If you’re a company in growth mode, don’t make the mistake of overlooking your AR/AP team. Optimizing this group now for bottom-line stability means you’ll be prepared to scale down the road. Here are six signs your growing business needs accounting automation to stay on track.
01. You have difficulty managing cash flow
Keeping cash flowing efficiently is what AR and AP are all about. For companies that have experienced growth, manual processes have likely slowed payments and increased billing errors. The longer it takes accounts receivable to invoice a customer, the longer it takes to receive payment.
02. Your Days Sales Outstanding (DSO) metric is rising
While most customers pay their bills
on time, collecting from those who don’t can be challenging. Lack of automation, however, means collection efforts often consist of one-off emails and inconsistent follow up. Automating customer communications ensures consistent follow-ups on past-due invoices, improving DSO and reducing bad-debt write-offs.
03. Customer billing disputes are common
Companies that grow quickly may develop ad hoc billing processes that are error prone. And while offering different discount rates and payment terms can be a good way to drive new business and build loyalty, they can create a nightmare for AR teams. Often resulting in billing errors and frustrated customers. When customers withhold payment until their billing errors are fixed, short-term cash flow is reduced. If frequent billing disputes cause customer churn, it also affects long-term cash flow.
04. You have unhappy suppliers due to a history of late payment
Manual AP processes delay payments to vendors. If payments are habitually late, it can impact relationships with your suppliers. Leading to increased costs and missed savings.
05. Your financial close process is built on spreadsheets
For companies that bill customers in increments, invoices may need to be sent on a set schedule or upon completion of a specific set of tasks. Keeping track of various billing schedules and milestones for each customer is labor-intensive, especially if records are kept manually or in spreadsheets. An accounting system that gives AR staff the ability to create automated billing schedules simplifies the process and helps ensure customers are billed correctly.
06. Frequent reporting errors are causing problems
AR and AP are core accounting activities, but they cross multiple departments. To operate efficiently, they need to flow smoothly across the organization. Poorly integrated systems interrupt these processes, which can lead to delays, errors, late payments, and customer billing disputes. Multiple systems also means multiple user interfaces with different user IDs and login credentials. Switching between systems is inefficient. And lack of real-time data can lead to payment or billing errors.
Managing order-to-cash and procure-to-pay cycles within a single, automated system helps avoid these issues.
How to Get Your Business Started with AR/AP Accounting Automation
NetSuite is the ERP that delivers a complete accounting system. It’s perfect for companies ready to move from entry-level accounting software like QuickBooks and spreadsheets to a fully connected and automated solution. NetSuite eliminates manual data entry, and minimizes the resources needed to manage AR and AP.
>> Learn more ways NetSuite + Limebox can transform your accounting department into a well-oiled machine.