The Risk Of Not Automating Collections


A major financial risk for any company with high-volume of accounts receivable is not leveraging automated collections software. Inefficiency in the order to cash cycle can lead to inefficiencies in cash flow, negatively impacting budgets and bottom-lines. It is therefore essential for the Finance Executive to consider how automating collections can streamline processes, reduce unnecessary delays and improve financial performance.

Managing accounts receivables manually is time-consuming and labor-intensive task that can sap resources at every phase of the cycle. From invoice creation, to follow-up of delinquent accounts and resolution of disputes, manual collections involve considerable effort and investment. Complex or large invoices require significant data entry and manual review, with continual cycle of tedious and incorrect entries. Manually reconciling the accounts also involves considerable time and resources, requiring multiple levels of review.

Equally important, manual accounts receivable processes cause delays in payment, either due to inaccuracies or inefficiencies in collections. Once an invoice has been issued, typically the accounts receivable team will need to track payments and identify delinquencies. When communication is conducted on paper or via email, it is hard to track response times, and identify customers who are slow to pay or cannot be reached. businesses are often left waiting for the customer to pay, threatening cash flow and the overall health of the business.

Conversely, modern collections software automates many of the manual processes, and brings transparency to accounts receivable operations. Automated accounts receivable programs enable business to take control of their order to cash cycle, and deliver increased visibility and efficiency. Automation allows accounts receivable teams to scale rapidly, while eliminating costly personnel allocating time to manually maintain accounts receivable tasks.

Software automation expedit is the process of following up on delinquent accounts. Automated payment collections are enabled based on set of rules configured by the accounts receivable team, and customer data is stored in secure place. Direct payment and timely remittance notifications are sent to customers reducing any potential disputes. Furthermore, concise reports provide data-driven insights for action, helping identify opportunities for improvement.

Given the current financial climate, there is great advantage in detecting delinquent accounts early and collecting payments on time. For the Finance Executive, automated collections offer powerful way to accelerate the cash conversion cycle. By automating and streamlining the order to cash cycle, accounts receivable teams can save time, reduce costs and reclaim control of the balance sheet–all while mitigating financial risk.