A robust Accounts Receivable process is key to achieving a solid cash flow and smooth financial operations for any business. However, the benefits of an optimised Accounts Receivable show up slowly by elevating different aspects of the business. As a remote accounting firm specializing in Accounts Receivable, Back Office Accountants has helped optimise Accounts Receivable of many businesses. Here are a few benefits the businesses encountered before ultimately leading to improved cash flow:
- Early dispute identification and resolution.
- Enhanced AR efficiency due to increased focus on high-impact tasks.
- Improved vendor relationships due to timely payments.
- Reduction in bad debt write-offs
- Better budgeting and cash forecasting due to improved cash flow management.
- Earned interest for the money in the bank
Improved business performance and perception (for investors and buyers).
All the benefits add up, ultimately leading to more cash to plan and fund business growth. However, optimizing AR is neither a single day’s work nor a cookie-cutter solution. After carefully studying the ins and outs of the business our Accounts Receivable Specialists craft an AR framework and execute it perfectly.
That said, most businesses do have an AR plan in place and yet they fail to achieve their AR metrics and goals due to a lack of optimization.
Accounts Receivable Optimization & Key Trends to Track:
Optimization is an ongoing continuous process that entails tracking the new trends and picking the right ones to solve existing problems or strengthen the current process. Most businesses stick to their core process and ignore the latest trends which could improve their current process and as a result fail to achieve their true AR potential.
At Back Office Accountants we monitor and track the latest AR trends and even try and test them out to understand them inside out, this, as a result, helped us deliver greater AR performance for our clients.
So, if you are a business that is looking to optimize your AR we advise you to monitor the new trends and take a gradual step towards inculpating them into our current AR process. In 2022, here are 5 key trends in Accounts Receivable our Accounts Receivable experts at Back Office Accountants find most promising for AR optimisation in the coming years:
AR Automation: Manual and paper-based AR processes result in data entry errors, stretched timelines and cost escalation, and reduced efficiency. And all these problems can be quickly solved by automation AR.
By replacing their legacy statements with Automated AR solutions, our clients at Back Office Accountants have improved the accuracy, reduced late payments, and improved the cash flow, while cutting down man-hours and allocating the personnel for high-impact AR tasks.
AR automation is no trend but a necessity in today’s accounting world. More importantly, it builds a strong foundation for a business to leverage the technology for optimizations.
Faster Customer on-boarding with faster risk assessment: Diligent credit assessment is a crucial step in choosing the right clients to work with. However, in the majority of cases, aggregation of the required information from multiple sources can delay the on boarding. By leveraging the latest credit management tools and businesses can quickly draw up the required credit information and even run periodic reviews to reduce the risk while seamless on boarding the clients in less time.
Cash Apps and AR Apps: Cloud accounting service providers regularly offer versatile applications and integrations that simplify AR management and collections. These integrations can be of great help for accounting resources to accelerate the entire process. Similarly, businesses today can also utilize cash apps to give the flexibility of making their payments in instalments. By making an agreement with payment vehicles, one can improve the overall experience by offering flexible plans to improve the collection.
Predictive Analytics for Improved Cash-forecasting Abilities: Accurate cash forecasting helps predict the profits and revenues and enables the effective use of cash to reduce the risk of liquidity problems. However, even with the right data in hand, it could take weeks for small businesses to predict the future cash flow. Predictive analytics and AI offer great help in predicting and forecasting the cash flow by improving the accuracy and cutting down the total time taken for forecasting.
Incentives for AR teams: Offering incentives for the accounting teams is more of a management trend that is being adopted by global businesses today. Financial leaders believe it spurs creativity to improve the AR collections, especially in small businesses that often lag in collections. Creating targets and incentive programs while carefully monitoring the process can be adopted by small and medium businesses once in a while (dull seasons) to encourage proactive and creative AR to benefit the businesses in the longer term.
Not every AR trend can be adopted in the current AR process, but at least a few of them can be tried and tested for improved AR performance. If you are a business that is looking to improve your AR process but lack sufficient resources to adopt the latest trends, our experts at Back Office Accountants can help. You can contact us here: https://www.backofficeaccountants.com/