Could Automation Help Mitigate Risk in Your AR Process?

Shaun Jex

Accounts receivable is not for the faint of heart. It is the driving force behind your cash flow.

There are a wide variety of threats to the process hiding in plain sight. Data errors, late payments, or a poorly-defined credit policy can all wreak havoc. Luckily, AR automation can help resolve each of these risk factors.

Garbage In, Garbage Out

The great American satirist Tom Lehrer once said, “Life is like a sewer. What you get out of it depends on what you put into it.” The same is true when it comes to your accounts receivable. Data entry errors from time-consuming manual processes can clog up the works, creating bottlenecks in your cash flow.

Common mistakes include inaccurately entered customer information, errors in price, or even mistakes caused by illegible handwriting for businesses still processing paper checks. 

Ardent Partners estimates that the cost associated with time spent correcting invoice errors can more than triple the cost of an invoice.

A simple way to reduce this risk is by using an automation solution like YayPay. By integrating with your CRM, ERP, and other data sources, YayPay reduces the chance of inaccuracies related to customer information. A self-service customer portal encourages electronic payment which will automate the process of applying cash back to your ERP.


A Communication Breakdown

A recent study found that 15% of B2B payments are not received on time, and 93% of organizations state that they deal with past due invoices. For a finance professional, those numbers probably cause more nightmares than all ten seasons of American Horror Story.

Delays like this have a direct impact on your cash flow, leaving assets on your balance sheet locked up. They can make your ability to invest and grow grind to a halt. 

Automating the delivery of invoices and follow-up communications can help reduce late payments. Though some may be concerned that this solution lacks the personal touch, email is one of the most efficient and effective means of connecting with customers.

Poor communication with customers is one of the leading reasons that invoices go unpaid in the first 60 days of delivery.  

YayPay allows you to create customized, automated cadences to maintain regular contact with your clients, from the time an invoice is sent until it is paid. Sending out frequent reminders about due dates will keep the subject top of mind, ensuring that the bill doesn’t get lost in the shuffle of their daily work.

The option of a self-service payment portal, another key YayPay feature, allows your customer to pay at their convenience. Empowering clients with the ability to make payments on their own schedule increases the likelihood that invoices are resolved quickly.


Who Gets the Credit? 

Deciding on who your company extends credit to and how the process works are vital to protecting the financial well-being of your organization. 

While most companies have at least some form of credit policy in place, many fail to put it in writing

According to Dun & Bradstreet, businesses frequently rely on “institutional knowledge” based on past experience, a sort of intuitive approach that leaves significant room for interpretation. Breakdowns in the process can occur when less experienced team members become involved.

A written policy provides clear-cut guidelines for your team when it comes to extending credit, and provides customers with expectations regarding the application process, how late payments are handled, and what will occur in case of a failure to pay. Once it is in place an automation solution like YayPay can ensure its protection by automating the trigger of periodic credit checks. 

The internal transparency afforded by a cloud-based automation solution also enables proper enforcement of your credit policy. Because YayPay integrates with your CRM, ERP, and other data sources, customer information is readily accessible between departments. Consistent information is available for inter-departmental communication, meaning your sales team and accounts receivable team can work together to determine options like offering extended credit. It also ensures that your customer receives a consistent experience, regardless of whom they speak to in your organization. 

The common hazards of accounts receivable don’t need to get in your way. Accounts receivable automation solutions can help clear the path to profit and growth. To find out more about how YayPay can help protect you from AR risk,  book a demo today.