What is Accounts Receivable Automation & Why You Should Consider It for Your Business

Posted on June 30, 2022
Written By Siddharth Sujan

accounts receivable automation

The accounts receivable department in an organization is responsible for invoicing customers, communicating with them regularly to ensure timely payments, performing reconciliations and generating collection reports for the higher authorities. As you can imagine, this is a critical yet laborious process that can get quite repetitive in its nature and drain onshore resources. To tackle this challenge and streamline receivables for their business, many owners & finance leaders are now taking to accounts receivables automation. Let us try to understand how technology can help optimize this function and why you should consider it for your business.

What is Accounts Receivable Automation?

The accounts receivable process is a multi-step function that starts when a business generates an invoice for a good or service it has provided on credit. The following steps in this process include accepting payment from customers, performing reconciliation with the remittances and generating insightful reports on the entire process.

RELATED CASE STUDY: Do you know that QX worked with a leading healthcare recruiter to automate the remittance uploading process using QX ProAR, our proprietary AR automation technology? Read the case study here.

We will now briefly touch upon these steps individually and decode the role of automation in optimization.

  1. INVOICING: In the traditional sense, accounts receivable executives spend hours creating paper invoices and mailing them to customers, each time a sale is made. Not only does the TAT for this activity ends up being three to five business days, but the invoices created are also prone to human errors. Automating this process allows businesses to instantly generate accurate invoices and initiate conversations with customers. This increases the probability of faster payments and eliminates postage costs.
  2. DUNNING: Once an invoice is sent out, accounts receivable executives initiate the process of manually following up with customers, sending timely reminders to ensure that payments are made as soon as possible. If the executive is too laidback in its approach, the business is at risk of delayed payments. On the other hand, you become too firm and it could hamper the relationship itself! Accounts receivable automation tools enable AR executives to schedule communications and inform customers about supporting documents, rebate notices, etc. in a streamlined & professional manner.
  3. PAYMENTS: The end goal of any accounts receivable executive is to get its customers to pay on time. Therefore, businesses need to have in place a robust payment system that is fast & user-friendly. Automating accounts receivable adds a whole layer of flexibility to this process, thereby ensuring faster payments. In addition to accepting payment modes like credit cards & ACH payments, automation allows customers to set up automatic recurring payments.
  4. REPORTING: CFOs and business owners also expect accounts receivable executives to leverage collections data to generate insightful reports. Accounts receivable automation tools enable businesses to generate timely, customized reports that facilitate informed decision-making and open the door for further optimization.

Benefits of Accounts Receivable Automation

  1. HEALTHIER DSOs: One of the biggest reasons businesses automate their receivables is to bring down their Days Sales Outstanding, or DSO. Defined as the average number of days a company’s accounts receivables remain outstanding before they are converted into cash, DSO is the most critical accounts receivable metric used to determine the efficiency of a company’s collection system. Automating accounts receivable optimizes the collection process, leading to faster payments and thus, reduced DSOs.

RELATED BLOG: Want to know more about DSOs and how working with expert collection teams can help bring them down? Read our detailed blog here.

  1. REDUCED OPERATING COSTS: When a business performs accounts receivable onshore, it spends a good chunk of money on hiring & retaining skilled collection experts. Automating these tasks, on the other hand, allows repetitive tasks to be automated, eventually bringing about cost savings of up to 50%.
  2. EFFICIENT, ACCURATE COLLECTIONS: Irrespective of your accounts receivable team’s qualifications, manual collections are prone to human errors that can prove costly for your business. Automation, however, reduces dependence on people. This leads to a more efficient & accurate collections process where humans intervene only in case of exceptions. In addition, automation also allows businesses to implement the same processes across the board, which further improves overall efficiency.
  3. HAPPIER CUSTOMERS: As automation is synonymous with improved invoicing accuracy, user-friendly interfaces and more streamlined processes, customers are bound to feel valuable. In addition, the frequent, automated communications ensure that you are in constant contact, enhancing the overall customer experience.

RELATED CASE STUDY: QX worked with a leading recruitment agency to optimize accounts receivable by setting up an offshore team of collection experts. Read the case study here.

QX Global Group: Your Accounts Receivable Automation Partner

By now we know that accounts receivable automation will result in optimized processes, improved cash flows and healthier customer relationships. However, implementing these automation solutions is highly technical and at times, your onshore staff might not have the expertise & experience. QX Global Group is a global Business Process Management (BPM) company with rich experience in automating accounts receivables for businesses of all sizes, across industries. Our team of collection experts is adept at working with all industry-standard tools and can even incorporate any additional tools that might suit your organizational needs better. Get in touch to kickstart your accounts receivable automation journey today!

Originally published Jun 30, 2022 08:06:04, updated Feb 08 2024


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