16th November, 2018
When hunting for ways to free up working capital, the company board often looks to the accounts receivable department to collect money faster. But how can the accounts team shine if their processes are stuck in the dark ages?
Even with dedicated people putting in time and effort to manage debtors, chasing payments can feel like an exercise in chasing your tail.
Accounts receivable professionals may be working hard, but the cash remains locked in the land of the lost.
Luckily, modern software combined with sound business processes can turn the wilderness that is accounts receivable into a well-manicured garden.
We know workplace productivity improves with automation.
And accounts receivable tasks are ideally suited to automation because they satisfy the following automation criteria:
So, how does the accounts receivable process change with automation on board?
|Look at several sources to report on the current status of aged receivables.
|Aged receivables are mapped by invoice ageing distribution. Dashboard analytics provide real-time data of key metrics such as value of invoices due and overdue.
|Late payments persist due to poor visibility of ageing invoices.
|Dashboard reporting puts a spotlight on largest overdue debtors, longest overdue debtors and debtors entering the danger zone of defaulting.
Filters let you drill down into debtor sets and find ageing debtors immediately.
|AR person prints an aged receivables report then talks to other staff about debtor’s payment history and promises to pay.
|Each debtor’s account history is maintained in one central hub and includes all reminder communications and debtor notes.
|AR person communicates with debtors only after an invoice becomes overdue.
|Automate a friendly reminder that payment is due soon, prompting debtors to pay early or on time.
|Call all debtors from a long list of overdue debtors regardless of previous communications.
|Each morning the system emails you a list of debtors who have reached the stage of needing a reminder phone call.
|Manually type reminder emails to large-value debtors; there’s no time to send reminders to everyone.
|Use merge fields to customise reminder templates with debtor information. Then allocate all or some debtors to an automated workflow that methodically delivers email and SMS reminders on schedule.
|Chasing stalls after a few reminder attempts
|Chasing escalates with one-click action to send a demand letter or outsource to a debt collector
|AR person remains at desk to process credit card payments over the phone.
|Debtors self-serve via clickable Pay Now buttons on invoices and reminders.
|Payments are received but not acknowledged.
|Thank you email is automatically generated when a debtor pays and reinforces positive payment behaviour.
|Hire more staff or outsource to a bookkeeper to handle a growing list of debtors
|Automation is highly scalable and can handle your growing list of debtors.
Productivity and cash flow both improve with the automation of accounts receivable.
And, as no industry is immune from technological transformation, those businesses that get ahead of the curve will reap the benefits.