Cash flow is critical to keep a business running. And the accounts receivable process is the very basis of a business i.e., collecting payments for selling goods and services. All businesses need to keep track of payments that are due. From sending bills to ensuring there is no outstanding debt, accounts receivable (AR) is the process of making sure your payments are cleared on time.
Why Accounts Receivable Automation Matters
With AR automation, companies improve their invoicing and payment process, their sales, as well as their overall performance. The purpose of automating your AR is to systematize the invoicing process and to ensure you collect due payments on time. It aims to minimize financial risks including fraud and credit default. Automating the AR process gives you more strategic insights. For instance, over a while, you can see the details of a customer’s payment history. This makes it easier to forecast their financial health and offer the right solution accordingly.
Also read: Avoid Late Payments with Automated Accounts Receivable Management
How Accounts Receivable Automation Speeds Up Payments
Manual accounts receivable processes create several issues, of which delayed and missed payments are the most common. This negatively affects your sales as well as your ability to pay vendors, partners, and employees. By automating your AR process, you speed up payments and achieve a steady cash flow. Here’s a look at how AR automation speeds up payments:
1. Automated invoices lead to faster payments
Processing an invoice is a long process. A powerful tool to fight late payments, e-invoices are easier and faster to process, approve, and track. They make it easier to collect payments, send timely reminders, and swiftly follow up on outstanding payments. Sending an automated invoice cuts out manual errors, and saves your time and money. It also offers a great UX, making payments a seamless experience for your clients.
2. You can offer flexible payment options, making it easier for clients to pay
Understand your buyers’ paying habits and offer a more flexible range of payment options to speed up payments. With AR automation, you get to customize payment methods and offer an ideal checkout experience that best suits your business. With options like embedded payments and variable recurring payments for subscriptions, payments become convenient, making it easier for customers to pay. Modern payments are instant, there are no unnecessary charges, and you have more control and visibility.
3. It minimizes the DSO cycle
Every business wishes to have a shorter DSO (day sales outstanding) cycle. But a manual collection process is very long. Tracking payments on paper-based records or spreadsheets along with manual follow-ups can take up to days and weeks. AR automation reduces the time between the delivery of goods and services and payment received for the same. Reducing the DSO cycle allows businesses to get paid sooner and manage their cash flow in a more optimized way.
Final Thoughts
AR automation enables you to maximize your resources by eliminating all errors and risks related to manual processing. You can create regular payment schedules, and enable your customers to take immediate action on invoices or payment reminders. Moreover, with secure access to data, you can use the insights to build better products and services and deliver a great UX to your buyers.
How Can Novalnet Help
PSPs like Novalnet have focused on enabling businesses to gain access to high-end fintech services and solve core issues like high costs, limited clarity, manual errors, etc. If you are ready to begin your AR automation journey, we are here to help. As a global payment service provider, we have extensive experience in helping Europe’s leading brands to process payments. Our technology helps you to accept payments globally in 125+ currencies in 150+ automated country-specific payment methods.
Set up your payments within minutes with minimal coding using our instant payment plug-ins. Or use our AI-based risk management solutions and advanced analytics to design the best payment experiences for your customers, all in a fully secure environment. Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.