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The Do’s and Don'ts of AR automation

Clémentine d'Arjuzon

Aug 10, 2022

Summary

Meeting Your Receivable Automation Needs.Analyzing Your Accounts Receivable.Centralizing Your Data. Integrating into Your Tech Stack.Incorporating AR Automation into Your Workflow.Planning for Your Growth.Fostering Collaboration.Personalizing your Communication.Prioritizing your Customer Experience.

Deciding to implement AR automation software is a great move for your B2B business. It helps you get paid faster, so you can better control your cash flow. It also frees your time from time-consuming tasks, which can be used for planning for your growth.

However, if you want to make the best of it, there are a few rules you need to follow. So, 

  • What are the best practices of AR automation?

  • What should you look for when it comes to choosing AR software? 

  • What are the big no-nos when setting up AR automation?

Find out by reading this article!

Upflow is an A/R automation solution. We help finance professionals streamline their accounts receivable process, so they can receive faster payments and focus on their growth. Start right away!

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Meeting Your Receivable Automation Needs.


Don’t: Mix and match different A/R solutions.


It can be tempting to go for an A/R solution that partially meets your needs, and go for another one for another need. For instance, you could use software A for your payment reminders, and software B for tracking your unpaid invoices. The same applies if you’re currently using your accounting software to deal with some of your accounts receivable. In theory, you could even use excel spreadsheets 

Practically though, it doesn’t make sense. Picking and choosing different features in different solutions would overcomplicate your processes, and increase the risks of errors. 


Do: Have one tool for your accounts receivable.


Accounts receivable collection is a multifaceted activity. There is a lot of data to deal with, and a lot of different actions to take. 

When it comes to choosing an automated solution to help you, it is therefore important to choose one that will centralize all your accounts receivable-related tasks. 

That includes:

  • Tracking your invoices,

  • Sending payment reminders, 

  • Gathering your client and payment data, 

  • Analyzing your efficiency through KPIs, 

  • Producing reports, 

  • Taking action to course-correct. 

Being able to complete all these tasks from one tool will make your processes easier and more efficient.


Analyzing Your Accounts Receivable.


Don’t: Settle for limited A/R visibility. 


Analyzing your A/R metrics is a crucial part of your accounts receivable management. How else could you know how efficient your processes are? 

When deciding on an AR automation solution, don’t settle for the limited range offered by some solutions, or resort to manual processes. 

While some small businesses can get away with using the analytics feature of their accounting software, this option becomes limited for growing companies. 

On the other hand, doing your A/R calculations on spreadsheets can lead to a dangerous path riddled with inefficiencies and human errors. 


DO: Select the KPIs that directly influence your cash flow.


Instead, look for software with extensive analytics. We recommend you track (at least) these fours metrics as they directly influence your working capital: 

  • Days Sales Outstanding (DSO),

  • Collection Effectiveness Index (CEI),

  • Aging Report,

  • Billing Cohort.

Make sure the solution you pick calculates these for you - and uses the most accurate way to do so!

Tracking these receivables metrics on your dashboard will help you better see your business. That’s helpful to better manage your cash flow now and in the future.

Forecasting can also help planning for your growth by preventing any liquidity problems and raising stakeholder satisfaction. At Upflow, we offer a predictive cash inflow feature directly on our users’ dashboards. 


Centralizing Your Data. 


Don’t: Compartmentalize your data.


Where finance teams sometimes go wrong is in their data management.

When they receive their customer payments, they don’t make the information connect with their accounting software - let alone their A/R solution. This means they later have to do their cash application manually. 

That example is a sign of data compartmentalization, which creates bottlenecks in your business processes

Using spreadsheets to bridge a gap between the different parts of your finance stack is also a bad idea. Excel files are static, which means you have to update them constantly. It requires heavy manual inputs and therefore leads to inefficiency. 


Do: Have one source of truth.


Most AR teams rely on: 

  • An accounting software, 

  • A billing tool,

  • A payment processing solution,

  • Eventually a CRM or ERP (like SAP). 

When you add an A/R solution to your stack, it’s important to decide which is going to be your one source of truth - the one that gathers all your latest data. It will make your collection process much smoother. 

