Accounts Receivable Software
What is an Accounts Receivable Software?
An Accounts Receivable Software is a collection of accounts receivable solutions that aim at improving the productivity of your company, lowering the DSO rate, and making the overall process more streamlined and organized.
Basically, an Accounts Receivable Software allows you to:
- Minimise the time required to collect customer payments and send a custom invoice to each one of them. In addition to that, it focuses on bringing a certain level of payment processing automation so as to avoid human errors and workflow delays.
- Improve the company’s cash flow with an efficient collections process. When the payments are cleared faster, there are few instances of delayed invoicing and collections.
- Monitor the collections process, customer balance, pending invoices, etc. easily through a cloud-based general ledger.
What are its Key Features?
A client dashboard is essentially a general ledger of your clients. It contains all the important details and customer’s configurable options that make collections process faster and easily manageable, and allows you to track the invoices along with their status (paid, pending, disputed, etc.) as well as identify the top paying clients at one glance.
The client dashboard is an important component of an Accounts Receivable Software. It can greatly lower the company overhead and improve the collections process which otherwise contributes to deferred revenue due to manual or dated practices.
Automated invoice reminders
A lot of company time is wasted in the identification of pending invoices and sending reminders for the same to the respective clients. This problem can be easily solved with the help of advanced invoice reminders feature of the Accounts Receivable Software.
Automated invoice reminders allow you take your mind off the collections process and still enjoy an improved cash flow. This nifty feature automatically creates a list of the pending invoices and sends reminders to the clients as per the parameters set by you.
For instance, for a particular client who is usually on time with the payments, you can set the feature to send a reminder a week past the deadline. On the other hand, if there is a client that has a history of late payments, you can set up the system to send a reminder 2-3 days ahead of the deadline.
Accounts Receivable Aged Listing
The aged listing feature of Accounts Receivable Software allows you to organise all your accounts based on the payable dates and client names. This makes the invoicing and collections smoother and simpler.
Your business data is important and must be protected at all costs. A lot of times, even a single invoice that goes missing can make a huge dent in your cash flow.
An Accounts Receivable Software is a cloud-based accounts receivable system that stores all your data in a secure cloud server. This means that even if you lose the data on your local storage media, you can still find it online. Also, since it’s centralised database, all the employees can access it from any computer or even a mobile device. This is especially useful when an employee is traveling and need to look up a particular invoice or payment.
Almost every small or big business faces its share of disputes with the clients. It’s inevitable irrespective of what measures you take, and it’s a fact that nearly 10% of these disputes don’t result in proper resolution. However, with an enterprise-level Accounts Receivable Software you make the process less stressful and problematic and also minimise the losses.
The dispute management module of the Accounts Receivable Software provides a proper communication channel for you and your clients to share information through. It allows you to verify the claims made by your clients quickly and even share the data with them if necessary to achieve faster resolution.
Client Credit Management
A lot of times, invoices payment delays take place not because of disputes or wilful procrastination, but because of genuine lack of funds. This is the reason why so many businesses offer credit to their clients. However, doing this the “traditional” way is largely ineffective and tedious. Plus, it can be difficult to recover the money or adjust the same with future payments.
Accounts Receivable Software offers a dedicated credit management service through which you can offer small and short-term loans to your clients as per their requirements. Since a third-party is involved which finances the loan, there is no hassle and no uncertainty.
Easy Discounting and Payment Adjustment
To incentivise your best clients you want to give them special discounts from time to time. These discounts can vary from one client to another about history with your business. All this is indeed tough to manage through the traditional or manual methods. However, Accounts Receivable Software can make it easy by offering support for discounting and payment adjustments. So, you can increase or decrease discounts as you see fit, and keep track of the same through the general ledger.
Multiple Payment Options
Multiple payment options are the key to an effective collections process and high cash flow. The reason is simple- the more options your clients get, the easier it is for them to clear the invoices.
There are some genuine issues with certain payment channels as well such as net banking in which payments can’t be made on public holidays and weekends. However, with an Accounts Receivable Software, you can offer additional payment options such as UPI, credit cards that aren’t only faster but accessible 24/7.
What are the Benefits of Accounts Receivable Software?
The following are some of the main benefits of an Accounts Receivable Software:
Improved Cash Flow
High cash flow is the key to every successful business. However, to accomplish this, you must follow the best cash management practices. This is where Accounts Receivable Software comes in.
A best-in-class Accounts Receivable Software allows you to avail tested and reliable collection methods. Thus, the DSO rate is lowered as reminders are sent to your clients for their unpaid invoices automatically, and you can monitor the activities of your best and worst clients easily through the general ledger.
Greater Control Over Business Finances
All “what’s,” “who’s” and “where’s” are taken care of by the Accounts Receivable Software when it comes to AR management. You know exactly where your money is going and which are your most significant sources of revenue. You can also identify the leaks in your receivables cash flow and take measures accordingly. This kind of control isn’t easy to achieve without automation and analytics that come with the accounts receivable software.
