Accounts Receivable: Choose the Right Software to Manage Your Invoicing
Accounts Receivable are the lifeblood of a business's cash flow. Sometimes referred to as A/R, "Accounts Receivable" is the accounting term used to refer to the money that the business should receive from its customers for the goods or services it provided.
Choosing the right software allows for organised and efficient receivables. Accounts receivable software provides plenty of benefits as you can use it to automate your routine tasks, eliminate manual errors, keep your books accurate, get timely notifications to avoid penalties and more. Growing companies especially need a good quality accounts receivable software.
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Key Features of Accounts Receivable Software
When buying an accounts receivable system or upgrading to a more powerful one, you should be looking for the following features:
Accounts Receivable Ledger. The accounts receivable ledger is a list of customers and their due payments that ought to be updated every month. Therefore, it is an essential reporting asset that identifies and stores information, and a good AR system cannot function properly without it.
Accounts Receivable Aged Listing. This function will organize accounts receivable based on payers and dates, the ranges and columns being completely customizable to respond to the specific needs of your business. Obviously, this is another vital source of information you can use to perform reporting.
Customer Statements. Customer statements are important to you because they fill the gap of reporting to customers their hanging and outstanding obligations.
Centralized Database. Last, but not least, your AR system is supposed to store and secure data in a centralized database. Ideally, you should be able to track information months and years back, using detailed categorization and advanced search filters.
Benefits of Accounts Receivable Software
Accounts Receivable software is a genuine proof that automating processes can have great results. These are some of the key benefits companies who utilize accounts receivable management software recognize.
A better cash position. AR systems make you focus on accounts receivable, and develop better prioritization practices to identify and close invoices earlier in the process. As a result, you will have more disposable means on the table, or at least a precise scenario of how your cash position looks like. This is critical for every company to be able to cover its financial obligations.
Increased control over cash and working capital. Understanding your cash position and improving accounts receivable performance is key to managing and improving working capital. By managing working capital effectively, you have the insights you need to make strategic investment decisions such as capital equipment purchases, new employee hires, facility expansion, and other investments to grow your business; further you will have more cash on hand by improving your invoice collection process.
Better communication with customers. AR software usually encompasses a variety of communication facilitating tools, such as instant access to information, customized emails with attached invoices, merged documents, and logged phone calls. With the very best scenario, you will be also able to store this information and to use it for reports. Needless to say, the way in which you communicate with customers is the core of your credibility, so the more professional it gets, the more awards you’ll have to reap from it.
Reduced administrative costs. The critical improvement of your billing process is that you’ll start handling invoices digitally and that will automate administrative procedures too. Automated processes don’t only refer to your customers, but also your employees and partners who’ll get rid of printing, stamping, and sending documents manually.
Shorter payment cycles. The key to a successful business is the ability to get paid as soon as possible on the products or services they provide. You rely on your accounting system to create the sales order and the invoice, but then your accounts receivable software takes over. Invoices can be automatically sent to customers the day they’re created, and a built-in customer portal and online bill pay capabilities allow your customers to pay you via credit card or ACH, giving customers more options to pay you sooner.
Efficient AR management. Keeping track of who is supposed to pay what, reminding debtors, and resolving issues related to the payment itself is the biggest advantage of AR software. You won’t need to prepare in advance for reminding customers of their invoices, you will reduce the time necessary to prioritize tasks, you will deal with significantly fewer disputes related to the ‘I wasn’t told’ problem, and you will spend more time soliciting payment than your current work line can allow.
Minimal credit risk. The credit that needs to be extended to customers is the eternal retail dilemma. Managers are continuously stuck in complex risk calculations, time predictions, and unpleasant communications. AD systems can be of great help for the purpose, as they allow you to gather relevant information from third parties, and to control exiting relationships for sudden risks. More precisely, you will be able to generate credit reports where customers are categorized using risk estimations, to deliver credit applications, to work with your own scoring formulas, and to notify customers on time.
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