Less time spent on chasing your latest data and double-checking your numbers means your whole receivables team will increase their productivity, and your company its profitability. 

We recommend making your accounts receivable automation solution your space for centralizing your receivable data in real-time

For that to happen, you need to pick software that : 

  1. Updates their data in real-time (not just twice a day).

  2. Works in sync with your finance stack. 

Want to know more about AR automation? Check out our webinar about how AR automation can help you improve cash flow management.

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Integrating into Your Tech Stack.


Don’t: Choose a solution that doesn’t fit.


Pricing might be your first consideration when it comes to choosing your receivable automation software. While we understand it's important, it shouldn't be your main criteria.

One element that will make a big difference in your collections management is how well your chosen solution fits into your current stack - either through direct integration or API. 

Working with software that doesn’t integrate with each other is a big no-no when it comes to business. That means all your pieces won’t be able to communicate with each other, which leads to mistakes - and ends up being very time-consuming. 

Discarding this criterion can be very costly for you now and in the future: it means potentially having to change your A/R solution, or your ERP system, further down the line. Not the kind of move you want to make when your business is growing and you urgently need a new solution. 


Do: Work in an open ecosystem.


Software - SaaS especially - are great because they work together. For that, all the pieces of your finance stack need to be integrated with each other.

Do look out for the integration possibilities of your A/R solution: either through a direct integration (Upflow links up directly with Quickbooks for example) or via API. 

Working in an open ecosystem means all your data flows seamlessly and is always updated in real-time. Each tool can function at its best with the information it needs, received straight from your other tools. 

It’s better for your collections management now but also in the future: as your business grows, you will need more software to support you. This way, you’ll be able to add a new solution on top of your existing tech stack and they’ll connect together easily.


Incorporating AR Automation into Your Workflow.


Don’t: under-utilize your AR software.


Adding a new piece to your finance stack (your super-accounting system) is great. But if you add this new solution and under-utilize it, or use it the wrong way, it won’t make your processes better. It could even make them worse. 

The best AR software (ours ;) will never replace the strategic role your AR team has in checking your AR metrics and creating effective workflows

It’s important to realize that to make the most of your AR software, you need a proactive strategy. You need to be discerning about collecting your receivables and have a clear plan of action. Not just setting up a few email reminders and calling it a day. 


Do: Make the most of your automated processes.


When it comes to software automation, it pays to take a moment to think about the AR process you want. 

A great way to do that is to set aside some time to map out your current collections process. From there, you’ll see some potential for optimization - and see which tasks could benefit from automation. 

It’s important to involve several people from your team while you do that, so everybody can speak out about their needs and everybody is on the same page.

And also to do it regularly! Your processes are bound to change as you grow, so reviewing your processes every 6 months to 2 years makes sense to stay efficient. 


Planning for Your Growth.


Don’t: Look for a perfect match.


It’s important to understand that your current processes won’t be 100% supported by AR software.   

Granted, your automation solution should meet most of your needs. That’s why you’re making the switch after all!

But aiming at finding the perfect software can lead to pushing your automation upgrade to later. And we all know the best decisions are rarely made under pressure! 

What’s more, your business’s needs are going to evolve. What you need in 6 months or in 2 years will be different. 


Do: Think long term.


We’d recommend aiming at an A/R solution that meets most of your current needs while staying focused on your long-term vision. 

There is a balance to find between finding a solution tailored to you and being adaptable in your processes. Software that meets 80% of your needs is what you should aim for.

Planning for your future needs means knowing where you stand with your receivable process now - and where you’re going. 

If you’re a fast-growing business, you’ll soon be handling more invoices than ever - and you need to factor this in in your AR software choice

Or, if you’re a SaaS just moving to a self-service model, chances are you will need more A/R features than you did with corporate accounts only. 

The same is true if you’re switching to a subscription-based business, which has its own specificities (you’d need to make online payment via credit card or bank transfer easily!)


Fostering Collaboration.


Don’t: Pick a solution for a select few.


We don't recommend keeping access to your A/R software restricted to a select few in your AR team - or even just one person -. 

First, it sends the message that invoicing and collecting payments are one person’s responsibility only

Second, what happens when the few people (or unique person) in charge of A/R are away on holiday, sick, or on parental leave? Not giving several people an onboarding of your A/R tool is the surest way to let collections management slip into the background.

