. This involves implementing accounts receivable automation software to automate invoice sending, payment tracking, and customer interactions.  

You can enhance your cash flow management process in various ways by automating your accounts receivable process. Here are some of the advantages:  

  • Faster payment collection: Automated systems can automatically send invoices and payment reminders, reducing the time it takes for your customers to pay. This can enhance cash flow by shortening the period between invoicing and payment.  

  • Improved accuracy: Automation decreases the risk of invoicing and payment tracking mistakes and errors. This can reduce the risk of payment disputes or delays, further increasing cash flow. 

  • Increased efficiency: As automated systems can handle enormous amounts of invoices and payments, human time may be spent on other tasks. This can increase the productivity of your organization while lowering expenses associated with manual processing.  

  • Improved customer communication: Automated systems can send payment reminders and follow-up emails to your customers, which improves communication and reduces the need for manual involvement. This can assist to strengthen customer communications while also lowering the chance of payment delays.  

Overall, accounts receivable automation can assist you in optimizing your cash flow management operations, increasing productivity, and lowering the expenses associated with manual processing. You can enhance your financial health and bottom line by reducing the time it takes to collect payments and enhancing accuracy and communication with your customers.  


How To Automate Your Accounts Receivable?  

Moving to automation from manual Accounts Receivable Management is a great decision! But your automation should meet some criteria to serve the real purpose. Automation should be suitable for all organizations from small-scale to large enterprises.  

Your automation should be in such a way that you can integrate any type of accounting book, whether it's file format or cloud accounting books. Once your new invoices are recorded in your accounting books, your AR management system should sync that data automatically.  

Over time, you learn more about your customers' payment histories when they use these kinds of platforms. Forecasting can benefit from this information. If customers consistently pay promptly, you might be able to offer them discounts. Using them, you can also identify accounts that are not paying on time and set up an automatic payment option to help them.    

Finance teams that approach AR automation intending to find better ways to solve their problems instead of just automating existing processes tend to achieve greater efficiency gains. 


Top Reasons That Prove Accounts Receivable Automation Accelerates Your Cash Flow  

Accounts receivable teams handle cash management as one of their most important functions. Through Accounts Receivable automation software, you will be able to invest in your company's future by accelerating cash availability.  


AR automation software makes cash flow more efficient in several ways.  

1. Automating The Invoicing Processes Lead To Faster Payment Times 

Depending on the organization, accounts payable teams take varying amounts of time to process a single invoice. Best-in-class teams take between three and four days, while less technology-savvy teams take more than 15 days. In many cases, late processing times are caused by approval bottlenecks and manual processes.  

If you are sending invoices by mail, this timeline is extended by the time it takes for your invoice to arrive at your client's office. Electronic invoices, however, can be processed immediately once they are delivered to your customers.  


2. Convenience Empowers the Customers To Pay Quicker  

Customers are in control of customer payment portals. Payment methods can be selected based on their needs. Customers can also contact your team directly through the most advanced payment portals, helping to resolve disputes that delay payments.  


3. Dunning Process Will Be Simplified And Optimized  

Statistically, about 30% of the time when a receivable is 90 days past due, it won't be paid at all. Manually collecting these payments is one of the biggest challenges AR teams face. Automating the collections process allows you to send automated reminders and messages, which increases the likelihood of these past-due accounts being brought current.   


How Automation Of Accounts Receivables Save Your Time?  

The accounts receivables cycle typically involves three main steps. First, you must create an invoice and send it to your customer. After identifying unpaid invoices, you should contact customers so they can be collected. Lastly, you should track the incoming payments and match them with the invoices.  

The benefit of using Accounts Receivable automation software that prioritizes customer collaboration is even greater since it improves the relationship between finance teams and customers. Over 80% of Maxyfi's Accounts Receivable Automation software users report that their customers have adopted it. It's easy to see the benefits when you consider the industry average of 20%.    

We have found that Accounts Receivable departments that automate their accounts receivable activities also benefit from:  

Your employees will be able to focus on what matters most 

  • reducing manual work by 50%  

  • Increasing payment speed by 25%  

  • Reduced past-due invoices by 30% to improve cash flow  

So, Automate your Accounts Receivable management and Dunning Process now, with Maxyfi!   

Want to know more about Accounts Receivable? Then follow our Maxyfi blogs regularly. You can also know more about Maxyfi through a quick 20 min discussion. 

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