Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase convenience and efficiency.  Lockboxes have been around for decades and much of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Commercial banks offered this service to improve efficiency and flow of business transactions simplifying the accounts receivables collection process.

Customers basically leverage the Bank Lockbox to receive check payments in one consistent location. 

Artificial Intelligence, Machine Learning, the advancement of technology. How does it affect you, and why should you care?

The shift to electronic payments and ACH has created some interesting implications for cash application teams. While it seems that electronic payments should be easier and faster to process than paper checks, the ways of providing the corresponding remittance, including via email, have had a negative impact on accounts receivable. Now, cash application teams have to find new ways to process these ePayments.

Looking into the future, change can be scary, but exciting, it’s uncomfortable yet enduring the process we adapt and change just as our businesses. B2B payments are evolving from paper checks to electronic payment delivery.  This paradigm shift from paper checks to electronic is creating a new timeline for payment delivery.

Accounts receivable typically isn’t classified as optimized, cutting edge, strategic or progressive department. It’s simply the department that collects money. Yet, if you walk into any business school around the world, you hear professors preaching “strive to get paid today & pay tomorrow.” As a business, you want to be cash greedy in your A/R department. Here are two reasons why you need to be CASH Greedy:

Automating your A/R process will reduce inefficiencies. Similarly, it will eliminate manual data entry errors and reduce transaction time. Adopting key performance indicators (KPIs) and defined capital metrics are also important.  For instance, by adding standard revenue and profit tracking reports, you can easily have a clear picture for days sales outstanding (DSO), who is paying late, number of invoices passed through the system, collections rates made on bad receivables and collections made, your business gains the freedom to track your performance in real time.

We want to be paid today and put that cash to work immediately. Waiting for checks to be mailed, received, then processed or similarly, processing through the Automated Clearing House (ACH) can take time, tying up your receivables and kills your balance sheet. The value of instantaneously decreasing your DSO, increasing your cash position while allowing you to borrow less and invest in more that matters.

Inefficient Accounts Receivable given the cost of capital, increases payment-processing fees, increases Days Sales Outstanding (DSO) and the potential of bad debt. Bad debt is the final straw of a painful customer transaction meaning; your company will never collect that revenue. This factor alone requires your attention to Accounts Receivable management, yet accounts receivables often are not prioritized as a revenue driver because the sale has been booked.  In reality to complete the sale cycle, a company must collect the money.

At a Macro level - leaving revenue on the table is painful, but not nearly as painful as funding a customer’s purchase with no return thus trapping receivables on the balance sheet. Lowering the days to collect the cash thereby improving working capital is a catalyst to improved operations.

A solution to increase liquidity and expand flexibility to invest in growth or product development, decrease bad debt and maximize shareholder returns is found by using an Account Receivable Automation cloud-based platform.