Receive Faster Payments, Improve Cash Flow with AR Automation

Demand for faster payments is driving automation and more options. Think about how personal payments have changed in recent years. Tap-to-pay technology is common. Digital wallet usage is rising, with 53% of Americans using them than conventional payment methods.1 Mobile peer-to-peer payment services are ubiquitous — Zelle alone handled $629 billion in payment volume for 61.6 million users in 2022.2

“Whether it’s pushing payments through card rails, Venmo or Zelle — even NACHA’s announcement on increased same-day ACH limits — the realities of faster payments and receivables posting are here,” says Seth Marlowe, head of treasury strategy and product innovation at Synovus.

Clearly, consumers have made the leap to digital payments, but what about businesses? Payment automation, especially accounts receivable, speeds up payments and improves cash flow for companies that invest in the technology.

What is accounts receivable automation?

Accounts receivable automation replaces manual processes such as invoice printing, credit review, reconciliation, collections and reporting with digitized methods. Why is this important? AR automation improves efficiency, saving time and resources.

Digital payments increase efficiency.

Many businesses cling to manual processes. Sixteen percent of AR teams were still manually matching payments and remittance data just a short time ago.3 Manual processing increases errors, which is costly and time-consuming. These types of inefficiencies slow the AR process, including an inordinate amount of time spent researching and troubleshooting.

The least efficient companies – considering automation improves processes – require seven days to fix invoicing errors. This is twice the time of more efficient businesses.4 It also increases the potential for fraud. Automated solutions securely send critical remittance data with each digital payment, reducing or eliminating these risks.

Automating AR functions also delivers more timely insight into payment transactions. Companies can gather and analyze customer transactions — who’s paying and when, and who needs different credit terms — which makes forecasting and budgeting simpler.

So, finance professionals are adapting their views as the benefits of AR automation, enterprise resource planning and straight-through processing (STP) become increasingly evident. Ninety-one percent of CFOs attribute payment operations efficiencies to accelerated payments digitization.5

Accounts receivable automation means more available cash.

The adverse effect of manual processes on the accounts receivable cycle is more concerning than inefficiencies. Consider these statistics about B2B payments:

• In Q3 2023, 55% of all B2B invoiced sales were overdue.6
• On average, companies that process 500-1,000 invoices per month without automation require about 35% longer to be paid.7
• Days sales outstanding (DSO) is about 30% higher with paper-based processing.8
• Companies with manual processes typically don’t follow up until 19 days after payments are due, furthering delaying collection.9

AR automation, on the other hand, shortens DSO and reduces payment delays by about 11%.10 Faster payment collection facilitates better cash flow management. It also improves visibility into real-time transactions and payments data. So, automated accounts receivable is instrumental in helping to balance profitability, margins and liquidity. With enhanced reporting and analytics, businesses also gain greater insight into customer preferences and buying patterns, which enables more accurate revenue and cash flow forecasting.   

Eighty-four percent of CFOS who have digitized payments believe it’s improved working capital management in their businesses.11

Automated accounts receivable lowers operating costs.

Cost management is a priority for most companies, and spending on automation may seem counterintuitive. However, finance professionals view technology investment as a necessary long-term play.  They understand the importance of improving efficiency to driving down costs over time. Seventy-two percent of firms participating in a PYMTS.com study said AR automation helped lower operating costs.12

AR automation can enhance the customer experience.

Business relationships take years to build. There’s a level of reputational risk that comes with placing a credit hold on customers because your receivables process is weeks behind actual cash receipts. A payment that is seamless and accurate offers a positive customer experience, enhances retention, and may even become a competitive advantage.

An integrated solution accelerates and optimizes the entire receivables process.

Investing in technology is a critical decision and If you’re considering an AR solution look for a few key features.

• Aggregated payments
  You’ll want to capture all types of payments, from both paper and electronic sources, and be able to aggregate them regardless of location, type, or channel. This reduces exceptions, eliminates unnecessary deductions, cuts labor costs, and better manages payment relationships.
  
  
• Single portal
  An automated solution brings all payment data into one central repository. A dashboard with drill-down capabilities provides visibility into the entire receivables lifecycle and allows treasury professionals to make better, real-time business decisions.
  
  
• Artificial intelligence (AI)
  AI uses machine learning and sophisticated algorithms to reassociate invoices and electronically match payments to remittance. This results in greater STP and cost reductions – what Marlowe calls “bringing the dollars and the data back together.” Increasing STP quickens the application of cash to the balance sheet.

Advanced reporting, alerts and automated posting are also important to effectively managing the accounts receivable process.  

Tap into the power of AR automation as a growth driver.

Now’s the time to fully embrace efficient AR management. For organizations seeking growth and flexibility, automated AR expedites payments for faster income. So, there is increased working capital available for investment in production, research, and expansion. Specifically, AR automation will:

• Lower your DSO.
• Increase working capital and reduce the need for costly loans.
• Improve team efficiencies and produce better, timelier data for cash and credit.

To learn how we can help you better manage your company’s AR for faster payments and improved cash flow, simply complete a short form and a Synovus Treasury & Payment Solutions Consultant will contact you with more details. You can also stop by one of our local branches.