How Payment Processing Improves Accounts Receivable Management | BlueSnap

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How Payment Processing Improves Accounts Receivable Management

Written by: Casey Griswold

Established management processes, from managing inventory to invoices, make doing business less painful. Those processes are now easier than ever to implement due to the ubiquity of labor-saving tech that we’re accustomed to.

So why does accounts receivable management lag behind? And how can payment processing help change that?

The Current State of Accounts Receivable Management

Traditional management is outdated, and resource intensive.

For many finance departments, accounts receivable (AR) is a necessary but frustrating chore. It’s essential — after all, your business needs to be paid for the goods and services you’ve delivered — but it’s typically a painstaking process of combing through invoices and checks to determine what’s been paid.

As a result, accounts receivable management is an archaic process. Even applications like Quickbooks or Sage-Intacct are severely limited in their AR/collections functionality. They provide a simple Customer Aging report with invoice due dates; you can’t take notes, assign tasks or share an aging report. Instead, you need to export that list to Excel and start combing through the data. Then comes the endless game of generic follow-up messages and email-tag to prompt customers to pay. It’s relatively simple, but extremely inefficient.

Typical AR management is a manual, time-consuming job, which is it often gets passed around to different people, from office managers to comptrollers to CFOs.

But this process isn’t sustainable — or scalable.

For many companies, this obsolete process works just fine — until it doesn’t. For instance, costs mount quickly when your DSO (days sales outstanding) rises, so idle invoices can impact the whole company. Whether past due invoices start to pile up or the person managing AR leaves, the result is the same: accounts receivable management is no longer effective or sustainable, and the company scrambles for a solution.

That’s particularly true for growing businesses or companies expanding into new markets. The increasing inflow of invoices can easily flood this outdated system, with significant implications for cash flow and business management.

Accounts Receivable Management is Due for an Upgrade

Automation gets the ball rolling…

Automation is changing the game for accounts receivable management. Automated AR solutions leverage tools like email campaigns that are automatically triggered when an invoice is due, pending or overdue, so customers are consistently and quickly notified.

Adopting an AR provider that enables automation cuts out a tremendous amount of time-consuming work, including sifting through invoices and tracking down overdue payments. Comprehensive AR platforms also increase transparency and efficiency for the entire AR department with features that make complex Excel sheets a thing of the past.

And payment processing does the rest.

Despite the fact that AR depends on customer payments, payment processing is typically a viewed as a separate function from accounts receivable management. By the same token, payment processing is severely outdated for invoice payments. When customers go to pay invoices, they’re typically met with limited options — many AR departments still rely on paper checks, which customers need to physically mail in.

This friction has dramatic consequences. It doesn’t just reflect negatively on your brand: an outdated payment process is a crucial factor in delaying invoice payments, which costs your business money and hampers your AR department. Customers with payment methods that your AR department can’t accept simply won’t pay their invoice as quickly. Even checks paid promptly can be delayed by mail or simple human error.

But all that’s changing. As invoicing becomes more digital, online AR solutions have begun to leverage comprehensive payment processors to provide full payment services to customers paying invoices; this trend is beginning to take roots, and the implications are huge.

It’s a simple truth: when you make it easier for your customers to pay, they’re more likely to pay their invoices faster. You’ll also raise customer satisfaction by providing convenience and making it easier to work with your business. Seamless, integrated payment processing slots into your tech stack, speeds up invoice payments and reduces DSO.

When combined with automation, upgrading your payment processor can improve your accounts receivable management, reduce costs and boost efficiency. Customers can open an automated email, click one button to view the invoice and then pay it off with a variety of payment methods. They can even set up automatic payment processing rules so that invoices are never overdue. It’s the perfect marriage for growing companies. So don’t neglect your AR management: upgrade your payment processor today.

Looking to get started? Check out this guide to evaluating payment vendors to find the right fit.

Leading the charge for this evolution are BlueSnap, a comprehensive global payment processor, and Armatic, a cutting-edge AR management software. And this partnership is better than ever: BlueSnap has acquired Armatic, bringing all your financial needs under one roof. Contact us to learn more about how this solution can benefit your AR department and your entire company in one fell swoop.

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