Want to save money, get paid sooner and grow your business with high quality customers as the economy recovers from the pandemic? Automating your accounts receivable can help you do all three.
Survived the pandemic crisis, thus far, and looking for ways to fortify your enterprise and expand profitably, as the economy regains momentum?
You’re not alone. As Australia continues to bounce back from last year’s pandemic-induced recession, we’re seeing business leaders across the nation focus on two things: building business resilience, so they’re better prepared to withstand the next disruptive event, and making their working capital work as hard as it possibly can.
Improving your cash flow can help you achieve both these ends and one way in which cash flow can be improved significantly is by automating your accounts receivable department.
As the term suggests, this entails doing away with many of the repetitive manual processes associated with ensuring your business gets paid for the goods and services it supplies. Think recording transactions, updating ledgers, invoicing, sending reminders to tardy payers and maintaining records.
These are the traditional duties of accounts receivable clerks but, in 2021, they can be performed more accurately and economically – and very much faster – by a cloud-based automated accounts receivable platform. Making the switch can reduce manual processing by 85 per cent and the cost of running an accounts receivable department by 70 per cent. That makes it an investment which typically pays for itself within a year of purchase.
Delving into the data
But while that’s a compelling value proposition in itself – one which could enable your business to redeploy accounts receivable employees to higher value duties – the bigger benefit is in the business intelligence the software can deliver.
That intelligence can be harnessed to speed up the payment process, by days and even weeks, courtesy of the fact that it allows your business to map out customers’ payment patterns and tailor reminder and dunning processes accordingly.
Some customers, for example, may blithely disregard your specified payment terms, only sending you a remittance once they’ve received two reminders and a follow-up phone call. Knowing that’s their modus operandi means you can fast forward your way through those steps and unlock their payment sooner than if your accounts receivable team waited the usual interval of a few days between interactions.
Conversely, pursuing people for payments they’ve already made doesn’t make for great customer relations. Automated accounts receivable technology allows you to save time and resources by not chasing debtors who’ve stumped up but whose payments haven’t been applied correctly, or are sitting in a pending file.
Identifying opportunities with existing customers
It also makes it possible to assess your customers’ ongoing credit worthiness far more easily than if you’re operating a manual accounts receivable system.
Very often, this is something of a blind spot for businesses. Typically, they’ll order a credit report and conduct due diligence when a new customer comes on board and then not revisit the arrangement until it’s clear a problem has emerged.
The superior insights an automated solution can deliver can help your business stay on the front foot, by measuring customers’ ‘attractiveness’ on an ongoing basis and making decisions about whether to rescind or extend credit accordingly.
Doing the latter, to customers who are good payers and in growth mode, is a good way to grow your business, without opening yourself up to undue risk in the process.
Embracing the automation opportunity
The post-COVID economy will continue to throw up opportunities aplenty for Australian businesses that are in the position to act. Investing in automated accounts receivable technology can help yours to become one of them, by reducing your overheads, improving your cash flow and delivering insights that inform strategic decision making. If you want your business to survive and thrive in the post-COVID era, that’s a winning trifecta of benefits you can ill afford to bypass.
Claudia Pirko is ANZ Regional Vice President BlackLine.
