A healthy business must have a steady flow of cash. Leveraging accounts receivable is the key to accelerating cash flow. More specifically, by enabling accounts receivable digitization (AR).

The AR function has been thrust into the spotlight as a change-ready operation, with the pandemic exposing the constraints of paper-based, manual methods and business owners becoming more aware of how important the payment experience is in building healthy and growing customer relationships.

While accounts receivable are undeniably important, they are frequently overlooked. It now sees itself as a catalyst for improving business efficiency, cash flow, and customer experience.

Digitization of Accounts Receivable: A strategic lever

One’s ability to forecast cash flow, as well as how quickly you collect that cash, is dependent on the effectiveness of various accounts receivable activities such as invoicing, payment acceptance and processing, and collections management. All of these functions can be hampered by highly manual processes. As a result of this realization, CFOs are taking immediate action as evidenced by the significant shares of firms currently investing in the digitization of these three payment-related operations.

Most accounts receivable processes are currently manual, which may result in inefficiencies that make accurate receivable assessment difficult. Companies that prioritize AR modernization and take a more comprehensive and strategic approach to AR digitization can gain significant advantages over those that rely on manual processes.

Payments and accounts receivable are no longer viewed primarily as back-office tasks that must be completed after contracts are signed. CFOs increasingly see these functions as critical to establishing strong customer relationships, and they cite this as the primary reason for digitizing their operations.

Read more: Account Receivables Use Cases for Machine Learning/AI

Traditional invoicing methods induce payment slowdowns

Cloud-based operations have largely replaced traditional invoicing processes. This means that businesses are implementing long-term solutions to processes that previously required employees to be present in the office, such as printing and mailing invoices.

Unfortunately, many businesses are still manually preparing and sending physical invoices rather than automating how they deliver invoices. This unwillingness to digitize and deviate from the status quo does more than just cause payment delays; it also directly inhibits cash flow.

Improving cash flow starts with better invoice delivery. Businesses typically take 10 days to process a single invoice, resulting in a 30-day payment delay. The pandemic has exacerbated payment delays, highlighting the difficulties of manual invoicing. By automatically delivering invoices, statements, and supporting documents online, this issue can be avoided and the lead time reduced.

Businesses that modernize their invoice delivery processes by utilizing shared online portals, providing multi-channel invoicing options, and empowering their customers to choose the best invoice format for their needs are better able to audit and track delivery and ensure payment information is received where and by whom it is required.

Customers want to have positive digital payment experiences

Paper usage has steadily declined over the last two decades, a trend exacerbated by the pandemic. According to a new study, 40% of CFOs believe that the use and acceptance of checks has decreased as a result of digitizing accounting operations. 

They also prefer to do business with companies that accept their preferred payment methods. B2B buyers have grown accustomed to the payment experiences they encounter in their daily lives as consumers, and they expect similar flexibility when purchasing from businesses.

AR digitization can assist businesses in reducing their reliance on paper and accelerating their adoption of digital payments. Businesses’ acceptance-and, as a result, customers’ use-of credit cards has increased as a result of the recent digital boom, with 64 percent of CFOs reporting an increase in credit card payments. ACH, wire transfers, virtual cards, and real-time payments are also on the rise. 

This is encouraging because accepting digital payments is an important first step in transforming the AR department.

Businesses can improve their overall health and accelerate cash flow by empowering their accounts receivable teams to accept and process more digital payments. Beyond providing their customers with a more interactive online experience, businesses can save money by digitizing and automating payments.

Cloud collaboration is essential for optimization of collection

When receivables are not paid within 90 days of the due date, businesses lose more than half of their value. Manual, time-consuming collection processes, as well as a lack of time and money, are frequently to blame.

A healthy business requires a steady flow of cash, and failure to collect payments on time can stymie growth. Accounting teams get lost in the shuffle when there is no structured, long-term approach to collecting past-due invoices and are forced to prioritize only the highest unpaid balances.

Digitization enables businesses to collaborate with their customers via the cloud to streamline collections. It also significantly reduces the volume of past-due invoices.

Businesses can simplify how they reach out to customers, automate routine operations, and minimize the need for manual intervention by implementing collaborative practices and utilizing software that allows and fosters collaboration.

Those who use AR software to segment their customers and personalize correspondence and reminders are better positioned to improve key cash flow metrics.

Automation improves efficiency and cash flow

The economy has seen a surge in digital transformation, which is now affecting accounting and finance departments. By digitizing accounts receivable, businesses can automate virtually all routine AR tasks in the cloud, including invoicing, reminders, payment processing, collections and dispute management, and invoice matching and reconciliation.

How SpurtCloud can help you?

SpurtCloud’s powerful features automate your entire receivables process, giving you valuable time back to focus on growing your business. Overdue balances are reduced by 40%, administrative labor is reduced by 10-20 hours per week, and we get our customers paid faster, reducing the burden of accounts receivable management and increasing cash flow. 

The software is designed to optimize your invoicing-to-cash operations. It allows you to reclaim the time you’d otherwise spend chasing down late-paying consumers. Instead than chasing down unpaid or delayed invoices, your team may focus on more productive duties with this solution.

SpurtCloud optimizes your entire outbound invoicing cycle by processing multiple payment types, integrating with Quickbooks, Xero or ERP systems, payment platforms, and business networks, and reporting directly to them. Easily manage and monitor your AR processes. Visit our website to learn more.