8 Benefits of Accounts Receivable Automation

Accounts Receivable (AR) is like the busy kitchen of a bustling restaurant, where orders (invoices) are placed by customers (clients) and the kitchen staff (your business) works hard to fulfill them. Just as a restaurant awaits payment after serving a meal, your business awaits payment after delivering a service or product. Managing AR is akin to ensuring the kitchen runs smoothly, dishes are served promptly, and payments are collected efficiently to keep the restaurant thriving.

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In the business world, it's about striking the right balance between giving customers enough time to pay their bills and making sure your own bills get paid on time. This is crucial for keeping the lights on and the kitchen – your business – operational. Keeping an eye on how quickly customers settle their tabs (your AR turnover ratio) is key to understanding how well your credit policies are working and where there might be hiccups in your cash flow.

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If AR is the bustling kitchen, then AR automation is the high-tech kitchen equipment that speeds up the cooking process. This article looks into the benefits of AR automation and how using these modern tools to automate manual tasks like billing and collections can help your business outperform the competition.

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Understanding Accounts Receivable Automation

AR automation is all about harnessing technology to streamline how your business handles payments that are due from customers. It's like putting the tedious tasks of invoicing, sending out payment reminders, and managing collections on autopilot. By doing so, your company not only works more efficiently but also cuts down on mistakes, speeds up your cash flow, and unlocks valuable insights into your operations.

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It may sound too good to be true, but the proof is in the pudding. Studies show that businesses that have adopted AR automation for more than half of their processes have seen their days sales outstanding (DSO) shrink by 32%.

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AR automation software helps teams move away from the paperwork, manual data entry, and constant human oversight that defines traditional AR methods. Instead, AR automation employs software solutions to make everything smoother and faster.

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This shift means fewer mistakes, more efficiency, quicker cash inflows, and access to up-to-the-minute insights. Even the top financial chiefs are on board; 63% of CFOs have noted a drop in billing mistakes thanks to automation.

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And if you're thinking that integrating AR automation into your existing systems is a big headache, think again. It's designed to fit right into your current accounting software and CRM systems without a hitch. When tied to your accounting setup, AR automation keeps data flowing smoothly, automating everything from invoicing and reconciling accounts to generating reports.

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When it comes to your CRM system, AR automation can take customer interactions to the next level. It keeps customer details in sync, which means invoices and payment reminders can be tailored to each customer, fostering stronger relationships. This holistic approach not only ensures consistent communication but also keeps follow-ups on schedule and delivers a unified customer experience.

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Linking AR automation with both accounting and CRM tools gives businesses a clearer view and better analysis of their data. Real-time insights, tracking payment patterns, and making informed decisions become part of the daily routine. This coordinated approach also improves communication across departments, eliminating barriers and promoting a more integrated workflow.

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8 Key Benefits of Accounts Receivable Automation

The power of AR automation can be an investment that propels businesses towards unparalleled efficiency, improved cash flow, and better decisions. Businesses can also build better customer relationships as automated systems ensure timely communication.

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Below is a breakdown of the 8 major benefits of AR automation.

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1. Faster Invoicing and Payment Collection

AR automation simplifies invoicing through a systematic approach. This minimizes manual work and enhances overall accuracy. It automates the creation of invoices based on predefined rules and templates. This eliminates manual data entry, reducing the likelihood of errors and ensuring consistency.

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Automation tools streamline invoicing and collection workflows, allowing for better collaboration. Automating communications also ensures that you send invoices promptly, along with clear payment terms.

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2. Better Cash Flow

Are you looking to improve your AR collections and get paid faster? AR automation leads to a shorter DSO – the time between generating an invoice and receiving payment. This reduction in DSO improves cash flows. Businesses improve liquidity as they gain quicker access to the funds tied up in accounts receivable.

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3. More Accurate Reporting

With AR automation, businesses can rely on processes to deliver precise and error-free results. Unlike manual data entry and processing, automation relies on algorithms, minimizing the risk of human errors. The rule-based nature of automation ensures consistency in tasks like invoicing, payment tracking, and reconciliation.

