Please ensure Javascript is enabled for purposes of website accessibility Automating Accounts Receivable for Your Business

Automating Accounts Receivable for Your Business

By August 4, 2022Business, Factoring

Businesses of every size and type are looking for ways to automate operations to save money and resources. One of the biggest resource sinks in any business is the accounts receivable department. Keeping track of how much customers owe, when they need to submit payments, is certain invoices are overdue, performing collections, and more can add up to long hours and many headaches. Fortunately, there are a few solutions to help automate accounts receivable without breaking the bank.

Accounts Receivable Software

Accounts receivable software has gotten more advanced over the years. Programs can track invoices from the time they are issued, automatically generate emails to remind customers that payments are due, and other features to keep cash flow steady and healthy. The initial cost can be steep, and not all accounts receivable software packages integrate seamlessly with existing accounting programs. However, AR software can cut down on the time spent on manually tracking client accounts and payments instead of placing all of the responsibility on your customers and in-house accountants.

Incentivized Early Payments

One of the biggest hang-ups for non-retail businesses is staggered payment schedules. We live and work in a digital age where commerce takes place 24/7/365. Yet to this day invoices are issued to customers with staggered payment schedules of 30, 60, and even 90 days. This standard business practice is not going away anytime soon, but a lot can happen between the time a sale is made and when a customer pays their balance. In some cases, invoices age out and businesses are forced to perform collections. Businesses have been offering incentives to customers who pay their invoices early. This boosts cash flow, builds brand loyalty, and helps to automate accounts receivable. Incentives can range from discounts on their next purchase to credit, monthly drawings for free products, branded swag, or anything else that motivates customers to pay their invoices early.

Penalized Late Payments

The polar opposite of incentivized early payments is penalized late payments. Customers that wait longer than the time allotted on their invoices can be charged an additional percentage of the total amount due. Some businesses have even tried draconian measures by charging compounded fees for every day or week past the due date. This has proven to work to some degree, though not as effectively as positive incentives. Additionally, businesses that charge penalties must legally display the penalties in detail on the invoices, as well as at the physical location of the business.

Down Payments on Purchases

Some businesses have found that customers are more willing to pay off their invoices early when they impose down payments on purchases. Having money already “in the game” makes customers more likely to pay off the remaining balance instead of having an amount lingering on their accounts. While down payments can accelerate cash flow and reduce outstanding accounts receivable, this method can also generate more paperwork for the accounting department. Tracking partial payments often causes more headaches than anything else.

Accounts Receivable Factoring

No matter how advanced we get with technology, software, incentives, or anything else, the fastest and easiest way to automate accounts receivable with still factoring. Accounts receivable factoring has been around for centuries, and is the method most businesses use to accelerate cash flow, reduce or eliminate the need for loans, prevent collections, and make things easier for the accounting department.

When a sale is made, an invoice is generated with a staggered payments schedule of 30 days or more. Instead of waiting on customer payments, sending out reminders, and hoping the balance does not go to collections, the business submits the invoice for factoring. The invoice is then converted into cash, the factoring company withholds a small percentage as their fee, and the rest is delivered to the business as revenue.

Single Point Capital provides the most comprehensive invoice factoring services. Businesses that send us their unpaid receivables are able to access funds within a single day. Invoice factoring from Single Point Capital accelerates cash flow, eliminates collections, and allows businesses to automate their accounts receivable departments. Whether you are a small business that needs to free up resources, or a large company that wants to manage high volume receivables better, Single Point Capital offers customized solutions to fit your needs. Contact Single Point Capital today, and start automating your accounts receivable department.

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