The sum of money owing to your business for your goods or services is known as accounts receivable. Since your order-to-cash cycle strongly depends on your accounts receivable (AR), it’s crucial to ensure crucial services like effective invoicing, ideal days sales outstanding (DSO), swift dispute resolution, and so forth.
Tips to Set Right your AR Automation
Get the Accounting Department Involved
While choosing whether to use automation software or not can be a tricky decision, your accounting team should determine which solution to buy and what features are required. They are experts in your accounting procedures and are therefore best equipped to identify the numerous pain spots your business is now experiencing and recommend solutions.
Make your team reconcile and clarify workflows as well. Invoices (sending invoices), payments (collecting payments), delivery and sales, and reconciliation are all steps in a typical AR workflow. It is possible to identify steps that can be automated and streamlined by creating a system of your workflows.
While it may be tempting to jump in and automate everything, remember that doing so will add needless stress to the onboarding and training. The goal is to provide the new capabilities gradually and give the AR teams enough time to adjust naturally.
Make Sure the Tech Stack Is Integrated Seamlessly
Almost all businesses start out with accounting and payment gateways before realising that the interface is constrained in certain aspects and that they require a more thorough invoicing software to reach hyper-growth.
Will this product integrate effortlessly into my current tech stack? Ask yourself whether the tool is good or not. If your answer is in the negative, switching to a different tool can end up taking longer and costing more money than you anticipated, rather than solving the problem.
By installing a backup gateway or employing numerous payment options, you can prevent or minimise payment failures. By automating invoices, credit cards, payments, and other data to your accounting software, you may reduce tedious work. Set up important dashboards and obtain thorough reporting to make the right decisions.
Encourage Cash In Advance
Create payment terms with early payment incentives for buyers (or even penalties for continuous late payers). If you can, offer discounts for early payments. You can give consumers who select yearly payment plans incentives. In some circumstances, accepting even significant discounts might be suitable for getting nothing at all. This agreement will benefit both parties. However, pay attention to what way the discounts impact your revenue.
The urgent necessity is to merge with an online payment interface. Offline payment systems, such as a check that doesn’t come on time or gets misplaced in the mail, can be quite unpredictable and cause collection delays. By letting your consumers pay directly from your reminder mail, you may go online and speed up payments by 20 to 30 percent. No matter the amount being moved, B2B PGs may use flat costs. Encourage your clients to make these payments.
Ensure Prompt Resolution of Disputes
Disputes are the most frequent reasons for failed payments and increased DSOs. Keep an eye on disagreements, comprehend their causes, and work to find a quick solution. Keep in mind that a postponed decision will just cause more postponements!
Dunning is a methodical approach to contacting customers in order to ensure collections. Dunning is useful for online gateways when credit cards are denied or transactions fail. Dunning also guarantees that payments made offline or with credit balance are safe.
Configure a useful AR dashboard
For simple tracking, create dashboards suitable for AR metrics. Your commitment and diligence in selecting the appropriate KPIs and identifying revealing patterns will determine the difference between a healthy and a not-so-healthy cash flow.
You can see issues with an AR aging metric before they become a cash inflow problem. You can evaluate the circumstances and decide the necessary adjustments if a customer is paying you late. It can assist you in withholding product or service offers until the customer pays the balance by the specified due date.
So if you are seeking good AR automation software, consult Monite. It provides the best automation integration customised to your needs.
Interesting Related Article: “4 Ways Electronic Payments Can Benefit Your Small Business“