Modernizing accounts receivable is often low hanging fruit for medium sized B2B organizations. We have written recently on the Future of AP Software, but there are also significant improvements available through modernization of account receivable. A study from Altradius found that the average credit terms in North America was 27 days but average payment duration was 61 days. That is a large gap and can be very problematic for an AR Department. Many B2B organizations still have antiquated AR processes which is not helping their customers pay them on time. Modernization of accounts receivable makes things easier for customer and also reduces manual effort. Here are the main components in modernizing accounts receivable.
Many organizations can’t afford large ERP solutions to power their business. One of the modern account receivable ways forward is to get a best of breed components to power different parts of the business. The key is that these systems are able to talk with each other and pass data back and forth. This will decrease manual intervention, improve the speed at which invoices are presented, and reduce errors.
The more paper, the more cumbersome the process. Paper invoices should be avoided at all costs, unless mandated by the customer. Digitized invoices provide a much better solution for both your organization one your client. Sending it in a digital format that can be viewed along with whatever supporting documentation is needed for invoice approval. A new modernized accounts receivable system may also allow you to integrate directly into a customer AP system. There should also be a way for organizations to review the older invoices and supporting information when needed.
Your AR system should allow for feedback directly from the customer. This could include things like notifications the invoice has been received, viewed, and even approved. In some cases, there may be a dispute or an error with an invoice. Having a tool that tracks this communication will help get these issues resolved quickly.
There are many different types of payment methods today versus cheques. Moving to affordable on-line methods may significantly help reduce DSO. Find the right tools for both you and your customers.
If you would like to understand how the OnePosting AR software solution can help with modernizing accounts receivable , book a meeting with our team.
- AP and Restaurant Invoices - October 26, 2022
- The Impact of Late Payment to Suppliers - February 28, 2022
- Scale Accounts Payable - February 1, 2022