Accelerating cash flow with 5 Accounts Receivable (AR) automation

Automation indeed magnifies efficiency, but only when the processes are defined and everyone has clarity on what they should do. With years of learning and experimenting, enterprises are exactly the ones that can benefit the most by setting up automations. But, in practice, it isn't happening and efficiency is left at the table.

A report from Rossum says, a staggering 49% of finance departments still operate with zero automation.

In an era, where leaders are trying to incorporate AI-powered automations in their day-to-day processes, there are many who are severely left behind in the race. So before stepping into AI incorporation which requires high data cleanliness and laser-like process vision, there are foundational automations that serve as a natural starting point on the AR automation journey.

1. Usage data capture and invoicing

Usage-based billing is one of the fastest-growing models in today's economy, and rightly so. It gives customers the needed flexibility and for you, an edge over competitors with rigid pricing. But the teams shouldn't bend over backwards to set up and maintain them. Without automation, it can easily turn into an operational nightmare.

A billing system should automatically capture usage data of a customer, and generate accurate invoices including overages with zero manual intervention at the end of each billing cycle. Once configured, it should run on autopilot and take care of everything in between. Finance teams can actually begin analyzing patterns in data instead of inputting them into multiple systems.

2. Approval flows

As more and more hands get on deck, approval workflows tend to slow down instead of speed up. Approvals should be reviewed by different people from different teams. And that too, should dynamically happen based on conditions. If there is no process automation in place, credit notes, invoice revisions, and high-value deals will get stuck in an inbox limbo, delaying revenue recognition and cash flow.

An agile system can route approvals based on predefined conditions; it could be based on, invoice value, region, or department. In addition to speeding up the collections process, it also ensures accountability and removes bottlenecks that might have been stalling collections.

3. Customer communications

The AR function is as much about communication as it is about accounting.

Just "timely" isn't enough; "personalized" reminders often make the difference between an invoice paid on time and one that lingers for weeks.

This is not just about momentary reminders, it's about building trust and giving a memorable experience throughout the customer lifecycle.

An enterprise billing system should have this capability built in or connected seamlessly with essential platforms to automate these interactions. Be it payment reminders, failed payment alerts, or renewal notifications, communication should be triggered on time and tailored to each customer.

For example, after a failed payment, the system can retry the charge, send a personalized email, and log the attempt in the system, all without human intervention.

4. Multicurrency and global tax automation

When enterprises operate across the globe, they need to raise invoices in different currencies. On top of that, services are often priced differently based on geography because of factors like purchase power parity. Alongside this comes tax complexity: every country has its own rules. For example, the US has state-level sales tax, in India, GST, and in the EU and UK, VAT.

With automation, customer-specific pricing and tax rules are configured once during setup, not each time an invoice is generated. But does this help accelerate cash flow? The answer is yes; it reduces manual errors and invoice disputes, key causes of payment delays.

According to a Forrester Total Economic Impact study, automating indirect tax processes helped a multinational company reduce invoice error rates from about 3% to below 1%, saving roughly $2.6 million in correction costs over three years.

So, this not only ensures a smooth experience for customers and a quick one for internal teams, it also saves costs.

5. Scheduling aging and DSO reports

For growing enterprises, the challenge isn’t the lack of data, it’s that too much of it sits in silos and nobody has the time to scour the files for them.

What happens as a result is invaluable data rotting in folders and disconnected applications. Nothing useful is derived from this, even though it's one of the biggest assets an organization can have. Real-time visibility is an important factor that can reduce DSOs, as the relevant people are alerted on a daily basis of the high risk pending invoices.

An advanced billing system should automatically compile and distribute aging summaries, DSO reports, and receivables forecasts at a scheduled cadence. Whether that’s daily snapshots for collections or month-end summaries for CFOs, reports should arrive formatted and ready, no manual pulls, or no ad-hoc Excel gymnastics.

For example, with Zoho Billing, one can schedule these reports:

Integration across platforms

Beyond individual automations, the billing system should integrate with other systems to improve efficiency in day-to-day operations. This ensures that all of the above mentioned automations deliver real results, rather than just being checklist items.

AR automation, despite being done at different stages and for different reasons, ultimately helps with improving collections speed, therefore reducing DSO and enhancing cash flow. Jio Haptik, one of the early adopters of the Enterprise Edition experienced a significant increase in collection acceleration process.

"Our collection cycles are completely self-serve now, reducing the settlement time from over 30 days to near-instantaneous cash flow thanks to Zoho Billing's wallet and billing API." 

— Varun Deshpande, Director, Jio Haptik

If you would like to bring the same velocity to your receivables and boost your cash flow with Zoho Billing Enterprise Edition, connect with our experts today.