An organization requires a reliable cash flow system to yield profit. The challenge, however, comes when customers fail to pay their dues after receiving goods or services from the company. The outstanding debt may subject the company to unforeseen losses if not collected.
An automated accounts receivable platform is the key to effective cash flow handling. It helps businesses send invoices and reconcile books of accounts. Most importantly, accounts automation helps the company track their debts so that customers settle their invoices.
Here’s everything you should know about an automated accounts receivable platform, including its benefits to an organization.
What is an Automated Accounts Receivable Platform?
An automated accounts platform is a unique software that eliminates repetitive debt collection tasks. The platform replaces manual processes involved in sending invoices and collecting cash.
Contrary to what many people think, an automated accounts receivable platform doesn’t eliminate human input. Instead, it streamlines the payment collection process through time-tested computer solutions.
Accounts receivable automation eliminates manual tasks like sending invoices, reminder emails, follow-up messages, and retrieving past invoices.
How Receivable Accounts Automation Works
The workflow in an accounts receivable platform may vary across organizations. However, the main tasks involved in account automation are the same. The platform focuses on the following key concepts;
- Sending invoices.
- Collecting outstanding payments.
- Reconciling invoices and payments.
Automating the accounts receivable platform begins by receiving and compiling the client’s data. Such data includes the client’s identification details, invoicing information, payment terms, or other unique details.
Once the accounts section receives the data, they enter all the relevant information on the platform as the client requests a purchase. The system then tracks the client’s account until the completion of the transaction.
For instance, if the organization expects payment from a client on a selected date, the system automatically generates and delivers an invoice without fail.
An automated accounts receivable platform also relays the real-time status of the invoicing transactions, including flagging off outdated sales orders.
Benefits of Receivable Accounts Automation
Accounts receivable automation eliminates the stress of unpaid debts and ensures compliance with invoicing regulations. Here are the top 5 benefits of automating the platform.
Streamlined Workflow
The software reduces the time spent on invoicing and ensures uniformity of all vital client transactions. By streamlining the workflow, the accounts section can focus on collecting overdue debts and preparing cash flow statements for the preceding trading seasons.
Compliance with Legal Requirements
Different countries have varying regulations governing invoicing to clients. However, complexity arises if an organization has multiple clients across many locations. The software tracks such complexities, ensuring strict compliance with invoicing regulations without breach.
Improved Accuracy
Accounts automation eliminates human errors and clears data redundancy. As a result, accountants will be less likely to deal with duplicate invoices and billing disputes.
Automated accounts also ensure prompt payment reconciliation, hence improving customer relations. When clients are happy, organizations build trust and loyalty among their customers.
Cost Benefit
Electronic invoicing is the best way to eliminate unnecessary accounting expenses in an organization. The platform reduces paperwork, cartridge ink, storage space, delivery, and postage fees. In addition, accounts automation reduces labor costs and money spent to recover unpaid invoices.
Increased Speed and Efficiency
Automated accounts receivable platforms improve speed and efficiency in invoicing transactions. The accounting staff uses digital templates to generate many invoices quickly. Moreover, unlike manual invoicing, the team can calculate complex billing schemes faster and more accurately.
Predict Bad Debts and Cash Flow Problems
An automated accounting system gives insightful information into the cash flow system. Organizations can automate payment notifications to predict the expected cash inflow. If a debt is overdue, they can accurately determine how long it is due and the chances the client will clear the payment.
Accounting Automation Best Practices
Computerized accounts receivables guarantee incredible achievements for profit maximization. Although the process is automated, human intervention is also necessary. Some golden tips will be helpful when implementing an automated accounts receivable platform.
Give Incentives for Prompt Payment
The system should have incentives for early payment by customers. For instance, you can discount the outstanding debt to motivate the client.
Resolve Disputes Quickly
One of the causes of non-payment is a dispute between the company and the customer. However, clients become happy and motivated if an organization has a quick turnaround time for dispute resolution.