Accounts Receivable also called as AR is the asset account that represents the money that a business is bound to receive form its clients and customers for the services or goods provided.

Accounts Receivables are the fundamental life-lines for cash in-flow which is why its efficient management is paramount to the smooth running and success of the business. Be it to pay the debts, invest in your infrastructure and technology or to grow the business, the cash flow and working capital is important and they are negatively impacted when the money is tied-up in AR.

Especially during the COVID-19 pandemic AR process of business has copped severe blows by disrupting the way the business run and operate. However smart businesses can take this as an opportunity to fortify their Accounts Payable process with automation and lay the path for a smooth and successful Accounts Receivable process in the years to come.

If you are a business owner looking to improve your Accounts Receivable Process and are looking at automation as an option then this blog is for you. Here we pin-point at the common problems caused by infective AR process and let you know automation of Accounts Receivable can help your business. So read on:

Problems Caused by In-effective Accounts Receivable Process:

While the majority of businesses adhere to strict AR policies, most of them especially small business fall short of enforcing them effectively. Increase in priority of sales, lack of streamlined AR process or infective management of the policies due to lack of resources or supervision are some of the causes of effective AR process. And when the underlying issues in the AR process are not addressed thoroughly, a business may run into the following problems:

  1. Invoice problems: Even though the customers are ready to pay in time, errors and delay in invoice generation can impact the payments. When business adheres to manual AR process, there is always the risk of invoices missing crucial details like purchase orders, rates, tax exemptions, late invoices that can unnecessarily prolong the payments and strain the customer relations.
  2. Invoice delivery problems: Business which still adhere to manual invoice delivery has encountered problems in plenty during this pandemic. With businesses choosing remote working the invoice can fail to reach the businesses resulting in missed or delay payments. And automating the AR process can efficiently solve the problems with respect to errors and delivery
  3. Bad Data: Majority of small business still work on outdated excel sheets and old data that are entered manually. Inaccurate data that is not renewed periodically, may not help the businesses and lay a path to a vicious cycle of missed and wrong payments. Having a master customer data with discount and tax rates, payment and delivery terms with automated systems in pace can lead to a swift, error-free and efficient collection process.

The above three or common problems of in-effective AR process which can hamper the total cycle, resulting in delayed and missed payments and more importantly can spoil the relations with the clients.


How automation of accounts receivable can help businesses improve their collection process?

Automated accounts receivable process can swiftly improve the way businesses collect their payments, communicate with the clients and manage their internal finances with greater control and here’s how:

Automatic invoice generation: Automation digitizes your entire Accounts Receivable process eliminating the manual invoices. Invoices are automatically generated based on the accurate details of goods, services, prices and client details pulled from the centralized data making the processing time saving and error-free.

Automated Payment Set-up: Automated AR process enables all type of digital payment collection methods for faster, secure and timely payments from the clients. It also simplifies the deposited process for the accounting teams where the amount is automatically deposited without having to wait for the client’s cheque to arrive and then wait in the line at the bank to deposit it.

Automatic invoice generation and payment significantly stabilizes the cash in-flow of the business and gives great control of the AR process but the benefits of automation don’t stop there. The total impact of a seamless automated AR process transform every aspect of the collection process when implemented perfectly:

  1. With swift and timely billing and invoicing, it significantly reduces the accounts receivable days sales outstanding (DSO) paving the way for the stable cash in-flow.
  2. 2. It reduces the time taken by the accounting team to process payments, helping them direct their energy and efforts towards core business functions, improving their productivity and enhancing the positive impact of the whole team on the business.
  3. Automating the AR process enables the development of end-to-end receivables system which is crucial for enhancing visibility to evaluate the status of client accounts and health of the business. This gives an opportunity to fix the problems before they arise and helps management in making critical decisions for the smooth functioning of the business.
  4. Having an end-to-end receivable management system also helps in improving customer relations by resolving the account issues in less time increasing the good-will in the process.

Automating your AR process can simplify the complex AR process, solve the bottle-neck associated with the collection process, improves productivity of accounting team, enhances customer relations, and paves a way for better cash in-flow for years to come. If you are a small and medium business looking to leverage automation of AR process for the smooth functioning of your business, our accounting team at Back Office Accountants are here to accomplish it for you.

Being one of the best back-office accounting firms, we have helped hundreds of businesses with both automated accounts receivable services tailored to their requirements. You can contact us here: