Fyorin  >  Resources >  Blog  >

Top reasons to automate receivables

Accounts Receivable
Financial operations
Accounting
By
Karolina Jarosinska
|
June 14, 2024

As businesses grow globally, their financial operations become more complex. This complexity arises from the increase in invoices, bills, incoming and outgoing payments in various currencies, and the need to manage multiple vendors and suppliers. All these tasks must be managed while ensuring steady access to working capital and maintaining a good cash flow to support continued growth. To manage these challenges, businesses, especially those with smaller finance teams, are turning to automation to unburden their finance departments from manual tasks, increase efficiency, and reduce operating costs. A report from Deloitte revealed that cost savings from implementing automation can range between 25 to 40%.

While accounts payable (AP) automation has received considerable attention in recent years, with many businesses actively seeking AP solutions, accounts receivable (AR) still seems to be an overlooked process. Another report, from Blackline and NACM revealed that over 40% of businesses are hesitant to adopt an AR automation tool. In this article, we will discuss the key benefits - including improved bottom line, efficiency, forecasting and client retention if you decide to automate your receivables process and implement an AR tool into your tech stack.

Improvement to the Bottom Line

Receivables raise costs for businesses in two significant ways: by increasing the manual work required from the finance team and by missing invoices. With high sales volumes, especially within a small team, the burden of issuing invoices, chasing payments, and reconciling them in the accounting system falls heavily on finance managers, taking their time away from other tasks. To keep all company financial operations on track, additional hires or overtime pay might be necessary.

Additionally, a study from Barclays revealed that over 50% of UK businesses suffer financial losses due to late or missing payments from clients. Clients often try to pay as late as possible to extend their Days Payable Outstanding (DPO), and if not chased in a timely manner, invoices may go unpaid. According to another report done by Pay.UK and the Chartered Institute of Credit Management (CICM), UK businesses were collectively owed £17.5 billion in 2020, with the average overdue amount around £20,000.

Having an appropriate system in place that automates the receivables process from start to finish—by issuing invoices, automatically posting them to your accounting tool, reconciling once the payment is received, and sending follow-ups for outstanding invoices—not only unburdens your finance team, saving on operational costs (consider the difference between paying for another staff member versus an AR automation tool), but also reduces the number of unpaid invoices, improving your bottom line.

Timely Data Leading to Better Forecasting and Decision Making

With an efficient receivable management system in place, you can convert sales into cash much faster and have real-time insights into outstanding payments. Real-time insights and a healthier cash flow due to reduced DSO enable the treasury and CFO office to access more accurate data, facilitating better-informed, proactive decision-making. For example, you can easily identify which customers tend to pay late and act on this trend more quickly with preventative measures.

Currently, many businesses spend significant time manually aggregating data on outstanding invoices, sales, and payments, followed by extensive analysis. By the time this process is complete, the data may be outdated. With improved cash flow and decision-making capabilities, you make more working capital available for further growth and expansion.

Improved Efficiency

Automating the receivables process with an AR tool can help standardise procedures and avoid common mistakes that lead to invoice errors, late payments, and back-and-forth communications with clients. Nearly 7 in 10 companies that adopted an AR tool reported a decrease in errors, according to a study. This is because an AR tool integrates with your accounting system, stores and updates client data - then, all information will be automatically pulled from your stored contacts to an invoice without a manual entry and seamlessly transferred between the AR tool and the accounting system.

Better Client Retention

We’ve mentioned the invoice errors before - they are frustrating for your business and the clients alike. Sending accurate invoices promptly after service completion enables clients to manage their own accounting better and enhances your reputation as a reliable supplier and long-term business partner. An automated receivables system, like Fyorin, which allows customers to pay in their home currency and offers flexible payment methods, streamlines the payment process, providing a smoother experience. This ease of payment increases the likelihood that clients will pay on time and remain loyal to your business, appreciating the seamless experience provided.

What to Look for in an Accounts Receivable Tool

When selecting an AR tool, consider the following features:

Check Mark
Integration with Accounting Tools: Ensure the AR tool integrates with your current accounting system. Check if it offers two-way integration, meaning invoices created will be automatically posted in the accounting system and marked as paid once payment is received.
Check Mark
Automated Payment Reminders: Look for the ability to schedule automatic payment reminders for overdue payments at desired frequencies.
Check Mark
Flexible Payment Options: The tool should allow you to collect payments in multiple currencies and via multiple methods, such as bank transfers and credit cards.
Check Mark
Visibility Features: Verify if the tool lets you segregate incoming payments into sub-accounts for additional visibility of where funds are coming from.
Check Mark
Ease of Implementation: Assess how easy it is to implement and roll out the tool across your team. Determine if it is a plug-and-play solution or requires extensive IT involvement and training.

Implementing an AR automation tool can significantly enhance your financial operations, improve efficiency, and support global business growth. By choosing the right AR tool, you can streamline your receivables process, enhance client satisfaction, and drive your business towards greater success.

Fyorin - Your Partner in Global Accounts Receivable

Fyorin’s accounts receivable solution allows you to not only get paid faster but also improve efficiency and lower down operational costs by offering 2-way integration with your accounting tool of choice to:

Check Mark
Reduce manual work by automatically reconciling paid invoices,
Check Mark
Eliminate mistakes and back-and-forth by instantly generating invoices and payment requests directly from the platform,
Check Mark
Improve the cash flow by sending automatic payment reminders for overdue invoices,
Check Mark
Allow you to grow globally and collect payments in over 220 currencies.
Check Mark
Give you a clear view of the money coming in.
We connect with major accounting platforms such as Xero, QuickBooks, Netsuite, Zoho, Microsoft 365 and Sage. If you’re interested in automating your receivables on a global scale to save time and money, send us an email to [email protected] or book a demo!

Fyorin, your global financial partner

Interested in transforming your treasury management function? Get in touch with us at [email protected]

Share article
Karolina Jarosinska
Product Marketing Manager
linkedin
Karolina is the product marketing manager at Fyorin. She deep dives into topics like fintech, payments, unified treasury to extract the recent trends and insights and bring them to Fyorin's audience.

You might like...

Global Payments
Automation
Global Ecommerce
Global Expansion
Balancing Act: Achieving Liquidity Diversification with Unified Treasury Solutions
By
Karolina Jarosinska
|
January 2, 2024
Global Payments
Automation
Global Ecommerce
Global Expansion
Unlocking Financial Success: The Power of Automation in Finance
By
Karolina Jarosinska
|
October 16, 2023
Global Operations
CFO
Global Payments
The Future of International Payments: Modern Treasury for Global Payments
By
James Camilleri
|
July 6, 2022
Fyorin Logo
Tap into global network of financial institutions to bank & diversify without borders
Grow Globally with Fyorin