Electronic payments and in-app purchases are becoming so much the norm. As such, many midsize to large companies have grown accustomed to digitalizing accounts receivable. But there are some smaller businesses that continue to soldier on with only partially automated payment systems.
If your company is still using paper-based processes, and suffering the consequences, it might be time to fully digitize your accounts receivable system. There are many benefits to consider.
Generating a paper invoice is a laborious process, especially when there’s a digital alternative. Instead of creating, printing and mailing an invoice, organizations can autogenerate electronic invoices and e-reminders for overdue payments. This reduces the administrative burden considerably. Plus, e-billing saves on office supplies such as paper, envelopes and stamps.
Digitalizing accounts receivable streamlines the cash conversion cycle. The accounting department doesn’t need to spend time mailing paper invoices and late notices. Instead, you might be able to reassign some staff members from administrative tasks to value-added ones. This includes budgeting, forecasting and cash management.
On the flip-side, customers that pay electronically or set up an autopay option don’t need to waste time sending a check. Plus, recipients of e-invoices could be more likely to pay quickly to capture discounts or merely remove the payment from their to-do lists.
Most customers, whether consumers or other businesses, have gotten comfortable paying via digital options, such as credit cards, ACH or wire transfers. Companies that sell directly to consumers may also accept payment via PayPal, Venmo or other digital payment apps. These alternatives might offer lower fees than those charged by credit cards.
At the end of the day, businesses that facilitate easy digital payments are easier to work with. Reducing customers’ administrative burdens can, in turn, increase their loyalty to your company. It can also reduce the potential for the conflicts that often arise when payments go missing or arrive late.
One added “bonus” of an optimized, automated accounts receivable system: Assuming it’s secure and users follow protocols, the right software can help you prevent fraud.
Paper checks are, after all, notoriously easy to fabricate or falsify. And because you won’t need to mail checks, you’ll no longer be at risk of check thievery by a third party. Beyond all that, the more visible and accessible data is to authorized personnel, the more likely they are to spot abnormalities and troubling trends.
If the time is right, fully digitizing your accounts receivable system could save money and help you grow the business. Just be sure to shop carefully, set a feasible budget and invest only in a solution that truly suits your well-specified needs. Let us assist you in weighing the costs, risks and advantages of this IT investment and any others you’re considering.