Use Of Accounts Receivable Manager As An Order-To-Cash Solution: Executive Considerations
GOALS FOR ACCOUNTS RECEIVABLE MANAGER
In the field of finance, it is universally accepted that the Accounts Receivable (AR) process is one of the more integral components of an order-to-cash transaction. AR offers degree of enforcement that is vital to the success of companies of all sizes. For finance executives looking to maximize the efficacy of their order-to-cash process, comprehensive accounts receivable manager is essential.
Luckily, modern accounts receivables (AR) managers provide an array of functionality to streamline the process. This article will explore the complexities of utilizing an AR manager for an order-to-cash solution and explain the benefits of implementing one. step-by-step guide of the process is also provided.
Benefits of Implementing an Accounts Receivable ManagerIn essence, the main purpose of an accounts receivable manager is to effectively collect customer payments. This overarching purpose is accomplished through few different approaches, such as the automated sending of invoices, which can significantly speed up the payment process. Some accounts receivable managers also provide built-in tools that aid invoicing, such as facilitating the tracking of customer payments and the resulting collection efforts.
Most critical are the additional benefits that the utilization of an accounts receivable manager provides. By deploying one, finance executive is likely to see improved credit ratings and an overall reduction in risk. In fact, many of the features mentioned in the previous point can be escalated beyond single customer to entire accounts. This allows finance executive to more accurately assess the creditworthiness of company accounts, as well as entice customers with discounts and other promotional activities.
Moreover, an accounts receivable manager empowers finance exec to make informed decisions infused with the most recent data. Through the use of reports, analytics, and the aforementioned built-in tools, finance executive is placed in significantly better position to make quicker, more informed decisions regarding customer payments.
Process of Utilizing an Accounts Receivable ManagerThough well-versed finance executives will be familiar with the fundamentals of an accounts receivable manager, an AR manager is most effective when used as part of an order-to-cash processes. To help such execs understand how best to implement an AR manager as an order-to-cash solution, the following outlines step-by-step guide.
1. Set Up AccountsPrior to utilizing an AR manager, the first step is setting up accounts. This entails inputting information regarding the customers, such as contact information, the type of customer, and any other data points that may be pertinent to the accounts receivable process. Once the accounts have been properly set up, the AR manager can move forward.
2. On-Board CustomersOnce the accounts have been properly set up, the next step involves on-boarding customers. This begins by using the AR manager to create invoices, as well as configure automatic payment plans if applicable. It is also during this step that finance executive configures all terms and conditions relating to customer payments, such as payment amounts and due dates.
3. Send InvoicesWith customer on-boarding complete and all the required data inputted, the next step is to send invoices. This is the point of contact between customers and the business. As part of this, finance executives should ensure that the invoicing process is automated. This means setting up system that will send invoices and payment reminders in timely manner. Doing so increases customer engagement and boosts the chances of successful invoice collection.
4. Assess Collection EffortsThe next step is to assess collection efforts. Through the use of the automated system set up earlier, finance executive can create variety of reports and analytics. This quickly reveals which customers are paying invoices on time and which are missing due dates. This data is particularly useful for understanding the efficacy of incentive plans, both current and future.
5. Automate ProcessesThe final step is automating processes. As mentioned earlier, using an AR manager offers significant degree of automation. More specifically, automation ensures that customers are being invoiced on time, and payment reminders are sent in timely manner to encourage customers to stay on schedule with payment due dates. Automation also assists with tracking payments, which is beneficial when collecting overdue payments.
ConclusionFollowing this step-by-step guide ensures that finance executives get the most out of the accounts receivable process and achieve the myriad of benefits that come with proper utilization of an AR manager. Moreover, by closely monitoring all steps outlined, finance executives are empowered with the necessary insights to make informed decisions backed by the most current data available. Thus, as an order-to-cash solution, an accounts receivable manager should be seen as an indispensable aid for finance executives.
