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Benefits of automating your accounts receivable

A small business owner using a laptop to automate her accounts receivable.
Rotem Tal
Published at | Updated:

Your business is rocking, sales are through the roof, and your customers and staff are happier than ever. What can go wrong? Suddenly you notice that your accounts receivable (AR)—aka the amount of money that customers still owe you for goods and services provided—is higher than expected, while your bills are piling up. This can present a challenge to your business’s workflow. After all, IOUs can’t fund payroll, restock your warehouse, pay your vendors, or settle company bills that are due right now. 

Getting paid on time is an important part of running your business. If you sell goods or services and don’t receive prompt payment for them, you’ll be in a cash crunch in no time. Automating your payments might not solve all of your cash problems, but it will definitely provide you with an easier way to manage them. 

This post will highlight some of the benefits of automating your accounts receivable. 

4 reasons to automate accounts receivable

Change can be scary, especially when it comes to breaking old processes or implementing new technology. However, when you consider the benefits of automated AR, the initial discomfort is totally worth it. Here’s why.

1. Efficiency and speed

Using an automated AR system gives your customers better ways to pay, saving them time and assuring you get your money sooner. Manual invoice processing requires a lot of human involvement with multiple touchpoints and is prone to errors. This can lead to a slower transaction cycle where processing a payment can take a few weeks when, in reality, it shouldn’t take more than a few days. 

On top of that, if there are any payment discrepancies, or late or failed payments, there’s a back-and-forth that can make processing even longer. This means more late payments, high processing costs, and less cash in your account. 

Imagine having all your payments (both AR and accounts payable) in one place, and being able to track and analyze them in seconds. Using an automated AR solution allows you to upload your invoice, send it to your customer with a payment request, and track and receive the payment. This whole process can be done in minutes, think of all the time you can save. 

2. Money-saving 

Before automation, the AR process was manual and paper-based. The AR department spent a lot of time responding to customer inquiries, laboring over each invoice, handling exceptions, and recording data. 

AR automation streamlines and expedites the whole process, freeing up your finance team to focus on other tasks. More time can mean, finding more ways to invest in innovation, funding growth, outperforming competitors, and that your employees can focus on other tasks. 

3. Cash flow forecasting

A digital AR solution with a real-time dashboard provides transparency across the accounts receivable process. It allows you to instantly access critical data like what invoices haven’t been paid yet, amounts that are owed, payment due dates, and delivery status. 

This visibility gives your business the power to forecast future expenses and revenue. Which makes business decisions much easier and can give you insight into opportunities for improvement.

A business that’s waiting on a customer’s payment,  for example, no longer needs to call them up or wait for a check in the mail. With automation, you can send them a friendly reminder in seconds and they can send you the payment online. 

This assures that cash is collected in the shortest amount of time, increasing cash flow. Automation can also improve a business’s ability to forecast future cash flow because of more consistent and reliable collection patterns, which can be monitored using real-time data.

4. Security and compliance

Paper and email-based AR processes are susceptible to phishing attacks, fraudulent invoicing, and data breaches. Businesses all over the world are at risk of substantial financial losses every day due to new types of security risks and invoice fraud. 

Automating your AR insures that all your outgoing payment requests and invoices reach their destination securely, regardless of where your customer is in the world. 

Reliable AR automation software comes packed with high-level security measures, offering PCI compliance and secure payment processing solutions.  

Go digital today

Incoming payments are what keeps your business in business. To make sure you get paid on time and don’t run into cash flow issues, you need an accounts receivable system that’s effective and efficient. 

From enhanced accuracy and speed to the ability to better manage your cash flow, the benefits of AR automation are clear. It might be daunting to change your processes at first, and you may encounter some bumps along the way, but it will totally be worth your while. 

Are you ready to shift from paper pushing to digital transformation, and get the most out of your accounts receivable? Sign up for Melio today.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.