Thomas Aronica is the Founder & CEO of Biller Genie, a solution that automates accounts receivable to get businesses paid faster.
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2020 is now behind us, but what happened in 2020 will not stay in 2020; it is already spilling into 2021 with a vengeance. Businesses have closed at a record pace due to a lack of cash flow, the lifeblood of any organization. As we enter a new wave of innovation, the digitization of information is an important technology trend that can be used to better equip small and medium-sized businesses (SMBs) and their employees to be more efficient. Accounts receivable (A/R) automation can unlock benefits for businesses and consumers, helping our economy recover. Additionally, the need for remote accounting demands the adoption of new, streamlined processes that save time, get businesses paid faster and improve cash flow.
Once an invoice is digitized, it can be automated. This is one reason why workflow automation is a topic generating so much interest in financial technology. Those SMBs adopting tech-driven solutions should be among the first to bounce back and shift the momentum toward economic recovery.
Why A/R Automation Is Important For Your Small Business
In the Covid-19 economy, many SMBs are struggling to survive. Automating A/R can help them thrive and prepare for future changes to the economic landscape. Cloud-based accounting has enabled employees to work productively from home, helping to slow the spread of Covid-19 and lessening administrative costs. Solutions that automate A/R can save money and help offset the detrimental impact of Covid-19. With A/R automation, tedious processes and mundane follow-up procedures are eliminated from administrative workflows.
Lack of payments for invoices is detrimental to the cash flow of any business. Most invoices become past due not because the customer doesn't want to pay but because they've simply gotten busy or just put it on the back burner to pay later. A/R automation can remove the need to manually follow up on overdue invoices. Taking those awkward phone calls to customers out of the picture can equate to better client relationships. Putting the power to pay in the hands of the customer without having to burden them is one thing that can promote responsible customer behavior. The key to this is the format, channel and frequency of follow-up by which the SMB sends the invoice or reminder. The easier a bill is to pay, the more swiftly it should be paid.
The customer experience can drastically improve when an invoice reminder comes in the form of a gentle nudge through a channel that works best for the customer. For example, some people respond better to email, some paper mail, some text, or a combination of all three. Businesses must be keenly aware of consumer preferences and ready to offer a wider variety of channels to communicate and collect payments. If not, customers could just wait longer to take action. They'll pay when it's convenient for them — and that's not always on time.
Businesses using automated A/R can customize the messaging sent to their customers and make it easy to pay, with "pay now" buttons built right into invoice reminders. This can ensure that collecting payments is simple and frictionless. These tactics are key to solving cash flow problems, and we've seen it result in businesses getting paid up to 15 days faster, which could make the difference between staying open or closing.
What To Look For In An Automated A/R Platform
With any shift in business practices comes challenges and solutions. Businesses must know what to look for and what to avoid when choosing an A/R automation provider. When researching, businesses should look for the following:
• Integrations with existing accounting software such as QuickBooks.
• An electronic bill presentment and invoice reminding feature.
• The ability to collect contactless payments.
• Automatic reconciliation.
• Online reviews that give a consensus of the quality of the software.
• Other features that can help boost revenue (e.g., late fees, processing fees, etc.).
Businesses should avoid solutions that require:
• Exporting data to new systems.
• Development work by your team.
• In-depth training.
• Significant changes or disruption to your existing workflow.
Prepare For The Transition To Automated A/R
There are things businesses can do now to be ready to implement A/R automation into everyday business practices, including:
• Ensuring books are clean and up to date.
• Analyzing all financial data. If inconsistencies are found between sales, A/R records and bank deposit statements, correct them.
• Making certain all customer contact information is correct.
If you're an SMB considering an automated A/R solution, be ready to meet challenges head-on. When you first integrate your accounting software into the automation platform, expect an influx of calls or emails the first few weeks while your customers adjust to their new tools and capabilities.
A/R Automation Could Be Key To The SMB Economic Recovery
Automation can save a financially strapped SMB, and nowhere is that fact made more evident than in a study by U.S. Bank (via Entrepreneur) showing that 82% of businesses that fail in the U.S. do so because of cash flow problems — not due to a lack of profitability or good service. Businesses are already providing great products and services, and automation has become the fuel that can ignite better outcomes and increased profitability.
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