I’ve been looking more deeply at accounting principles lately – and today’s post is the result of my discoveries about accounts receivable aka AR. Accounts receivable represent money that is owed to a company for goods and services, but hasn’t been paid yet. For example, if Company A sells widgets for $50 each and has delivered 1000 widgets to Company B, then Company A records $50,000 in accounts receivable. Once Company B has paid, the accountants record $50,000 to cash or sales. Depending on where the sale took place, Company A must keep track of sales tax owed and paid – a compliance task.
Keeping track of the amounts and when they are paid can generate paperwork for your business – when you add in the options for customers to pay over time, or if for any reason the payments are not made – then the complications really begin. Companies may charge a late fee, and will definitely want to communicate with customers who have not paid yet – more paperwork or electronic communications!
When tasks related to accounts receivable are done manually, the chances for error, the hours of time figuring out solutions, and the opportunities for customer frustration can all grow exponentially. Luckily, these manual efforts can be automated by using technology called Robotic Process Automation (RPA). This frees up employees to do more meaningful tasks, while lowering frustration levels across employees and customers.
So, what is RPA? RPA can be defined as follows: computer software that performs repetitive tasks performed by humans. Some examples include: sending and opening email, putting data into files and files into folders, copy-and-paste, filling in forms, sending reports, reading from and writing to databases, making calculations, collecting statistics, and following decision rules.
RPA technology includes software that can extract meaningful data from documents, store data where it can be retrieved when needed, and provide data to other business processes. RPA can also communicate with customers by sending email, for instance. Tasks include invoice generation, data entry, computations, sending reminders, reporting, and collecting data for analytics.
However, you may be surprised to find out there are also things that RPA isn’t – or doesn’t do. These include voice recognition and reply, control of machines that currently process paper hardcopy, and actual physical robots that can come marching into your office, or your customers’ homes!
Across all of AR, automation can help speed up processes, cut down on error rates, and positively impact the bottom line of your business in many ways. Automating data entry when the customer makes a purchase is the first step. Automating tax collection and reporting is part of the purchasing process too. Automating the collections process allows for quick and accurate modifications when necessary, as well as up-to-date reporting. Approvals during issue resolution can also be automated with notifications going out in email, and issues that are escalated at the right time when any amount is in dispute.
Looking to the future of your business, RPA can monitor changes in customers’ credit scores, in order to predict any issues that may be around the corner. Also, credit management changes can be made more quickly and efficiently in response to updated conditions. And finally, with automation you open the door to collecting more data about how your business operates – how much time passes before payments are made, for example, is stored automatically so that up-to-the-minute information can be viewed and analyzed at any time.
Capturing data from an invoice by scanning it in, sending reminder emails to customers when amounts are due, and sending approval emails to the right person at the right time – those seem like no-brainers for automation. But I find the concept of money that “hasn’t been paid yet” to be tricky, and it’s not intuitively obvious (at least to me) that there’s an advantage to keeping close track of those amounts. But being able to view the data and automating the collections process enables you to stay on top of what’s happening in your business in the moment. Even more powerful, it lets you see trends – and the earlier you can see the trends, the sooner you can make changes that will benefit your business.
Curious about AR Automation and how to choose what is right for your business?
Register for free to join us for AR Automation Day on April 8, 2021 at 11 AM Eastern for a 2-hour content “binge” designed to accelerate your AR Automation decisions featuring:
- Business, process & customer impact analysis
- Real world implementation stories
- Integration & data readiness guidance
- Customer segmentation strategies
Related DAC Content: