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Accounts Receivable Automation Isn’t What You Think It Is

Lucile Borgne

Lucile Borgne

May 3, 2022


Let’s talk about a CFO’s biggest accounts receivable challenges What is accounts receivable automation? The key benefits of accounts receivable automation Automate your accounts receivable processes with Upflow

Accounts receivables are key for businesses and should be a focus from the very beginning, even for small businesses and startups. After all, no company can survive without cash and that’s what A/R collection is about: getting paid by customers in a timely manner.

No customer payment, no cashflow, and no growth. It’s as simple as that.

As a B2B business ourself, we know how hard it can be managing your collection activities proactively and effectively.

Which tool or ERP to choose?

Which solution is the best to cater your specific needs when it comes to collection management?

We know how overwhelming it can be and we believe A/R automation can help you get rid of manual processes and free your schedule for what’s actually important. Read on if you want to learn more!

Let’s talk about a CFO’s biggest accounts receivable challenges

It goes without saying that CFOs have a lot on their plate. And by no means do they want or need manual administrative accounts receivable processes to get in the way of that.

If you’ve touched the accounts receivable process in any way over the years—and have relied primarily on a flurry of spreadsheets or an assortment of invoicing tools to keep things in order—you probably have experienced a few common pain points, including: 

  • Spending a lot of time on zero value-added tasks, like managing multiple spreadsheets and following up with customers manually;

  • Small inaccuracies, due to human error, causing invoices to go to the wrong person, which makes it difficult for accounts payable to pay bills in a timely manner;

  • The negative long-term impact that chasing down late-paying or non-paying customers can have on building strong and successful customer relationships;

  • The challenge of resolving payment disputes in the absence of a clear “paper trail" or business process

All of these pain points lead to three things: 1) a lot of wasted time, 2) businesses not getting paid in a timely manner and possible bad debt, and 3) a negative impact on customer relationships. A lot of this stems from ineffective and highly manual internal accounts receivable processes, which often keep CFOs up at night. 

In fact, this lack of efficiency makes it harder for them to do their jobs effectively and optimize their schedule on two fronts:

1. Getting greater visibility across all AR processes

As with everything in life, you don’t know what you don’t know. But this becomes a pretty big problem when what you don’t know is the reason why your company isn’t getting paid on time and your profitability takes a hit.

CFOs aren’t necessarily interested in diving into the nitty-gritty of accounts receivable and invoice management on a daily basis. However, they still need to have real-time visibility across the most important aspects of basic accounts receivable processes. That’s the only way they can pinpoint weak spots in the process that negatively impact an organization’s financial health. 

What CFOs need is immediate, real-time access to high-level “financial health” information to help them drill down into who’s paying and who’s not. And for those customers who aren’t paying in a timely manner, they need to know what roadblocks are getting in the way of that. In other words, they simply need to know early on what risks are impacting the bottom line, so they can course-correct and identify critical process improvements to be made.  That's where automated A/R software can help.

Need help tracking your key A/R metrics? Have a look at our free spreadsheet.

2. Making cash collection a priority to maintain strong customer relationships

CFOs know that the customers who pay on time are more often than not the best customers overall—and it’s their job to maintain these positive customer relationships for the long term. 

But cash collection is nonetheless one of the weakest spots of the customer dynamic. Oftentimes it’s not even considered a priority by many departments, even though it should be. Why? Because ineffective payment collection methods not only impact cash flow in a negative way, it can also damage customer relationships over time. It’s a vicious cycle has impact on all your business, not only your receivable team. 

While you might consider accounts receivable processes to be purely administrative, many CFOs today see it as much more than simply a support function. When fueled by accounts receivable automation, it can play a more strategic role in nurturing stronger customer relationships, on top of reducing your DSO.

What is accounts receivable automation?

Many people wrongly assume that accounts receivable automation means removing any kind of human element from the equation. That would be a wrong assumption. Because collecting money can be a sensitive and highly personal activity, you can’t rely solely on automated solutions to do all of the heavy liftings for you. Maintaining strong customer relationships, as noted above, is an important part of the process: your AR team will be needed as ever. 

Therefore, there are really two sides of the accounts receivable management coin:

  1. Internal administrative processes 

  2. External customer communications

Accounts receivable automation can effectively touch both sides of this coin. In fact, it’s an ideal way to centralize and streamline simple internal accounts receivable tasks. After all, the end goal for practically every finance team is to make payment collection much more efficient and smoothen follow-up strategies. 

