What benefits do companies who utilize accounts receivable management software often recognize? To put it most simply, using accounts receivable management software is like hiring the perfect employee who always follows your direction, never lets anything fall through the cracks, and works 24/7! While this is attractive enough by itself, let’s get into the tangible benefits of implementing account receivable management software. Companies who utilize this technology see some amazing results, for example:
IMPROVE YOUR CASH POSITION
You have bills you have to pay. If you don’t get paid on time you will inevitably run into dry spells when you owe more than you’re taking in. By focusing on your accounts receivable, utilizing best practices, reminding customers to pay, identifying invoices earlier in the process, and making it easier for customers to pay – you will have a very clear picture of your cash position. Some account receivable management applications include a statistical cash forecast based on your customer’s historical payment history, so you know what cash you should receive in the next week out to the next month.
INCREASE CONTROL OVER CASH AND WORKING CAPITAL
Understanding your cash position and improving accounts receivable performance is key to managing and improving working capital. By managing working capital effectively, you have the insights you need to make strategic investment decisions such as capital equipment purchases, new employee hires, facility expansion, and other investments to grow your business; further you will have more cash on hand by improving your invoice collection process.
INCREASE ACCOUNTS RECEIVABLE MANAGEMENT EFFICIENCY
How much time do you waste trying to figure out who to call, when, and why, and how long does it take you to get the information you need to resolve issues so you can get paid? The answer – a LOT more time than you think. According Paystream Advisors, companies that use accounts receivable management software to get organized and to automate mundane tasks can:
- Reduce time spent prioritizing and preparing for calls from 15% to 6%.
- Reduce time spent managing disputes from 40% to 13%.
- Increase the time they spend soliciting customers for payment from 20% to 62%
IMPROVE CUSTOMER COMMUNICATION
A/R management software should make it easier for you to communicate with customers. From one screen you can typically review account information, create emails, attach invoices, create mail merge documents, and log phone calls. And best of all, every communication is stored for future review and analysis. Save time and better serve your customers through improved communication tools embedded in more advanced accounts receivable management systems.
IMPROVE CUSTOMER SERVICE AND SATISFACTION
Most customers want to pay you on time, and it’s often your fault they pay late. Either you didn’t send the invoice early enough for them to make an on-time payment, or there was a problem with the invoice, and they won’t pay until it’s fixed. What’s the impact of these preventable issues on customer satisfaction? They’re significant. Consider that about 50% of all invoice issues are related to missing or incorrect purchase order information on your invoices – a problem that is very much preventable. Further, consider how frustrated your customers will be if you continually call them for late payment when it’s your fault they didn’t get the invoice soon enough, or when it’s your fault that you continually exclude their PO from the invoice.
Account receivable management software can automate invoice delivery to customers, alert you to problems with invoices such as missing purchase orders, and provides everything you need in one centralized location so you can serve your customers better, wasting less of their time, and improving your relationship so they will buy more products and services down the road.
REDUCE ADMINISTRATIVE COSTS
It’s the digital age. Are you still mailing statements and invoices or sending them via fax? Midmarket and enterprise A/R management business applications are designed to automate every activity that shouldn’t require human intervention. Why pay someone to print, fold, and stuff envelopes when you can probably automate those communications for most, if not all, of your customers. Further, what will you save in paper, toner, envelopes, postage, and lost time in this antiquated process.
SHORTEN THE SALES TO PAYMENT CYCLE
When a distributor or manufacturer makes a sale they incur hard costs for the inventory and labor required to fulfill the order. When a service organization secures approval for a new project they allocate expensive resources to provide the service. The key to a successful business is the ability to get paid as soon as possible on the products or services they provide. You rely on your accounting system to create the sales order and the invoice, but then your accounts receivable software takes over. Invoices can be automatically sent to customers the day they’re created, and a built-in customer portal and online bill pay capabilities allow your customers to pay you via credit card or ACH, giving customers more options to pay you sooner.
MINIMIZE CREDIT RISK
How much credit should you extend to customers? What’s your risk that they won’t pay? Every company that extends credit is taking a calculated risk of getting paid on perishable time or inventory. But that’s the nature of businesses today – customers expect credit terms, and competitors extend credit so everyone has to do the same. But there are ways to reduce your risks. You can rely on information from third party credit bureaus, which is helpful for new customers, and you can monitor your existing customer relationships for customers that are slowly becoming higher risk accounts. Many A/R management software applications allow you to store credit reports from bureaus, send out credit applications and file them against account records, create your own credit scoring formulas, color-code customers by risk level, and setup alerts to notify you of customers with excessive broken promises, disputes, or accounts that take longer to pay their bills. Note that there are many accounts receivable software solutions that specialize in business credit management that offer little in respect to collections automation while other applications are stronger in collections with very little credit functionality.