Companies invest in technology for many reasons and usually it is to not replace human involvement, but to enhance it and allow users to work better, faster, and smarter to yield the best possible result from their efforts. The same is true of accounts receivable automation. But how exactly does the software make you, as the person or the department responsible for collecting outstanding invoices better at your job while also making your life easier?
Below, we’ve highlighted 8 ways that accounts receivable automation makes the life of a collector easier and more efficient.
KEEPS YOU FOCUSED
Collectors traditionally spend way too much time prioritizing their activities and figuring out what needs to get done and not nearly enough time taking action; accounts receivable automation software tells you exactly what you need to do, when you need to do it, and why as soon as you log into the software. The list is even prioritized with the most important activities at the top and as you work your way down the list and complete the tasks, the tasks drop away and are replaced with other activities for completion.
ELIMINATES MISTAKES AND OVERSIGHTS
According to a recent study highlighted in an article on CFO.com, 49% of invoice disputes are the result of ‘invalid or missing purchase order information.’ This and other mistakes can be prevented with the use of accounts receivable automation software. The system can be set up to notify you when an invoice for a customer is missing a predetermined piece of information or, for example, a purchase order number. If an invoice is missing the required information, the system will alert you to the problem; giving you plenty of time to fix it before it leads to a dispute or late payment.
LOCATES CRITICAL INFORMATION QUICKLY
You will be able to see all of your accounts important information quickly and easily in one place, without having to navigate from one screen to another or jump in and out of programs to find what you need. You’ll have instant access to information such as contact information, important dates, activity counts, disputes and broken promises, aging, open issues, open and overdue invoices, payments, average days to pay, a summary of communication, and more are at your fingertips 24/7.
Additionally the software will allow you to quickly make phone calls, send emails, manage disputes, log expected payments, set up follow-up activities all from one screen. With easy access to information you will be able to quickly pull up a customer accounts, review it, and take the necessary actions without wasting time digging through old emails, looking up information, and reading notes you’ve scribbled in the margin of spreadsheets.
INCREASES CONSTANT COMMUNICATION WITH CUSTOMERS
How often are you connecting with customers today? Many companies send an invoice and do nothing until the invoice is late and then they start playing catch-up because they do not have the time to deal with sending letters/emails and making phone calls to customers to help avoid this situation.
Accounts receivable automation software can help your collectors send the reminders and make the calls vital to the success of timely collections. The system will automatically send reminders and notifications when the invoice is created, as the due date approaches and when the invoice is past due. It can even send a thank you note once the payment has been received. For each of those automated communications, you can set the rules that define when they are sent to specific customers and utilize customizable templates to support your brand and strategy. Additionally the software allows you to
- Attach original PDF copies of invoices to communications.
- Automatically retrieve emails sent from customers to your work email and bring them into the system providing a centralized view of every customer interaction.
- Manage every aspect of your customer communication including phone calls, disputes, expected payments, and email from a single screen.
- Attach supporting files to communications such as bills of lading, proof of delivery, employee timesheets, contracts, etc.
HELPS PROVIDE STELLAR CUSTOMER SERVICE
Accounts receivable is an accounting function but it’s also a critical customer service function too. Each contact you have with a customer and every experience they have plays into their decision to work with your company again. Accounts receivable is usually the last contact they have with your company, so it will be at the forefront of their mind when they consider working with your company again in the future. By making the payment process fast, simple, and stress free, your collectors are playing a large part in driving repeat sales, not to mention helping your company get paid faster. Accounts receivable automation helps you do this in a number of ways such as:
- Getting your customers the invoice sooner, with all of the information they need to process payment.
- Keeping you in touch with your customers through automated email reminders and scheduled phone calls.
- Some systems give your customers the option to pay their invoices online 24/7.
- Make sure the entire team has access to the information they need to help any customer who calls in about an invoice. If you go on vacation your customer will not be frustrated by explaining their situation to someone else in the department.
- The system lets you create and save templates so you can send an invoice that complies with your customers invoicing procedures. Making processing on their end fast and easy.
KEEPS TRACK OF A/R METRICS
Monitoring, measuring, and improving receivables performance is a proven way for companies to increase cash flow, but many don’t make this a priority. Why? Because with manual processes like spreadsheets as the foundation of their strategy, gathering and analyzing information is extremely time consuming.
With flexible reporting and an easy to read dashboard, collectors and managers alike can see a consolidated snapshot of a company’s accounts receivable and a summary of credit and collections activities including important key performance indicators such as:
- Current A/R aging by invoice date
- Average days to pay
- Cash forecasts
- Current days sales outstanding and a view of the 6 month DSO trend
- A cash summary
- Top delinquent accounts
- Summary of collection activities
HELPS YOU DO MORE IN LESS TIME
A 2013 report from Paystream Advisors explains that accounts receivable automation allows collectors to spend their time in a more valuable way than those who rely on traditional collections methods. Those collectors who utilize automation are able to reallocate their time away from clerical duties and focus it on communicating with customers, settling disputes, and other more critical tasks that lead to faster invoice collection. For example:
- Those with manual processes spend only 20% of their time soliciting customers for payment, collectors with accounts receivable management automation spend 60% of their time talking with customers.
- Collectors with manual processes spend 15% of their time prioritizing their daily tasks. Automaton allows other collectors to spend only 6% of their time doing the same thing so they can use that 8% of their time on something more valuable.
Additionally, The American Collectors Association illustrates how much more productive an accounts receivable management team can be with an accounts receivable automation system:
AVERAGE NUMBER OF CALLS PER COLLECTOR EACH HOUR
- Manual: 13.5
- Automated: 17.5
AVERAGE NUMBER OF ACTIVE ACCOUNTS HANDLED PER COLLECTOR
- Manual: 780
- Automated: 1,713
AVERAGE NUMBER OF PAYMENTS PROMISED PER HOUR
- Manual: 6.4
- Automated: 10.5
AVERAGE NUMBER OF DEBTOR CONTACTS PER COLLECTOR EACH HOUR
- Manual: 6
- Automated: 8.5
The workflow engine behind the software is based on best practices. Additionally the software comes equipped with templates for collection activities, communications, reporting, etc. that have been designed by accounts receivable experts. Paystream Advisors, in their 2013 study, found that companies who utilize accounts receivable management software recognize benefits such as:
- 20 percent reduction in DSO
- 25 percent reduction in past due receivables
- 15 to 25 percent reduction in bad debt reserves.
- ROI in as little as two months (try this ROI calculator to see how much you’ll save)