The Most Robust Accounts Receivable Process – Tips For Automation, Tracking & Reconciliation

What Is Accounts Receivable (AR)?

The accounts receivable process (AR) is a payment collection workflow for the balance of money to be paid by the customer for the goods or services delivered. Any amount of money that is owed by the customers for purchases made on credit comes under Accounts Receivables. Technically, they are listed on the balance sheet as current assets. 

The process of cataloging, tracking, and collecting payments for such invoices is called the AR collection process. You cannot grow a business without establishing a robust accounts receivable process. Let’s try to understand the workflow and challenges before we get on the strategy you can use to create a robust Accounts Receivables process for your company as well. 

 

What Is The Accounts Receivable Process Workflow?

The accounts receivable process begins as soon as the goods or service is delivered to the customers. This results in the generation of an invoice by the AR department to be sent to the customer. The expected timeline of the payment depends on the type and size of the account and the service provided. 

Next, the customer is reminded in due time regarding the payment. A link redirecting to a payment gateway is sent to them for a safe and secure payment experience. The AR department is responsible to reconcile the payment from the gateway provider and the bank for confirmation. 

Next, as per the internal structure calculation of sales commission and lead billing is carried out. In case of delay, the late payment reminders are sent to the customer or the matter is escalated. 

 

What Are The Common Challenges Faced In The Accounts Receivable Process?

The accounts receivable process is mission-critical to the business functioning. The complexity of the process becomes multifold as it is customer-facing and involves different parties like the payment gateway and the bank, along with various internal teams like sales and accounting. 

Here are some of the challenges faced while managing the AR collection process. 

  • Disorganized Ledger
  • Failure of payment within the agreed timeline.
  • Customers keep on stalling with empty promises.
  • Reconciling payment from the bank.
  • Offering a line of credit to customers.
  • Solving payment disputes with customers. 

 

Important Actionable Tips For Making Your AR Process Robust

A robust AR collection process looks like a system where you can do all the below-mentioned actions.

 

Create An AR Dashboard

  • Access the list of all clients with payment schedules.
  • Each schedule must expand to show the complete details.
  • View filtering based on period or department parameters.
  • Process payments instantly from the dashboard
  • Find the pending payments quickly using a global search.

Automate Lead Billing & Payment Collection

  • Access client documents in DMS or accounts in CRM in one click.
  • Add or modify authorized payment methods.
  • Search and open the schedule of any other client.
  • Check the billing history and upcoming billing schedule. 
  • Edit service details for processing payments and creating an invoice.
  • Change payment plan into weekly, bi-weekly, or monthly.
  • Initiate confirmed payment from the client.
  • Download and view the invoice generated.

Integrate A Trusted Payment Gateway

  • Allow all methods like Credit Card, ACH, Financial Lenders, and Pay Later.
  • Automated payment processing based on the payment schedule.
  • Schedule declined payments for re-processing.

Play The Follow Up Game With Reminders

  • Send upcoming and past due payment messages.
  • Sent link to pay using the method on file or adding a new payment method.
  • Create drip campaigns for past-due reminders.

Remove The Complexity From Payments Using

  • Refunds: Partial, Complete, Accidental Payments.
  • Client Credits: Any payment credits post-sale of services.
  • Client Debits: Chargebacks, Additional fees, etc.

Reward Sales Team With Commissions

  • Calculate sales commissions based on a commission structure.
  • Generate commission reports based on payroll.
  • Allow users access to individual commission reports.

Craft A Seamless CX with Cancellations

  • Handle Partial or Full-Service Cancellations.
  • Calculate and process refunds.
  • Clear out pending payments.
  • Apply credits for unrealized invoicing.

Bring Out The Hidden Insights With Reports Like

  • Revenue/collection trends over time.
  • Revenue realization reports.
  • Collection reports By sale date and payment date.
  • Cash-flow reports and projections.
  • Process exception reports (missed payments, incorrect schedules, unrealized invoices, etc.)

Optimize Your Services With Revenue Recognition

  • Attribute payments to individual service items.
  • Design model based on finance department requirements.
  • Recognize revenue on the client level, business unit level, and/or service level.
  • Insights into questions like these:
    • How much revenue was realized by a particular service?
    • What’s the collection percentage of clients from certain demography?
    • Which services have the worst collection rate?

Plug Revenue Leakages With Quick Reconciliation

  • Generate reconciliation reports for Credit Cards, ACH, Finance Lenders, and Pay Later.
  • Build auto-reconciliation process from account statements.

 

 

At Nablasol, we create automation and develop integrations for your unique custom workflows. Reach out to us to know more about how we can help your business with digital transformation.

Digital Transformation Process Automation

Animesh is a technical writer at Nablasol and loves to see businesses and agencies take charge of their social footprint and put a human touch behind the brand. He loves to trek and will never say no to ice cream. Follow him on Twitter @Neonsaber7

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