A big perk of accounts receivable automation is that it enables finance teams to gather the right financial health metrics at any given time. They need to be able to keep a real-time pulse on cash flow and other issues that could eventually impact the business’s bottom line. Having easy access to centralized reports and dashboards is essential for managing this part of the process. AR automation will help you reduce DSO and improve profitability.

It’s important to note, however, that accounts receivable automation isn’t designed simply to send payment reminders workflows to customers. Even though that may be the first thing you think about when you hear the word “automation” thrown around. Of course, being able to schedule and send automated reminders to manage payment collection, especially for smaller customer accounts, is an important part of accounts receivable automation that you won’t necessarily have in regular accounting software or ERP systems

Being able to create highly personalized emails for larger accounts, or accounts that are at risk of being delinquent, is a part of this, too. At the end of the day, the finance team needs to have the flexibility to add a “human” dimension to the payment collection process whenever it’s needed. This can be incredibly useful when managing through points of friction with customers.

The big takeaway here is that accounts receivable automation exists to automate and simplify the processes that don’t necessarily need to be manual. It should still give you the flexibility to keep high-value work as manual as you want or need it to be, during sensitive phases like the onboarding for example.

And it surely isn’t intended to dehumanize this process either. Quite to the contrary, AR automation solutions are designed specifically to help finance teams be more effective in everything they do. This includes minimizing the potential for costly human error. 

The key benefits of accounts receivable automation

There are a number of reasons why every finance team should implement AR automation software. Here are a few of the biggest benefits to keep in mind: 

  1. Easier for customers to pay on-time Accounts receivable automation puts customers in the driver’s seat. Giving them an easy way to provide updates on payment status creates more transparency and accountability in the payment collection process. Let’s face it, no one really likes to pay bills. But when done right and if different payment options are offered (credit card, ACH, etc), the process can feel much less transactional and much more collaborative. In this way, accounts receivable automation also allows you to take a more customer-centric approach to payment collection overall. This includes being able to send personalized “smart” reminders based on the unique needs of each customer. It also means that you should spare your customers from a reminder per invoice. Make it easy for them by sending them reminders at an account level.

  2. Easier for you to get paid faster Accounts receivable automation provides finance teams with a centralized workspace for managing all aspects of the accounts receivable process. This includes tools that streamline communications and cash processes across both the finance and sales team—especially in cases where the sales team is closing deals but customers aren’t paying. In the absence of clear cross-team communication, it’s very easy for payments to get lost in the shuffle.

    Remember, your sales team owns the customer relationship, so be sure to rely on them to help remove any payment collection roadblocks that arise. Receivable automation software like Upflow often offer different collaborative features that will help all your teams communicate effectively.  

  3. Easier to understand the health of your A/R processes Knowing exactly where all payment collection stands at any given time is easily the most life-changing aspect of accounts receivable automation. And this is exactly what CFOs need to ensure that all processes are operating efficiently at all times. Ideally, they need to be able to measure the right metrics in real-time, including things like Days Sales Outstanding (DSO), in order to measure the overall performance of the payment collection process and invoicing process. They also need access to key data points, like Average Payment Delay at a client level, to spot accounts that are most at risk of late payment.

All in all, automating accounts receivable management, plus being able to gather and access the right metrics easily, gives CFOs greater visibility across the entire process. This makes it possible to do drill downs at the customer level and also run predictive cash flow reports and forecasts. Finally, it eliminates much of the guesswork and human error that goes hand-in-hand with manual accounts receivable processes.  

Automate your accounts receivable processes with Upflow

At Upflow, we are driven by a single promise: to help businesses collect customer payments effortlessly. We’ve built an intelligent accounts receivable solution to help CFOs redefine and reimagine accounts receivable management.

Our vision around accounts receivable collection revolves around the following pillars:

  • Systematized: Ensure that no invoice ever goes untracked or unpaid. Upflow integrates directly with your existing accounting system, making all invoices automatically tracked and accounted for.

  • Customizable: Tailor every account to a customer’s unique needs. Process automation is entirely up to you: you can make your collection more or less manual depending on your client.

  • Collaborative: Getting every customer to pay on time is a cross-functional team effortand depends on all involved teams’ responsiveness, which is streamlined by collaborative features.

  • Proactive: Anticipate payment collection issues before they become a problem. 

  • Automated: Send customers reminders at the account level, not per invoice.

  • Customer Satisfaction: Create a better customer experience to drive on-time payments with customized payment portals and several payment processing partners.

Are you still going about your accounts receivable processes in a manual way? Ready to try something new (and better)? Now’s your chance to book a demo with our payment experts and supercharge your cash collection.

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