BILL.COM BLOG

Accounts Receivable Automation: The Answer to the Collection Challenge

AR Automation

Companies love to get paid, and get paid quickly. The first step in this process: Send invoices. While you create invoices with a precise due date on them, you can’t guarantee that your customer will pay by the deadline.  

Organizations often face a lag in business payments from their customers, ranging from 30 to 90 days or even longer. However, those payments are necessary to support your business, its operations, employees and more. Payment delays negatively impact your business and its cash flow. Few companies are immune from this phenomenon.

Two methods that will shorten your window for collections: Accounts receivable automation and ACH payments.

Why Accounts Receivable Automation?

You’ve no doubt heard a bit–or a lot–about automating business processes. It’s the practice of taking day-to-day activities, subtracting the labor-intensive administrative part of them and transferring that “burden” to technology.

For example, consider bill payment. Instead of walking a bill from desk to desk for review or calling co-workers to follow up on the approval process, technology would automate the process, moving the bill from person to person and sending reminders or notices if the process lags–all the way through to payment itself when authorized.

Accounts receivable automation migrates invoicing efforts to digital practices. It automatically creates the invoices based on your company’s data, delivers them electronically on set dates, sends reminders and reconciles payments with accounting systems and bank accounts. It also supports multiple types of payment. If your customer wants to pay via means such as ACH, credit card, PayPal or more–your AR can accommodate that.

How Does Accounts Receivable Automation Help My Company Collect Payments Faster?

Every business wants to get paid faster and AR automation can make that happen.

1. AR automation digitizes the entire AR process, meaning that paper–the great decelerator of all processes–is eliminated. No more printing and mailing invoices. They’re delivered digitally and immediately.

2. It automatically generates your invoices and delivers them in a timely and consistent manner. There’s no need to wait for someone to create, review, or proof invoices (a process that many business owners and employees dread).  

3. It enables digital payments and allows your clients to set up automatic recurring payments.

Why Should I Consider ACH Payments for Collections?

Here’s the simple answer: It accelerates your payment collections. By taking money directly from one bank account and attributing it to another, you:

  • Receive the money much sooner when compared to paper check processing and payments.
  • Actually get paid. You won’t have to worry that a check won’t clear or that a credit card charge will be denied.

Benefits of Auto-Payments via Accounts Receivable Automation

One of the reasons it can take so long to collect payment relates to how your customers handle invoice reviews. Normally, an invoice has to be accepted, reviewed by multiple individuals, sent to accounting and then paid on their schedule–a payment delay that can bleed into multiple months or longer.

However, you can erase that delay by allowing your customers to set up automatic payments.

With automatic payments, you no longer have to extend credit to customers. When a customer doesn’t pay an invoice for 30, 90, 120 days or more, small businesses often have to cover the deficit themselves. They often have to delve into existing reserves or take out loans while waiting. Basically–they extend credit to those customers. If you rely on corporate credit cards or loans to augment collections deficits, your business will also face additional charges in the form of interest payments. This process can be negated altogether with auto-payments.

Auto-payments also allow you to stabilize and enhance control of your cash flow. You’ll have set dates on when your business will receive payments and can plan accordingly.

With the ability to digitize payments and ultimately collect payments more quickly, accounts receivable automation offers a lot of opportunities to get paid faster. Learn more about how your company can start with AR automation.

Bill.com

Charles Crabtree
Director, Strategic Accounts, Bill.com
Charles helps CPAs, accounting firms, and bookkeepers bring automation to the AP/AR process by harnessing the cloud. You can reach him at ccrabtree@hq.bill.com or on LinkedIn.