Do you ever wonder about the advantages companies experience when utilizing account receivable management software?
Fundamentally, this software operates like an ideal employee, consistently following directions, leaving no stone unturned, and working round the clock without a break.
This idea might appear fascinating on the surface, but let’s probe further into the practical advantages of using account receivable software.
By examining its features, we can reveal the transformative effects it can bring to your business.
Challenges with Manual Accounts Receivable Management
Managing accounts receivable manually presents a multitude of hurdles, including:
- Inaccurate Data Entry: Manual data input can lead to errors, undermining the reliability of your financial records.
- Siloed Internal Alignment: Without a unified system, your finance, sales, and operations teams might be working with conflicting information, creating confusion and inefficiencies.
- Time-Consuming Processes: Manual invoicing can take up to 15 days per month, eating into time for strategic planning and potentially leading to late payments.
- Late Payments: Without automated reminders, payments might be overlooked, negatively affecting your cash flow.
- Cash Flow Issues: Data shows that 82% of business failures stem from poor cash management. Manual AR processes can hinder cash flow, causing liquidity problems.
- Customer Miscommunications: Mistakes in invoices, missed payment notifications, or overlooked customer queries can damage your customer relationships and harm your business reputation.
- Payment Misapplication: Payments might be applied to the wrong invoices, creating confusion and inaccuracies in your financial records.
- Manual Reconciliations: These are prone to errors and are time-consuming, compromising the reliability of your financial reports and complicating audits.
- Fraud Risks: Manual AR management lacks robust security measures, increasing the risk of financial fraud.
Benefits of Accounts Receivable Management Software
If you’re facing any of the problems that impact your account receivable management, it’s time to take action.
Employing accounts receivable management software will not only solve issues but also provide numerous advantages.
1. Enhance Your Cash Position
Your company’s cash position is the lifeblood that keeps it afloat.
A reliable account receivable application can significantly improve your cash position by promptly tracking, managing, and collecting what customers owe.
This automation can fast-track payment processing by sending timely payment reminders and updates to customers, thereby ensuring punctual receipt of payments.
Furthermore, it delivers precise real-time visibility into your cash inflow, empowering you to make well-informed decisions.
2. Increase Control Over Cash and Working Capital
To manage and improve working capital, it is important to understand your cash situation and improve accounts receivable performance.
AR management software amplifies your control over cash and working capital by providing a comprehensive view of your receivables.
It allows for accurate cash flow projections, identification of potential issues, and timely corrective actions.
This enhanced visibility and control lead to more effective financial management, mitigating the risk of shortfalls and fortifying financial stability.
3. Increase Accounts Receivable Efficiency in Management
Consider the time you expend trying to discern who owes what, when, and why?
How long does it take to acquire the necessary information to resolve issues and ensure payment?
The answers might surprise you. Experts find that companies utilizing collections management software to automate and streamline routine tasks are more likely to thrive.
This efficiency boost, in turn, enables you to channel more time and resources toward strategic planning and growth initiatives.
4. Improve Customer Service and Satisfaction
Customers are typically eager to fulfill their payment obligations, but sometimes hurdles related to invoicing can delay this process.
Perhaps the invoice didn’t reach them early enough to facilitate timely payment, or maybe it arrived damaged.
Consider the fact that approximately 50% of invoice problems can be attributed to incorrect or missing purchase order information. This is a problem that can easily be avoided.
Consider how annoyed your customers will feel if you call them repeatedly for late payment, even if it’s their fault they didn’t receive the invoice in time, or if you continue to exclude their PO from the invoice.
AR software can help here by providing customers with an efficient and hassle-free payment experience.
It provides an all-in-one platform for you to handle customer queries, manage dispute resolutions, and ensure accurate invoicing.
Best of all, you can save every communication in an audit trail for later review and analysis.
These capabilities enhance the business-customer experience, fostering stronger relationships and improved loyalty.
5. Eliminate Human Errors
In any manual system, there’s always room for error.
AR management software, however, can help eliminate such incidents.
With 2-way integration between your accounting software and AR automation across all data, the software reduces the risk of inaccuracies in your financial records.
6. Reduce Administrative Fees
It is the digital age. Do you still mail statements and invoices? Or do you send them by fax?