A/R automation software sometimes offers different pricing depending on the number of users who get access - so we understand there might be a cost factor here. But accounts receivable collection needs to be a priority across your whole company. 


Do: Involve others! 


A/R is the responsibility of AR teams - but not only. Your accounting team, as well as your sales team, should be in the loop too. 

At Upflow for instance, our sales representatives are in charge of collecting the first invoice with a new user.  It makes for a smooth transition to accounting and ensures the onboarding on our platform is going well. It also shows salespeople that while signing new clients is great, having these new clients pay is even better! 

Overall, the sales team is the one closest to your clients, and their relationship can benefit your AR team when it comes to collecting invoices.  

Picking software that doesn’t limit the number of users is great to promote cross-department collaboration and increase efficiency. That’s what you get with Upflow. 

In case of late payments, for instance, your account manager is able to follow up with your customers to know exactly what’s going on and leave some internal notes for your AR team. Everyone knows where they stand and that optimizes your order-to-cash process.  


Personalizing your Communication.


Don’t: Erase all human interaction.


Automation shouldn’t equate to lack of interaction. That’s why we don’t recommend sending the same emails to all your customers. 

It’s one thing to use templates to save some time, it’s another to send generic emails. If you do that, your emails will be less efficient (without personal information, can your client be sure the email was for them?) and your customer relationship will suffer. 

Never picking up the phone, or trying different contact points (via your sales team for instance), is what may turn your unpaid invoices into bad debt.


Do: Include personalized touches. 


It’s nice to feel like more than a number when speaking with your providers: when they address you by your name or even include a personal detail (“how was your holiday?”) in their email. 

It’s true for your clients as well! What’s more, it makes your collection emails more efficient.

More personalization means your clients know you’re speaking to them. You can also set up different email workflows depending on your customer relationship: big account, small business, new client, at-risk clients, etc. 

Just like in marketing, the more personalized, the better! With Upflow, you can use our ready-made templates, personalize them, and also set up different email sequences.   You can also send some communications manually via the platform if you wish to.

Need help building effective templates? Have a look at our free collection email templates!


Prioritizing your Customer Experience.


Don’t: Leave customer experience to last. 


Don’t make customer experience the least of your priorities! 

When it comes to choosing your AR automation software, make sure that the customer experience you deliver with it is a great one

If your new payment process isn’t easy for them to navigate, or if there are few payment options for them to choose from, it’ll take longer for you to receive your payment. All of that could contribute to damaging the relationship you’ve spent time and energy building. 


Do: Make your clients a priority.


The easier you make it for your clients to pay you, the faster they will! 

This A/R rule applies to anything from managing their automated account on your website easily, to offering various payment options (credit card, bank transfer, etc.) 

Sending the right information at the right time will ensure they promptly pay you - which in turn reduces DSO in your company, and increases your liquidity. 

Focusing on  your clients in your collections process is sure to lead to better profitability in your business. 

Upflow can help you do all of that!

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Key Takeaways: 

  • Take some time to (re)think about your collections process and see where your AR automation fits into it. It helps make the most out of your tool and optimizes your overall process.

  • Mapping out your precise needs ensures you choose the correct solution that fits the bill for your A/R, instead of having to make do with several tools.


  • When it comes to AR analysis, it’s important to select the metrics that have a direct influence on your cash flow. Make sure your DSO, CEI, aging report, and billing cohort are automatically calculated by your software and displayed on your dashboard.

  • Centralizing your A/R data into one source of truth (one software) provides real-time data you can trust.

  •  Choose an AR automation solution that integrates into your existing tech stack. It synchronizes your data across your ecosystem. Keeping it open is important now and for the future when you add more solutions to it. 

  • It’s important to pick a tool that fits most of your current needs, while also planning for your future ones. 

  • AR isn’t the sole responsibility of finance teams - involving other stakeholders across your company (accounting and sales) increases your productivity. Software that promotes collaboration is the best.

  •  Automation doesn't replace human interaction. Include personal touches in your communications, and make sure you pick up the phone once in a while. 


  • Great customer experience is key! For accounts receivable, it means making the payment process as easy as can be by sending timely reminders and offering multiple payment options.

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