Improved Customer Relationships
When you introduce an Accounts Receivable Software to your clients, you let them know that you care about your business and want to make improvements wherever possible.
As they get multiple payment options from which one can be picked for organised and streamlined communication channels to share financial details through, and top-notch security to take comfort in, they are likely to think twice before breaking the ties with you to partner with someone else.
An Accounts Receivable Software allows your employees to save a lot of time and do things smartly and efficiently. For instance, they don’t have to write every single invoice reminder for payment processing, follow up with clients to confirm the payment status, or even spend hours in reconciliation.
With an Accounts Receivable Software, your employees can also find what they are looking for, easily. They can see through records that go several months or even years back, and settle disputes with the clients faster. This entire process improves their productivity, as well as the overall work culture.
Minimal Credit Risk
When you provide credit to your clients, then there is always some level of risk irrespective of how long they have been in business with you.
While you can’t really remove the credit facility as that can hurt your business relationships and is actually a norm, you can at least minimize the risk with the help of Accounts Receivable Software. This is because it allows you to check the credit history of every client in detail including their communications, payment time predictions, etc. that help in determining the scope of any credit risk, with great accuracy.
How to pick the right Accounts Receivable Software?
Due to the high demand, many Accounts Receivable Software are available on the Internet today. However, you must be careful when you pick one for yourself. This is because you have to adapt to a new collections process, learn about its features as well as have your clients become comfortable with the new system. This takes some time as you go through a learning curve and you don’t want to repeat this process.
Picking a poor Accounts Receivable Software that isn’t well-tested by the developers or lacks essential features like strong data security or support for your current ERP software can also cause major issues later.
To make your selection easier, the following are some of the key aspects you should look for in an Accounts Receivable Software:
The most important thing you should look for in an Accounts Receivable Software is that whether it’s compatible with your current ERP solution. For instance, if you are using Tally, then the receivable software you pick should be capable of fetching your Tally data.
The reason why a seamless integration with an ERP solution is important, it’s likely that your staff already has good experience with the ERP program you are using today, and so bringing in a different one is counter-productive. Plus, it’s possible that you are fully satisfied with the current ERP program, which is why you may not want to get another one so that you can use it with the Accounts Receivable Software. Lastly, if the compatibility feature is available, then syncing your existing records and customer data will be easy.
Different kinds of Accounts Receivable Software offer different kinds of features, and you would naturally want to stick with one that offers the ones that you need for your business in particular. Still, the following are some of the major features that the program should have:
- Recurring Billing
- Multiple Payment Options
- General ledger for organised clients’ data
- Intelligent reminders for invoices payment
- Disputes management
- Customer credit
Future Proof Technology
The technology used in the Accounts Receivable Software is another key factor to look into for many reasons. For starters, you don’t want to invest your time and money into a product that can go obsolete in just a few years. An advanced technological Accounts Receivable Software, on the other hand, will ensure that you stay ahead of your competition for a long time.
Software as a Service
In the recent times, a paradigm shift has taken place in the tech industry, especially in the domain of commercial software. Now, instead of on-premise software, businesses use these programs under the Software as a Service (SaaS) model, and that’s what you should look for in the Accounts Receivable Software as well.
There are various benefits of investing in a SaaS Accounts Receivable Software. These are:
- Since a SaaS Accounts Receivable Software is a cloud-based accounts receivable software, you don’t have to worry about updates and security. This is because the software provider manages these on their end in the backend. The updates are available automatically, and there are few instances of performance issues.
- A SaaS Accounts Receivable Software offers platform-independence. So, you could be running a Windows OS or a Mac OS but can you use the service either way. You can even use it on the go with your mobile phone.
- You don’t have to install a SaaS Accounts Receivable Software on a computer. This means that you don’t have to worry about hardware maintenance or data security. Everything you need is up in the cloud, safe and secure.
- SaaS services are also usually way more affordable than on-premise software. So, that’s a big plus for your cash flow.
The best of the features and prices of an Accounts Receivable Software are not worth it if the security offered is subpar. After all, you are going to trust software with sensitive company data, and if gets compromised, then it can cost you your entire business. So, it’s important that the receivable software you pick gives due importance to data security and privacy. You should also check that it strictly complies with the standard security requirements from the financial regulatory authorities.
There is no death of Accounts Receivable Software and other business software which are extensively pushed by the developers by highlighting their best features and competitive prices, but when a customer approaches the company for product support after the sale has been made, they are met with late responses and poor resolutions. This is because these businesses don’t check the quality of customer support.
Don’t make this mistake yourself, and verify the after-sale service of the software provider before making any decision.
An Accounts Receivable Software is a must for every competitive company that knows the importance of business scalability and modern technology. It’s a powerful tool that manages customer as per their. It’s a great way to gain an edge over your competition and cut the wastage of valuable company time. Thus, there is no reason for you not to start using it today itself if you aren’t already.