How Accounts Receivable Are Being Transformed By Tech?
Increasing accounts receivable (AR) has always been the topic that preoccupies every company executive’s mind as well as the motive behind every meeting, proposal, project and each and every decision made in the firm.
The financial health of a company is a combination of a few metrics including accounts receivable, accounts payable which are the two sides of the weighing scale. The way these metrics are computed has transformed totally thanks to technology. So in other words adaptation to technology can indirectly affect the financial health of a company.
This article explores how modern technology is transforming accounts receivable, the benefits of automation, Minute long data analysis and future trends that could reshape the AR function even further.
Automation and AI Adoption
The most basic way technology is transforming AR is through automation.
Automated invoicing finance teams can now forget about manually typing out invoices, tracking payments, sending out reminders and managing disputes. These processes are especially hectic in large business models, handling thousands, maybe millions of transactions on a 30 day basis.
Automation through AP Automation software directly addresses these inefficiencies, almost totally eliminating any chance of error and delay encountered during manual entries by simply digitizing routine tasks.
Customer credit risk calculation and management
Anything that has to do with calculations can (and should) be done by AI. I mean, you’ll be assured of consistently accurate results.
You can use AI to assess risks, which would help. businesses to evaluate the creditworthiness of both new and old customers.
The AI can analyze large data sets like transaction history so you can make informed decisions that will reduce your chances of accruing bad debt or incurring loss.
Creating A Schedule
Creating an accurate timeline for a startup is already a hectic affair, talk more of an international conglomerate. Tasks like payment reminders, subscription expiry can be made effective and accurate using the help of our trusty automation.
Trello, Asana, or Monday.com: These platforms let you break down projects into tasks, assign them to team members, and set deadlines. They offer task prioritization, progress tracking, collaboration, and automated notifications for upcoming deadlines.
Even applications like Zapier or IFTTT: Automate repetitive tasks, like scheduling reminders or sending expiry notifications, reducing manual workload, utilizing trigger-based actions, integrations with other software (e.g., email, calendar, task apps).
Cloud Based Systems Used To Facilitate Real Time Information Distribution
Accessing and sharing information between teams and departments without technology is almost unthinkable now in 2024. Imagine moving folders, photocopying and transporting files between offices, that’s a recipe for a logistical disaster. A cloud easily allows real time updates to everyone with access.
Cloud solutions also facilitate better collaboration between departments, such as finance, sales, and customer service. With a centralized platform, all relevant teams can access the same up-to-date information, reducing the risk of miscommunication or delays in resolving payment issues. For example, a sales representative can check the status of an invoice before following up with a customer, ensuring they have accurate information to facilitate a smooth conversation
Customer Behavior Tracking
In recent times AI has been employed in order to understand and generate customer profiles helping businesses know each customer’s peculiarities and to an extent understand them. For example if a customer buys 5 new bags at the end of summer probably for his family in preparation for back to school buys. New computer programs are capable of suggesting a buy 4 get 1 free package to just him.
Individualized marketing is certainly the most effective form of marketing, and the future of marketing and it is powered by technology.
Predictive Analysis and Making Forecasts
Sophisticated predictive analytics tools based on Machine Learning and or Artificial intelligence enable companies to predict cash flow trends more precisely by examining past data, customer payment behaviors, and market trends. This forward-looking information assists financial planning and helps mitigate risks.
Digital Payment Solutions
Automated payment matching has been a much needed breakthrough in the finance industry as a whole. In the past payment has built a track record of being a point of countless misentries. And as it is a vital part of any transaction and so it becomes just as vital to the business in its entirety.
Advanced payment systems automatically match credit payments to their respective invoices, significantly cutting the time consumed trying to manually reconcile payments and avoid errors seamlessly.
These technologies are streamlining accounts receivable processes, reducing costs, improving accuracy, and enhancing the overall financial health of businesses.
Conclusion
We hope this article and the points we’ve discussed have given you a better understanding of how integral and how well integrated technology is when it comes to accounts receivables. So you should be able to ease some load off your employees and let AI do all the work.