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4. Time and Cost Savings

Automation serves as a game-changer in reducing manual labor, resulting in major time and cost savings for businesses. By automating repetitive tasks, such as data entry, invoicing, and payment processing, businesses can streamline their operations and free up employees to focus on more strategic and value-added work.

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5. Real-Time Reporting and Analytics

AR automation tools offer real-time insights into your financial data. This can transform the way you monitor and analyze your accounts receivable. By updating information on invoicing, payment status, and collection efforts, these tools provide an up-to-the-minute snapshot of your financial landscape.

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This real-time view enables businesses to find trends, spot potential issues, and make informed decisions. Managers can track key performance indicators, such as DSO, in real-time. These insights empower businesses to respond to changes in customer behavior, market conditions, and internal processes.

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6. Stronger Customer Relationships

Automated AR plays a pivotal role in building customer relationships. The automation of invoicing ensures prompt and accurate billing, providing customers with a hassle-free experience. Automation also reduces the likelihood of errors, minimizing billing issues and disputes.

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Automated payment reminders also contribute to better communication with customers. This not only strengthens your customer relationships, but also keeps customers informed about upcoming or overdue payments.

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7. Less Administrative Burden

Automating accounts receivable frees up staff from the burdens of manual, repetitive tasks. This empowers them to redirect their efforts towards more strategic work. You can offload tasks such as data entry, invoice processing, and routine follow-ups to automated systems. This is especially true when you use AI for your AR processes.

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As staff is no longer bogged down, they gain the bandwidth to focus on work that requires critical thinking and creativity. This shift in focus allows employees to contribute more effectively to growth, innovation, and long-term goals.‍

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8. More Compliance and Security

AR automation tools help with financial regulation compliance and bolster data security. These tools adhere to regulatory frameworks, ensuring that invoicing, payments, and collections align with legal requirements and industry standards. This helps businesses avoid regulatory penalties and maintain trust with clients.

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Success Story: JobGet Optimizes its Receivables with Centime

Now let’s take a look at AR automation in action with this case study. JobGet, the fastest-growing social job app for service industries, faced a bottleneck in its AR system due to rapid growth. IAfter its manual AR process proved inefficient and time-consuming, JobGet looked into AR automation providers and selected Centime.

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Centime's automated reminders and customization have since allowed JobGet to better manage its customer base. The targeted approach resulted in quicker responses, better payment timing, and reduced manual follow-ups. Centime's platform also introduced user roles and permissions, enhancing JobGet’s data security.

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JobGet also used Centime to introduce a payment portal to customers, reducing the need for manual follow-ups. As a result, JobGet reduced its overdue invoices with customers, positively impacting its cash flows.

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The Controller and Staff Accountant at JobGet now save multiple business days each month with Centime, enhancing the business’ overall financial operations.

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Final Thoughts: Benefits of AR Automation

As we’ve covered above, AR automation is a powerful tool for businesses to reduce financial bottlenecks. It not only simplifies collections, but streamlines invoicing, and maximizes overall financial efficiency. It also provides real-time insights so you can plan a more efficient and successful collections strategy.

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By studying the benefits and the case study above, you can find how AR automation is an essential tool for your business. Want to learn more about what AR automation can do for your business?

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Centime's AR automation is an investment that can transform your business towards more growth and better operations. Our automated payment reminders and modern payment portal help you get paid faster, reduce manual work, and minimize errors. Learn more by scheduling a demo today.

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**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi and ICS are registered service marks, and IntraFi Cash Service is a service mark, of IntraFi Network LLC.

^††3.5% Annual Percentage Yield (APY) as of 11/19/24. Deposit rate may adjust to current market rate and may change daily. Fees may reduce earnings.

*Centime is not a bank and is not authorized by any federal or state agency to engage directly in core banking activities.
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*All banking products and services available through Centime are provided by FNBO and are governed by the applicable agreements and related disclosures provided to you by FNBO. Member FDIC.
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‍*While Centime facilitates traditional banking activities (such as the acceptance of deposits or extensions of credit), these services are actually provided by our banking partner, FNBO.
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*Centime may provide support services to FNBO, as permitted by applicable law, to facilitate the delivery of its bank products and services.

**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network bank

8 Benefits of Accounts Receivable Automation

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