Top reasons to automate receivables

As businesses grow globally, their financial operations become more complex. This complexity arises from the increase in invoices, bills, incoming and outgoing payments in various currencies, and the need to manage multiple vendors and suppliers. All these tasks must be managed while ensuring steady access to working capital and maintaining a good cash flow to support continued growth. To manage these challenges, businesses, especially those with smaller finance teams, are turning to automation to unburden their finance departments from manual tasks, increase efficiency, and reduce operating costs. A report from Deloitte revealed that cost savings from implementing automation can range between 25 to 40%.

While accounts payable (AP) automation has received considerable attention in recent years, with many businesses actively seeking AP solutions, accounts receivable (AR) still seems to be an overlooked process. Another report, from Blackline and NACM revealed that over 40% of businesses are hesitant to adopt an AR automation tool. In this article, we will discuss the key benefits - including improved bottom line, efficiency, forecasting and client retention if you decide to automate your receivables process and implement an AR tool into your tech stack.

Receivables raise costs for businesses in two significant ways: by increasing the manual work required from the finance team and by missing invoices. With high sales volumes, especially within a small team, the burden of issuing invoices, chasing payments, and reconciling them in the accounting system falls heavily on finance managers, taking their time away from other tasks. To keep all company financial operations on track, additional hires or overtime pay might be necessary.

Additionally, a study from Barclays revealed that over 50% of UK businesses suffer financial losses due to late or missing payments from clients. Clients often try to pay as late as possible to extend their Days Payable Outstanding (DPO), and if not chased in a timely manner, invoices may go unpaid. According to another report done by Pay.UK and the Chartered Institute of Credit Management (CICM), UK businesses were collectively owed £17.5 billion in 2020, with the average overdue amount around £20,000.

Having an appropriate system in place that automates the receivables process from start to finish—by issuing invoices, automatically posting them to your accounting tool, reconciling once the payment is received, and sending follow-ups for outstanding invoices—not only unburdens your finance team, saving on operational costs (consider the difference between paying for another staff member versus an AR automation tool), but also reduces the number of unpaid invoices, improving your bottom line.

With an efficient receivable management system in place, you can convert sales into cash much faster and have real-time insights into outstanding payments. Real-time insights and a healthier cash flow due to reduced DSO enable the treasury and CFO office to access more accurate data, facilitating better-informed, proactive decision-making. For example, you can easily identify which customers tend to pay late and act on this trend more quickly with preventative measures.

Currently, many businesses spend significant time manually aggregating data on outstanding invoices, sales, and payments, followed by extensive analysis. By the time this process is complete, the data may be outdated. With improved cash flow and decision-making capabilities, you make more working capital available for further growth and expansion.

Automating the receivables process with an AR tool can help standardise procedures and avoid common mistakes that lead to invoice errors, late payments, and back-and-forth communications with clients. Nearly 7 in 10 companies that adopted an AR tool reported a decrease in errors, according to a study. This is because an AR tool integrates with your accounting system, stores and updates client data - then, all information will be automatically pulled from your stored contacts to an invoice without a manual entry and seamlessly transferred between the AR tool and the accounting system.

We’ve mentioned the invoice errors before - they are frustrating for your business and the clients alike. Sending accurate invoices promptly after service completion enables clients to manage their own accounting better and enhances your reputation as a reliable supplier and long-term business partner. An automated receivables system, like Fyorin, which allows customers to pay in their home currency and offers flexible payment methods, streamlines the payment process, providing a smoother experience. This ease of payment increases the likelihood that clients will pay on time and remain loyal to your business, appreciating the seamless experience provided.

When selecting an AR tool, consider the following features:

Integration with Accounting Tools: Ensure the AR tool integrates with your current accounting system. Check if it offers two-way integration, meaning invoices created will be automatically posted in the accounting system and marked as paid once payment is received.

Automated Payment Reminders: Look for the ability to schedule automatic payment reminders for overdue payments at desired frequencies.

Flexible Payment Options: The tool should allow you to collect payments in multiple currencies and via multiple methods, such as bank transfers and credit cards.

Visibility Features: Verify if the tool lets you segregate incoming payments into sub-accounts for additional visibility of where funds are coming from.

Ease of Implementation: Assess how easy it is to implement and roll out the tool across your team. Determine if it is a plug-and-play solution or requires extensive IT involvement and training.

Implementing an AR automation tool can significantly enhance your financial operations, improve efficiency, and support global business growth. By choosing the right AR tool, you can streamline your receivables process, enhance client satisfaction, and drive your business towards greater success.

Fyorin’s accounts receivable solution allows you to not only get paid faster but also improve efficiency and lower down operational costs by offering 2-way integration with your accounting tool of choice to:

Reduce manual work by automatically reconciling paid invoices,

Eliminate mistakes and back-and-forth by instantly generating invoices and payment requests directly from the platform,

Improve the cash flow by sending automatic payment reminders for overdue invoices,

Allow you to grow globally and collect payments in over 100 currencies.

Give you a clear view of the money coming in.

We connect with major accounting platforms such as Xero, QuickBooks, Netsuite, Zoho, Microsoft 365 and Sage. If you’re interested in automating your receivables on a global scale to save time and money, send us an email to [email protected] or book a demo!