Operational inefficiencies in Accounts Receivables Management hinders a business’ cash flow and overall financial stability. Here’s a look at some top AR Inefficiencies, or should we say ‘Pain Points’ of the AR Management Process that can be easily taken care of by implementing AR Automation.
GETTING PAID ON-TIME – ISN’T THAT THE ULTIMATE GOAL
At the cost of affecting your business’ bottom line, delay in payment, in fact, provides your customers with free financing. According to recent studies, many finance leaders cite manual processes as the biggest challenge that affect timely payments. The key reason is that when AR Teams handle collections manually, they have no centralized system to see which customers need to be reminded about upcoming payments and at what time – the manual processes make it extremely difficult for your AR Teams to promptly follow up on overdue invoices.
Getting paid on time through manual processes relies heavily on your ability and capacity to send out dunning letters and communicate with customers through disjointed outreach efforts, such as phone, emails or WhatsApp. There are two issues at play here, one, these are often difficult to track and two, are difficult to scale. So, what businesses land up doing is increase the headcount or go through a significant team restructuring, both of which are not sustainable.
AR Automation tools, such as Inebura, automate and deliver timely notifications, prompts and dunning letters that helps your team focus on collections priorities. Inebura delivers a solution that goes beyond simple automation – it integrates the customer as a tenet of the collections process. It connects your AR Team and your customers via a shared, online portal that encourages real-time engagement and discussion. This insures that customers are more empowered to offer inputs on their invoices and make timely payments.
INVOICE ERRORS & MISTAKES – A TRUE EMBARASSMENT
Manual data entry to generate invoices can lead to disputes and ultimately delay payments. Moreover, frequent errors in invoicing can not only prove to be embarrassing, but it can also make the customer lose confidence in your team and you.
Incorrect listing of information on invoices in manual invoice-to-cash process is, in fact, one of the most common issue that AR Teams face on a regular basis. When teams have to generate a ton of invoices, they’re more likely to make mistakes, such as inputting the incorrect amount, wrong invoice numbers, wrong GST number, incorrect discount etc. Such invoices can delay payments as it takes time to respond to customer requests for changes/ clarifications and then apply revisions.
Most of the time, businesses get to know about such an error only when the bill is due. And the customers are not willing to pay until the correction has been made. That truly delays the process and results in higher DSO.
AR Automation Software, such as Inebura, can integrate with your existing ERP to automatically send invoices once they’ve been generated in the accounting software. This ensures no manual intervention nor invoice-related issues by reducing the possibility of data entry errors.
PROCESSING OF PAPER-BASED RECEIVABLES – THEY’RE REALLY SLOWING YOU DOWN!
Whatever we might say about digital payments, check payments still remain the most widely used method of payment. But, check payments are not solely responsible for slowing you down, it’s also the way your business is processing those checks. AR Teams land up spending resources, efforts and time (and money) on manually accepting, processing, and posting checks.
Without AR Automation Software, such as Inebura, AR Teams spend valuable time on manually processing and posting paper checks. This includes keying in of associated customer information and payment details into their back-office systems.
Inebura can help streamline check & remittance processing, deposit and cash application from a single solution – scan checks and remittance documents; view, associate and store all relevant information in a central location that’s secure.
With Inebura, your AR Teams can drastically reduce the amount of time they spend on processing paper checks and/ or any associated paper remittance documents, the time they can utilize to work on value-added tasks. The added benefit is lowering of costs and the lowering of risk associated with tedious, error-prone tasks.
ABSENCE OF ONLINE PAYMENT OPTIONS – WHAT DOES IT SAY ABOUT YOU!
Invoice-driven businesses rely a great deal on the customers’ ability to view and pay invoices associated with their account. And businesses that still rely on paper-based invoices really result in delayed receivable processes because of the slow pace in which the customers receive and pay their dues.
By automating the invoicing process with AR Automation Products, such as Inebura, businesses can really speed up their invoicing and collection efforts.
Further, by integrating Inebura into your receivables operations, you are able to provide an extremely better overall payment experience for customers as it also brings with it easy secure ways to make online payments.