By automating finance activities such as invoicing, collections, and reconciliation, the software reduces the need for intensive manual work.
In fact, e-invoicing has been found to decrease costs between 37% and 39%.
This decrease in administrative effort can result in substantial cost savings, increasing your company’s profitability.
7. Shorten the Sales-to-Payment Cycle
The sales-to-payment cycle is a crucial determinant of your company’s cash flow. A shorter cycle means quicker cash inflows.
AR software can expedite this cycle by promptly issuing invoices upon sale and following up on due payments. By reducing the time between the sale and the receipt of payment, you can enhance your cash flow and financial health.
While your accounting system creates the sales order and invoices, your receivable software takes control. Customers can receive invoices immediately after they are created.
A built-in customer portal and online payments enable customers to pay via credit card or ACH. This gives them more options to pay sooner.
8. Minimize Credit Risk
What amount of credit should you give to customers? How much risk do you take that they won’t pay off your credit card?
Any company that extends credit takes a calculated chance of not getting paid for perishable inventory or time. This is the reality of business today.
Customers expect credit terms and competition extends credit, so everyone must do the same. There are ways to lower your risk.
Third-party credit bureaus can provide valuable information for potential customers.
You can also monitor existing customer relationships to identify customers who are becoming more risky.
AR software can support this by monitoring customers’ payment behaviors, assessing credit values, and alerting you of potential default risks.
9. Improve Productivity at Scale
AR management software is designed to scale your business.
As your customer base and transactions grow, the software can easily handle the increased volume, maintaining its efficiency.
Moreover, the efficacy of automation in finance isn’t merely conjecture—it’s backed by data.
A recent study from Gartner revealed that by adopting automation tools, finance departments can recoup as many as 25,000 hours that would otherwise be lost to unnecessary rework.
This capability allows your employees to focus on other strategic tasks, improving overall productivity.
In the fast-paced, highly competitive business world, having an efficient account receivable management system is not just a perk—it’s an essential tool for achieving financial stability and sustained growth.
Automating your accounts receivable process can yield a wealth of benefits, from enhancing your cash position to improving customer satisfaction, reducing errors, cutting administrative costs, and more.
While there are numerous AR software solutions in the market, Peakflo stands out as a reliable and effective choice.
Peakflo goes beyond the basics, offering a comprehensive package that ticks all the boxes for AR management.
Its feature-rich platform ensures prompt invoice delivery, streamlines the sales-to-payment cycle, minimizes credit risks, and supports scalability, among other benefits.
Moreover, Peakflo’s commitment to customer satisfaction reflects in its robust customer support, user-friendly interface, and customizable features designed to cater to your business’s unique needs.
Adopting Peakflo can transform your AR management, freeing up your time and resources to focus on what truly matters—driving your business forward and achieving your strategic goals.
Why AR Software?
Here are the benefits of AR software:
- Enhance Cash Flow: AR software ensures prompt tracking and collection of payments, improving your cash position.
- Streamline Processes: Automates repetitive tasks, reducing manual effort and speeding up the entire AR process.
- Reduce Errors: Eliminates human errors in automated data entry and calculations, ensuring accurate financial records.
- Boost Customer Satisfaction: Provides a seamless payment experience to customers, enhancing their satisfaction and loyalty.
- Increase Control: Offers better visibility into your cash flow and receivables, allowing you to effectively manage your financial resources.
- Reduce Costs: According to DocSumo, AR automation can result in a substantial 65% reduction in costs, cutting down on printing expenses with data securely stored in the cloud and preventing duplicate entries which can lead to costly double payments by promptly alerting the accounting teams.
- Minimize Credit Risk: Monitors customers’ payment behaviors and warns of potential default risks, minimizing credit losses.
Who Uses Accounts Receivable Software?
Accounts receivable software is utilized by finance professionals, sales teams, and business executives alike.
It’s also proving to be beneficial for any company that is growing quickly or struggling, wants to reduce days sales outstanding (DSO), decrease collections efficiency by 30%+, increase collections efficiencies by 2X+, and protect and improve customer relations.
Learn more about Peakflo’s accounts receivable features and book your free consultation today.