Thinking about automating your accounts receivable process? This article will explore what return on investment you can expect from automating your AR management.
August 29, 2023 
In our current context, can businesses afford to be reluctant to change? Even though automation has proved over and over to save organisations a great deal of time and money while providing better services, too many businesses still rely on paper invoices and manual processes. Implementing new software might take time, training and creating change within your company’s culture. But the best things in life come when you break from your routine and reinvent yourself. This article will explore the return on investment of automating your AR management.
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Automating your Accounts Receivable is the first step to a healthy cash flow. A healthy cash flow is more than just controlling your liabilities. Of course, if your books exhibit more liabilities than assets, it’s not a healthy cash flow. But if your assets display more Accounts Receivable than actual payments, it’s not a healthy cash flow either. Automating your Accounts Receivable is the key to a healthy cash flow because it can convert your outstanding payments into actual payments.
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Chasing customers for unpaid invoices takes time and effort, and there’s only so much the human mind can do in a workday, but AI’s abilities are endless; therefore, automated AR management is more accurate, more efficient, and therefore increase your collections rates in the short run and decrease your DSO in the long run.
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Automation also reduces operating costs and eradicates costly data entry errors and misplaced invoices, which are so common in accounting departments. Investing in good software is also way cheaper than outsourcing your collection with an agency or dedicating your employee’s time to it (or risking having burnt-out staff in the long run).
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Automation is a game-changer for employees, who are constantly exposed to making mistakes and can be driven to burnout by thankless payment chasing and nagging duties. They are more efficient, relaxed, and can achieve more, positively impacting customer experience. PYMNTS’ February 2021 B2B Payments Innovation Readiness Playbook: The Business Case for Automating AR Processes, an American Express revealed that “87% of firms that have automated AR functions are processing faster, while 79% say automation enables them to improve team efficiency, and 75% say it’s useful in providing “superior customer experiences.”
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Artificial intelligence can automate repetitive tasks such as checking incoming payments, creating invoices, or assigning payments to open positions. When your employees spend hours processing invoices and chasing customers for outstanding payments, are they actually adding value to your company? Are they actively driving revenue? The ROI of manual AR management is too low to have your staff waste precious time doing these time-consuming, routine tasks that automation can do better.
By investing in automation, your team can focus on added-value, revenue-driving tasks, and the impact on their morale is significant. Empowered, they are more likely to achieve more and adopt a proactive approach to their work because cumbersome, burdensome tasks are suddenly out of the picture. According to a survey of finance and accounting employees conducted by LemonEdge, 31% of interviewees admitted they planned to leave the industry due to high stress. What were the most common sources of this heightened stress? Heavy workloads (42%) and Time-consuming manual processes (36%). Do we need to say more?
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Automation can eradicate invoice mistakes, which is good news for your business and customers. Investing in automated AR management software offers your customer a more professional, seamless experience, starting with payments.
Some advanced automated solutions provide your clients with bespoke payment plans and options and a straightforward Payment Portal which guarantees total convenience to pay via any payment method (Stripe, Direct Debit, ACH or EE transfer payments). Not only is it easy for them to pay you, but with one quick look, your customers can get precise and valuable insights into their payments. Empowered, they feel more engaged as AI-powered AR management solutions communicate with them in a friendly, mindful tone that matches their own.
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By recording real-time payments, AR management platforms keep an overview of outstanding payments and enable you to take early action to avoid late payments. Thanks to AI algorithms, it’s easier to identify patterns and trends in your customers’ payment behaviour and history. You can detect, if not predict, payment defaults earlier and minimise non-payment risks.
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Thorough creditworthiness checks can help you decide on the granting of credits and the setting of payment terms. With an enhanced customer risk assessment, you can make better decisions.
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AI-powered tools allow companies to improve their cash flow forecasts. By analysing past transactions and identifying patterns, AI can help accurately predict future cash flow so that you can better plan and manage your finances.
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PYMNTS’ February 2021 B2B Payments Innovation Readiness Playbook: The Business Case for Automating AR Processes, an American Express revealed that “87% of firms that have automated AR functions are processing faster, while 79% say automation enables them to improve team efficiency, and 75% say it’s useful in providing “superior customer experiences.” Optimised cash flow and increased efficiency, enhanced customer satisfaction, and more insightful decision-making and strategy; these metrics skyrocket when you leverage the power of automation in your AR management. Whoever said, “you reap what you sow”, didn’t know you could automate the reaping part. What is the ultimate ROI of Accounts Receivable management? Working smarter, not less.