The key point here is that, if your business lacks the technology to deliver a solution where your customers can view, pay and manage their invoices, it can lead to an inefficient and inconvenient payment experience. This, at one hand can directly delay your payments and on the other hand, lead to a dissatisfied customer.
EXTENDED DSO PERIODS – THEY’RE PUSHING YOUR CASH FLOW AWAY!
Extended DSO Periods delay your cash flow resulting in a slowing down of internal operations and probably halt your cash application processes. The solution is simple – choose an AR Management Software that adds Mobile Payment Acceptance to the mix. AR Management SaaS Products, such as Inebura, can accept and process payments on the spot. This will ultimately result in drastically reducing DSO.
With Inebura, your AR Teams can accept payments (ACH, Credit/ Debit Cards, Checks) and automatically associate the payment to an outstanding customer account and invoice(s).
MANUAL CASH APPLICATION & DATA ENTRY – TIME WASTED, MONEY WASTED!
Whenever your AR Team manually reviews a payment, it costs you money – manual data entry and error-prone manual receivables processes are slow and time-consuming. Further, with siloed systems i.e. different systems, being used for payment processing and posting, businesses are spending valuable time and overheads on processes that can easily be automated on a single platform.
SaaS based AR Management Platforms, such as Inebura, give your AR Teams the ability to streamline the entire process. The teams no longer need to manually match payments to customer accounts. Moreover, the manual intervention needed for low-value activities, such as keying in payment details into the back office system etc., now become a thing of the past. Inebura automates the matching of payments to open receivables and/ or even customers are able to select the invoices they are paying via a self-service portal.
When you allow your internal resources to focus on functions that add value, you are able to easily, efficiently and securely accept, process, manage and post all payments.
SILOED LEGACY SYSTEMS – A HEADACHE AND A PAIN!
Businesses, for years, have utilized multiple disparate systems to manage and process various aspects of the Accounts Receivable Process, and unfortunately, many businesses still continue to do so. Siloed systems make it difficult to accurately track the status of collections, and moreover, they are a common cause of miscommunications for which intervention from senior leadership might be required in the near future.
AR Teams use this patchwork of systems to generate multiple reports, spreadsheets etc. And when it comes to retrieve information from these scattered systems, it becomes quite a task. The time that these teams spend on gathering information is time not spent on servicing customers and collecting payments.
This problem can easily and effectively solved by implementing a SaaS Platform, such as Inebura, that manages and streamlines your entire Accounts Receivables Process. Inebura enables your AR Teams to work more efficiently by consolidating all information, such as account statuses, payment histories and more, in one place. Also, it can seamlessly integrate with your ERP software and you can get your systems talking to one another. Inebura also includes a customer-facing portal to ensure that everything is accessible by both your AR Team and customers.
NON-STANDARDIZED COLLECTIONS PROCESSES – AN ECO-SYSTEM FLAW
Businesses that use highly manual AR Processes have a hard time standardizing their collections outreach. This implies that AR Teams miss important dates for following up on outstanding invoices.
Manual Collections, more often than not, is a reactive process that’s difficult to scale and relies completely on your AR Team sending out ad hoc collections notices. And without a system in place to track the status of open receivables, AR Teams, unknowingly land up doubling their efforts. And without clear visibility, AR Teams might reach out to customers and inquire about payments that the customer has already paid – this wastes your team’s valuable time and also is a source of frustration for the customer.
AR Automation Software, such as Inebura, eradicates these inconsistent ad hoc processes. This, drastically increases the probability of timely collections. Inebura uses automated payment reminders, priorities collections activities, tracks invoices in real-time, and gives access to a robust communication platform – everything one might need to put a system in place and ensure timely collections.
This inconsistent, non-standardized collection process is a real handicap when it comes to AR Management. According to an AmEx Study, companies that rely on manual processes for prioritizing collections take 30% longer to follow-up on overdue payments than those companies who use automated processes.
To know more about Inebura or to book a demo, write to sandeep@inebura.com