Automation has transformed commerce as well as our everyday lives. Despite this, business executives from all around the world have voiced some skepticism about accounts receivable automation. The main problems include integration, compliance, and change management. These concerns lead to red tape and low adoption rates. However, automation has advanced further and can now handle some of the most frequent issues encountered by A/R teams.

The environment of accounts receivable is intricate and complex, it is a challenging task to automate accounts receivable activities in a coordinated and effective manner while providing real-time visibility throughout the entire organization.

Particularly large firms frequently employ a dozen separate finance systems. However, the data required goes beyond ERPs. AR needs data from auxiliary systems like cash applications, collections management, and customer relationship management. A variety of other documents are also present, including contracts, purchase orders, credit applications, credit memos, invoices, and checks.

Add to that data input from other external sources like ACH & EDI transactions, lockbox feeds, credit bureaus, and customer payment gateways. Different time zones, currencies, and languages present additional operational challenges to multinational corporations.

A precise and quick assessment of the cash position is also impossible due to the isolation of information and applications, which reduces efficiency. Despite efforts to “move paperless,” the inherent isolation has prevented true automation.

A crucial aspect of controlling the company’s cash flow is the management of accounts receivable.

When a business makes credit sales, accounts receivable are created. It is a protracted and complicated process that needs to be handled carefully and precisely. A company confronts numerous issues with accounts receivable, but by performing some key actions, these issues can be resolved.

To achieve a successful accounts receivable process, businesses can either recruit an internal specialist or outsource to suppliers of accounts receivable services. They use automation for effective processing, whether they are internal experts or an outside company. When repetitious operations are automated, human resources are replaced with digital resources, freeing them up for jobs that call for human assistance.

Automation brings in digital resources to handle a variety of accounting responsibilities. Automation has a number of benefits in addition to simply freeing up human resources. The following are some benefits of accounting automation that contribute to improving the receivables process:

Many companies still manage their accounts receivable using manual procedures. As a result, the typical accounting team of one to ten employees spends up to 10,000 hours annually physically performing accounting activities. Payroll costs for these hours come to about $300,000, and they rise rapidly as business operations progress.

Automation-friendly businesses are considerably more likely to increase productivity and gain from economies of scale. Reducing the headcount is one way they do this. Robots can function continuously, freeing up employees to focus on other crucial activities that call for originality and human intelligence.

Accounts receivable automation also offers a great solution to avoid the growth-reducing difficulty of finding skilled staff in light of the growing labor shortages. Because it makes chances for remote and hybrid work more accessible, the automation’s digitalization component also makes hiring employees simpler.

93 percent of accounting teams deal with past-due payments, Although there are tax advantages to writing off bad debt, the business’s bottom line is nevertheless negatively harmed. Even worse, the teams in charge of collecting money spend a lot of time dealing with the tiresome tasks necessary to do so.

The longer an invoice goes unpaid, the less likely it is that it will be collected. This leads to higher bad debt-to-sales ratios. Check out the information on bad debts below:

These numbers suggest that it is best for businesses to address payments as soon as possible. Automation enables fast and reliable billing to lower days of unpaid sales. Additionally, when A/R teams employ efficient dunning management techniques, payments continue to be prompted.

Companies’ initial foray into automating accounts receivable and becoming paperless is through Microsoft Excel. Excel does automate the calculation of data, but it is quite prone to human error, which frequently happens during data entry. Not unexpectedly, errors exist in 94% of spreadsheets.

Spreadsheets also require more time to load as the file size increases. This holds true whether you use Google Sheets, Microsoft Excel, or a different program. Additionally, multiple-column spreadsheets don’t display well on devices with smaller screens, such as smartphones, and tablets. This may greatly lessen the flexibility of the job.

By retrieving information directly from reliable sources, cutting-edge technology solves these issues. These consist of bank statements, invoices, and sales contracts. It can then use a centralized dashboard to analyze this data.

Businesses have been emphasizing the customer experience more and more over the past few years. Good customer service goes beyond the sales process and the way businesses handle complaints. The payment procedure is also covered. The chance of on-time payments is higher and sales are easier to close when clients experience fewer frictions.

Customer loyalty is also greatly influenced by the customer experience. The days when clients remained devoted out of convenience or complacency are long gone. At the least inconvenience, they now shift their attention to rivals fast and frequently.

By offering streamlined invoicing and payment processes, businesses may drastically lower attrition. Accounts receivable automation makes this possible by returning some control to the consumers. They don’t need to call or send emails; they can simply connect to their customer portal and easily manage invoices and payments.

Customer retention can be greatly increased by using an automated dunning notification technique. Because they read like a routine business operation, receiving standardized notices feels much less confronting. Automating dunning notices also reduces the possibility that the A/R team will write these letters out of annoyance, which could subsequently come over in the content.

Processing accounts receivable manually has various drawbacks that compromise the quality and dependability of the company’s financial statements and reports, hence it is no longer used. Accounting automation is now preferred by organizations because of this. It is always advantageous to be aware of the process’s difficulties and the solutions automation offers, whether the process is run internally or outsourced to an accounts receivable services provider.

A/R technology is adopted by financially smart managers who are tech knowledgeable and recognize it as more than just a method to automate repetitive activities. They have also embraced fintech to expand their clientele and business operations.. A/R software is becoming an essential component of business plans at these firms due to sustained growth and other advantages of accounts receivable automation.