You’ve heard it before: automation is supposed to make your life easier; automation is the way forward; work smarter, not harder. Though these statements are true, none of them explain how automation will achieve these things. In this article, readers will learn how accounts receivable (AR) automation software simplifies the order-to-cash (OTC) cycle and generates faster liquidity for the business. They will also learn how AR software produces invoices faster and how customer relations are likely to improve as a result.

It’s in the order-to-cash (OTC) cycle – when a sale has been made, and payment is expected – that businesses are most likely to lose money. This is generally due to human error, lost documents, incorrect data, or invoice delivery mistakes. These errors can lead to write-offs of ‘bad debt,’ which nobody wants.

So how do we prevent these errors from happening? The answer is AR automation software. AR automation reduces errors by simplifying the order-to-cash (OTC) cycle.

AR automation software charts the OTC cycle on elegant dashboards, presenting data in a clear and digestible fashion and then generating invoices that are both flawless and prompt. All the information the customer needs to know is presented clearly and without error. It doesn’t get smoother than this. 

In traditional practice, accounts receivable professionals compose invoices by hand. Single invoices require writing detailed billing information, which is taxing to do and prone to error. For this reason, it’s not uncommon for written invoices to be spaced out across an OTC cycle and, as a result, contain large amounts of money due.

A subtle but impactful benefit of AR automation is its ability to generate and send invoices at higher frequency. This way, the payer receives smaller and more manageable bills and is, therefore, more likely to pay them right away.

With a more reliable and consistent collection process, companies can forecast what their future expendable income will be. With enhanced foresight of what their liquidity will look like in the near future, businesses can do better strategic planning for future ventures. All this contributes to a reduction in days sales outstanding (DSO).

As mentioned in the section above, AR automation software gives staff the ability to significantly reduce the invoice drafting process. Staff selects one of the various digital formats, the business’s billing information is auto-filled, and the invoice is fired off. With online delivery, the invoice gets into the customer’s hands quicker. The quicker they receive it, the quicker they can pay it.

The digital formatting options also offer alternative billing schemes, such as consumption-based billing, ideal if you’re a business offering a service that the customer uses daily. 

You may already know that AR automation software can send proactive payment reminders and dunning letters, but AR can offer additional methods for customers to validate their payments, as well.

These methods include purchase order data, delivery information, itemisation, and personalised project codes. Since these invoices are distributed digitally, they are all consolidated in one place, like an email inbox, making them less likely to get lost.

Depending on the AR automation software you choose, the services mentioned above can be quickly and easily integrated into your current ERP.

It has already been mentioned in this article, but as a reminder, another way that AR automation software increases efficiency is its lack of errors. Accidental duplication of invoices, billing disputes, and general customer misunderstandings. The time it would take to resolve these errors is saved with AR automation software.

Another thing that AR software accounts for is invoice regulations in other countries. These regulations could include, to name a few examples, sales tax, e-billing, and data protection.

The last – but certainly not least important – measure of how AR software makes the OTC cycle more efficient is its standard of security. Sensitive customer data is safely stored and protected against security breaches and fraud. As the data is automatically archived, it is organised and easily accessible for audits, as well.

For businesses to thrive, they need to nail the customer experience. One good encounter can create return customers, attract new ones, and retain them in the future. 

Contrary to other areas of business, customers of AR software don’t need to be schmoozed. They just want things to work and have their questions answered expediently.

Much of what was mentioned in the sections above has the dual benefit of also making customers happy. Faster invoice processing, for instance, can be a breath of fresh air for customers trying to get things done. 

Accurate billing, as we’re sure you can imagine, helps dodge all sorts of disasters. Email reminders of upcoming invoices or automated thank-you notes are easy ways to keep customer relations positive. But there are a few more ways AR automation software helps improve the customer experience.

One way is by offering customers flexible payment options to pay their invoices. Customers can decide between multiple payment methods, such as credit card, debit card, ACH, wire transfer, and e-checks. 

Another way is AR software’s self-serve dashboard. Instead of having to call someone in accounts receivable for a status update, customers can access a self-serve portal themselves. Here they can review invoice history and make payments.

The self-serve portal, however, cannot answer every question a customer may have. From time to time, the customer will have to call the business that’s providing the goods or service and ask the question directly.

The customer experience, or any interaction between people doing business with each other, depends on the quality and efficiency of the communication. 

Being put on hold and waiting for a representative can negatively affect the customer experience. Automation has, however, come up with some tactics to reduce wait times. These include automated chatbots and call-forwarding solutions. Customer queries are triaged, and the right representative for your question will pick up and already have all your information in front of them.

Now you’re up to speed on how AR automation software can advantage your business – 1. faster time to liquidity, 2. increased inefficiency, and 3. better customer relations. But there’s more key information for you and your business to know before moving forward. To receive these benefits, it’s important you fully understand what’s involved in acquiring an AR platform. How to choose a platform, and whom to speak with before making the transition. As well as best practices with your AR platform.