The accounts receivable can be described as the money that the business owners have to collect from their customers after selling the goods or services. For instance, if you have delivered the products to your customers and you are waiting for the payment, then the amount that customers have to pay is known as the account receivables. Once you have received the payment from the customers, then your accounts receivable value will be zero.
The accounts receivable plays a vital role in the business, and all business owners should keep an eye on it. The proper management of account receivables will help in maintaining the good cash position of the company. By using cloud accounts receivable software, it is easy to maintain the cash flow.
There are various steps involved in the accounts receivable management process, and all these stages are described below:
1. Generate And Send Invoices
You should immediately generate and send the invoices to your customers after delivering the products or services. Make sure that every detail is properly mentioned over the invoice so that there would be no confusion at all. You should mention the cost of products or services along with deadlines and late payment charges.
2. Follow Up
Usually, customers fail to make payments at the right time due to various reasons. The best way to collect payment is to take follow up by sending a reminder email. This reminder email will notify them about the amount they have to pay. Sending emails and invoices manually involves a huge amount of hard work, and it is the time-consuming method. Therefore, using account receivable software is a good idea.
3. Receiving Money Method
When customers ready to make the payment, then they should know the different modes of payment that they can use. You should allow your customers to make payments in different ways. It will reduce the barriers in making payments and offer convenience to the customers. According to the survey, if you provide different methods of payments to your customers, then it will increase the probability of getting paid at a faster pace.
4. Update Accounts
It is imperative to update the account after receiving the payment. Again, updating the account manually is a time-consuming criterion. But, it is a very crucial process in cash flow management. The small mistake in the account updating process can lead to a big loss. It is a good idea to leave this process on the automatic account receivable software and accounts payable software.
Benefits of Automating the Accounts Receivable Process
1. Send Invoices Automatically
With the help of automatic accounts receivable management software, you can easily personalize the invoices and send them with just one click. This software also allows you to schedule the invoices, and they will automatically send it to the customers. If any customer purchases similar products or services every month, then you can adopt the recurring payment model for the customers. The A/R software will automatically generate the invoice and send it to that customer every month.
2. Automatic Reminder Messages
Sometimes the employees in the accounting department fail to take the follow up for late payments. But, when you invest in the accounts receivable software for business, then you do not need to worry about taking the follow up at the right time. This software will automatically send reminder emails to the customers at the right time.
3. Easily Receive Payments
With the automatic accounts receivable solutions, you can easily set the gateway to getting the one-time payment or recurring online payments. It will let the customer easily make payment.
Provide the payment link on the invoice, and the customers can click on the link and make online payments. This payment portal will provide security and offer convenience to the customers to make online payments.
If you want to create the recurring invoice profiles, then you should provide the different methods to your customers to quickly receive the payments, such as the credit card payment, smartphone payment applications, debit card payment, etc. The fixed amount will be automatically deducted from your account every month. This method ensures timely payment and helps n maintaining the optimum cash flow.
4. Automatic Bank Feeds
If you start using the accounts receivable software, then there will be no need to manually enter the data. This software will automatically receive the bank statements from the bank transactions.
5. Optimum Report Generation
Various financial reports are generated automatically with the help of the A/R software. These reports will be updated in the real-time immediately after the transaction. Moreover, you can easily access these reports easily, anywhere, and anytime. By reviewing these reports, you can instantly get to know about all business related transactions.