Optimizing The Order To Cash Cycle With Automated ARSoftware
AUTOMATED ACCOUNT RECEIVABLE SOFTWARE
When tasked with optimally managing the order-to-cash cycle in company, becoming familiar with automated accounts receivable software is an integral step. From streamlining cash collection activities to facilitating paperless invoices, automated AR software offers organizations reliable solution for key order-to-cash processes.
Before delving into the various benefits of automated AR software, it is important to understand the premise on which accounts receivable is based. Accounts receivable is current asset that records companies right to receive money as result of selling goods or services. In other words, it denotes outstanding payments owed by customers to business. Accounts receivable is typically accompanied by formal agreement between the company and the customer, known as sales agreement. This sales agreement outlines the payment terms detailing the expected payment timeline and any discounts associated.
Given the importance of AR in financial setting, optimizing accounts receivable processes to improve cash flow is critical. Automated AR software can provide an in-depth solution for companies seeking to operate their order-to-cash cycle optimally.
To use automated AR software for your order-to-cash cycle, the following steps should be taken:
Step 1: Set Up an Automated AR System
The first step in using automated AR software is to set up an AR system with appropriate data fields. An AR system is database that stores financial records of customers who purchase goods or services from company. This database should include the customer’s contact information, payment terms, and expected bill amounts.
Step 2: Begin Generating Invoices
Once the AR system is active, begin generating invoices for each customer sale. Invoices are documents that state the payment terms, payment amount, and due date. Invoicing is an important part of the accounts receivable process. Automated AR software allows companies to create, send, and manage invoices quickly and efficiently.
Step 3: Monitor Debtor Activity
Having an automated system in place for accounts receivable allows for constant monitoring of customer debts. By diligently monitoring debtor activity and sending out timely reminders for overdue payments, organizations can ensure successful collection of money owed by customers.
Step 4: Determine Payment Types
Decide which payment methods to accept from customers. While some prefer traditional methods such as check and paper transfers, many organizations are turning to digital technology such as e-invoicing, e-signatures, ACH, and credit card. Automated AR software is equipped to handle various payment types for optimal customer experience.
Step 5: Offer Benefits to Customers
To promote swift and efficient payment, offer customers discounts or free shipping if they pay their bills on time. Offering benefits to customers incentivises the payment process and increases customer retention. Automated AR software can automatically track and apply these benefits.
Step 6: Assign Roles and Responsibilities
In order to maximise the efficiency of automated AR software, it is important to determine roles and responsibilities ahead of time. Assigning roles ensures that the accounts receivable system runs smoothly. Automated AR software typically allows different staffers to access specific tasks pertinent to the AR process.
Step 7: Message Customers
Using an automated communication platform, send customers messages about their overdue payments. The platform should include options for automated emails and SMS for maximum customer engagement.
Automated accounts receivable software is valuable tool for organizations seeking to optimize their order-to-cash cycle. With these seven steps, executives working in finance can utilize the sophisticated capabilities of automated AR software for improved cash collection activities.
