Businesses already realize the importance of automating their processes. Not only does it save grueling steps for your employees, which can improve job satisfaction, but it also boosts productivity, helping your business become more efficient. Accounts receivable (AR) is no different. In fact, with cash flow serving as the backbone of your operations, your AR processes likely can benefit the most from automation.
In addition to keeping your budget in line, automation can also make things more efficient for your business. Like you, your customers want to ensure they’re able to keep their own operations functioning from one day to the next. Here are a few ways going paperless can keep your customers happy by reducing their risk.
Service Interruption Avoidance
A study conducted by the Aberdeen Group found that straight-through processing rates were 89 percent higher with digitization than manual processes. Early payments increased by 16 percent. When invoices are marked paid as soon as they come in, a customer is less likely to see services suspended due to non-payment. This means shipments will keep coming in and providers will continue to show up as planned, helping your customers avoid issues that could interrupt their own business operations.
Set Credit Limits
The Aberdeen Group’s study found that digitization better helped businesses set credit limits for their customers, which reduced risk for those businesses. While this will primarily protect you from customers who won’t pay, it will also keep your customers from extending themselves beyond a certain point. They’ll know in advance that once they reach a certain dollar amount, services will stop and they’ll be able to make plans accordingly.
Continuing Credit Checks
Customers often don’t realize they have a credit issue that is affecting their ability to get services. Fifty-two percent of those surveyed said automation helped them with continuing credit checks throughout the order-to-cash cycle. This helps catch a problem early, when your own representatives can contact the customer and clear up any misunderstandings or issues. Otherwise, you’ll be waiting until after an order has been placed to try to get paid, which can turn a potentially loyal customer into someone who will have a bad perception of your company.
Often businesses that choose automation inspire their own customers to do the same. Your customers may log into your system to pay your invoices, for instance, and once they’ve seen how seamlessly the process flows, they’ll then put similar systems in place. This will give them the same capabilities you have, which include being able to check customer credit and process incoming payments more quickly, keeping their own risks at a minimum.
Automating accounts receivable can push your business’s processes to the next level. Best of all, it can improve the service you give your own customers, equipping them with the information they need to serve their customers and vendors. As a result, you’ll build a loyal base of clients who will not only continue to work with you, but refer your business to their friends and associates.
Why is developing an efficient accounts receivable process so important? If your business is dependent on the payment timeliness of a few large clients, you are at greater risk than if receivables are more evenly spread across many smaller ones.