Accounts Receivable Automation

The Benefits of Accounts Receivable Automation

What is AR Automation?

Accounts receivable automation is the use of modern technologies to reduce repetitive, time-consuming tasks in the accounts receivable process. AR Automation frees up employee’s time, and many times leads to a reduction in the FTE headcount. That’s right, I just said an overall reduction in FTE headcount. But how can that be possible when it seems like you need to hire more people just to keep up with your business now? I’m going to answer the question, but first, let’s take a look at what the problem is in the first place.

No matter how hard you try, you can’t keep up?

I have to say from personal experience, that most CEO’s or CFO’s think they are doing a good job with accounts receivables. The truth is that most corporations struggle to keep up with accounts receivables and invoicing due to a lack of planning. What I mean by a lack of planning, is not thinking about key corporate structure prior to scaling the business. For example, a lot of small business owners will put all their focus on selling more products or services, without thinking of the consequences if they actually do sell more products or services.

So what am I trying to say?

Simply, the more customers you service on credit, the more invoices that will need to be sent, tracked and followed upon. The whole thing seems like a good problem at first until you see that your receivables are skyrocketing and your revenue is flat or declining. Hiring your way out of the problem is a lost cause because a single employee can only contact so many people a day making phone calls and sending letters. In conclusion, each day that passes that your business sells more, the further in the hole you actually become. This is what I meant by not thinking ahead and planning.

The good news is that there are solutions to this problem.

What’s at the core of Accounts Receivable Automation

The key to accounts receivable automation is data organization and accuracy. It’s easy to manage to mail and call 10 people, but how do you handle following up with 1000, or 10,000 invoices monthly. Software allows for the organization of data, which in turn allows the data to be queried. By utilizing SQL and managing data held in a relational database management system (RDBMS) multiple records can be accessed with a single command. Ok so that sounds super nerdy, what does it mean in lamen terms.

AR Automation for dummies

Let’s say for example your business provides services on credit for 1,000 people every day, and each and every one of those 1,000 customers needs to get invoiced $100. AR Automation allows you to tell the software, every day to automatically identify when a new customer has been entered into the database and automatically email, text, or mail the customer an invoice with a touch of a button.

What most business owners don’t take into account is what if they have the wrong address, phone number, or email, or the person simply won’t pay. How much effort should you keep putting into it? The real question is how much should you spend from a resource perspective on it.

Accounts receivable automation allows you to program the database to identify, tag, and segregate customers with missing addresses, phone numbers, etc. Once these accounts are identified, they can be fixed manually or enriched using services from companies like IDI Data. Curious what happens when a customer pays or fails to do so? It’s simple, payments trigger paid in full signals and prevent the same person from being contacted again.

Creating high priority work list are a breeze with automation. Simply set thresholds for say days outstanding, type of debt, etc. Essentially the possibilities are limitless.

How do you go about implementing Automation for your AR Processes?

The good news is that there are plenty of companies that sell AR Automation software. Some of the companies are better than others, but usually, the biggest differences are the flexibility of the software to connect with other software vendors. The bad news is that it can be incredibly difficult to implement such software if you’re a large company. Why is it so difficult? It’s simply more difficult because you have more data flowing into the system and you need to transition from your current processes. It is possible to implement automation with solid planning and a good understanding of your business. I would recommend not rushing implementation, good software builds take time.

An Alternative Approach

Let’s face it, AR software is expensive and your business may be a small, midsize, or even large business with limited resources. So then what, keep drowning in invoices? Quite the opposite, in fact. By working with an Accounts Receivable Management services firm, many times you can still get the benefits of AR Automation without the cost and time delay. How is this possible you ask. AR Management firms have optimized their automated software processes in advance.

This means that AR firms can assist you in getting your data into their databases with little effort. Once data is attained, automated processes can can take place and you can rest assure your mind. Is it really that easy? The facts are that it actually is but most people aren’t aware that its that easy.

Isn’t it expensive to use an AR Firm for implementing automation?

The reality is that it’s extremely inexpensive to hire a flat rate AR firm, and many times by working with them you can actually save money on FTE’s. Interested in talking to someone live about implementing AR Automation in your company? By partnering with Amplicon Inc, Automation of your AR processes can be accomplished today! Contact Us or Call 949-508-1095.

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About the Author

Nick Arroyo

I've been an entrepreneur for the last ten years. I've had unbelievable success and tremendous failures. I'm currently in the process of rising from the ashes and making a tremendous comeback. Some say it's virtually impossible, but my favorite part of the journey has always been the climb. Jack of all trades, master of none, many times better than a master of one.

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