One challenge that small business owners often face is how to properly manage their accounts receivable (AR), which is a huge aspect of a business’s success. Many businesses are still managing their AR the old way—drowning in paperwork and manual tasks. Learning how to digitize your AR workflow can make all the difference in getting paid on time and in full. Here are just a few of the benefits of digitizing your AR:
● Boost efficiency
● Improved accuracy
● Cost-effective
● Improve cash flow
● More secure
Now let’s get into why you should digitize your accounts receivable process and the tools that you can use.
What is accounts receivable?
AR refers to payments you expect to receive in the next few months for goods and services you've already provided.
Net-term deals with payments due in 30, 60, or 90 days are included in AR, as are any open or past-due invoices. Since it refers to money that is expected soon, AR is listed under current assets in your balance sheet. Managing AR effectively requires sending payment requests, tracking the current state of each invoice, sending reminders, and maintaining a clear record.
What does it mean to digitize AR?
Digitizing your accounts receivables means you can receive payments online by automating traditional manual processes such as invoicing, tracking payments, and managing outstanding payments. This switch to digital tools helps businesses streamline their efficiency among lots of other benefits—let’s go through them.
● Boost efficiency
Digital tools speed up tasks, reducing the time spent on manual data entry, invoicing, and payment tracking. This frees up your time to focus on higher-value tasks that drive business growth. Pro tip: Look for tools that offer both accounts payable and accounts receivable capabilities.
● Improve accuracy
Automating processes reduces the risk of manual error, leading to fewer discrepancies and minimizes the chances of late payments or disputes.
● Save money
Many digital platforms[1] are free to use and even offer free ACH bank transfers so you don’t need to pay to get paid. By reducing paper, postage, and the need for manual labor, digitizing AR saves you money in the long run.
● Improve cash flow
By allowing your customers to choose which payment method works best for them, you can encourage them to pay earlier, improving your cash flow. You can also get access to your capital sooner by not having to wait around for paper checks.
● More secure
Automation helps secure the AR process, especially when it comes to sensitive customer data and payment processing. Eliminating manual processes such as email and paper checks, limits your risk of security breaches and fraud.
How to start digitizing your accounts receivable
Switching your AR process to a digital platform is a strategic move toward efficiency, accuracy, and success. Embracing automation keeps you competitive, strengthens client relationships, and helps you gain valuable insights into your financial health. When looking for the right tools, make sure they’re user-friendly, affordable, and secure.