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The accounts receivable process brings revenue into the business by invoicing and collecting payments for products and services that have been sold.
FREMONT CA: The accounts receivable department oversees the revenue flow through invoicing and collection. This business process aims to generate healthy cash flow to promote business growth and profitability, from credit application to invoicing, follow-up, and debt recovery of late payments.
The accounts receivable process brings revenue into the business by invoicing and collecting payments for products and services that have been sold. The objective of this business process is to get cash into the company before bills become late payments or bad debts, resulting in a healthy cash flow that will support business growth and profitability.
What do a successful accounts receivable process look like?
An efficient AR process aims to bring in early payments as often as possible to help maintain the balance sheet and reduce late payments with systematic monitoring and follow-up.
The technique of improving the AR process begins with new customer credit applications, followed by work to understand their creditworthiness and create credit limits that drive purchases without consequences. The accounting system then offers the information required to send invoices, and automating the invoicing process can save a significant amount of time. Finally, following up on invoices sent encourages payment of overdue invoices as early as possible.
Aging reports, which are used to discover overdue invoices beyond payment terms, are another critical AR function for cash flow. Such records are used to track down and collect outstanding payments from every customer. The more payments that can be recovered as part of a streamlined AR process, the less likely a company will hire third-party debt collection agencies.
Should businesses automate the accounts receivable process?
If the volume and complexity of the invoicing become time consuming, try automating the process to free up resources for more critical tasks. Select the appropriate solution or solution partner necessitates considerable consideration.
Several accounts receivable automation systems necessitate a significant amount of setup and configuration effort. On the other hand, a managed service solution outsources technological complexity to deliver on a specified set of business goals and is connected with the AR process requirements.
Organizations must look at the list of critical questions to ask before evaluating e-invoicing solution partners to see if they meet the business needs.
Whether companies are looking to reclaim time spent physically uploading invoices to clients' AP portals or combining paper and electronic invoicing into a single process, automation can help them save days of manual labor per month.