Whether it’s reducing processing times, minimizing errors or enhancing compliance, clear goals will guide your strategy and serve as benchmarks for success. A single, comprehensive place where you can get an “all you need to know” about collections is the dream. It’s equipped with intuitive filters to help users quickly navigate and access the specific data they need. Automation is crucial to optimizing your AR process and can be done seamlessly with AR automation software.

• Advanced AI also analyzes customer payment behaviors and refines collections strategies, giving businesses deeper insights and stronger risk management capabilities.
• Currently part of Chargebee’s editorial team, Suhani collaborates with industry leaders to provide actionable insights on subscription-based revenue models.
• Tracking this metric can help businesses assess areas where it can improve its Accounts Receivable process.
• In many cases, late payments can be traced back to poor communication or a lack thereof.
• Once the invoice reaches your customers, you need to engage proactively with them and create a fool-proof collection strategy.
• They’ll have to confirm why the short payment happened, whether it was for a valid reason, and how to apply the payment in your accounting system.

Benefits of Using Xenett for Accounts Receivable Management

• Provides 24/7 self-service access to real-time information, allowing customers to view usage, download statements, view past payments, pay invoices, and manage payment methods.
• An aging report categorizes accounts receivable by the length of time an invoice has been outstanding.
• In today’s digital world, manual invoicing processes are outdated and prone to human error.
• It’s important to keep that communication going throughout the billing cycle.
• Encourage your collectors to add a personal touch to every payment or status follow-up.
• Continuous monitoring and real-time updates are essential to maintain compliance and manage financial risks.

Measuring the effectiveness of an AR process involves tracking some key metrics. Miscommunications like these could even give rise to internal tensions between finance and sales or customer success teams (or even within the same teams!). Another major challenge is that reporting is only sometimes done in real-time, since data is spread across multiple systems and spreadsheets. Data reconciliation can take a lot of time to provide a high-level overview of the AR process to higher-ups, such as a CFO or accounts receivable process a Director of Finance. This means decision-making on critical accounts becomes time-consuming and needs to be clarified.

The 8 Accounts Receivable Process Steps

Day sales outstanding measures the average number of days you collect payment after a sale. A lower DSO indicates quicker collections, which is preferred as it implies better cash flow. The accounts receivable process is about how a company gets back what they are owed. Thankfully, better options help fully automate the accounts receivable process and remove the above-mentioned challenges.

The traditional vs. modern accounts receivable process flow

Reviewing the status of your AR is also something you can do on an ongoing basis. How frequently you report on collections might depend on the size of your company and your AR team’s bandwidth. For updating AR aging reports, once a month (or more often if you can) is a good time frame to aim for.

Signs It’s Time to Automate Your AP Processes

If they purchase a product or service on credit, you’ll track their pending payment in accounts receivable. In many cases, companies use different technology providers for all or some of these needs. This can significantly slow down your ability to process payments because all these systems must communicate with each other. Without a high degree of integration between these multiple systems, there will be gaps in your payment processing that you’ll have to fill with manual work like data entry.

With the right planning and support, however, these challenges can be successfully managed for a smooth implementation. AR automation is transforming accounts receivable, delivering greater efficiency, accuracy and compliance. Technologies like e-invoicing further reduce errors and strengthen control.

Elevate Your Accounts Receivable Process Flow with HighRadius

Collaboration issues stem from multiple siloed data sources – for example, a collector and a sales rep could maintain the same data on different spreadsheets with different inputs. Disparate data also comes from separate email conversations without the relevant stakeholders in the loop. CEI measures the effectiveness of the collection efforts over a specific period. It compares the amount of receivables collected to the amount of receivables available for collection. It should be noted here that, till this stage, only the collectors are involved in this collection process. While you’ll find basic renditions of the steps involved in an AR process everywhere online, we’ll deep-dive into what the process actually looks like.