14 Finance Leaders Share The Latest Trends In Accounts Receivable
A solid accounts receivable process ensures steady cash flow to your business, which makes it…
A solid accounts receivable process ensures steady cash flow to your business, which makes it an integral part of your overall financial strategy. Modern technology has made it easier than ever for businesses to stay on top of their AR and promptly collect payments from customers and clients. Companies are also considering ways to alleviate the financial stress and difficulty their customers may be facing.
From all-in-one accounting and invoicing software to automatic follow-ups on late payments, there are countless ways to leverage technology for streamlining accounts receivable. There are also some smart business tactics to help you better serve customers, generate consistent revenue and keep the money rolling in. Below, 14 members of Forbes Finance Council share new and upcoming trends they’ve observed in the AR collections space and how businesses can take advantage of them.
1. Added Convenience For Customers
How easy are you making it for your customers to pay you? Automation of the collection process for accounts receivable is a highly effective way of increasing positive cash flow. If you answer “no” to either of the following questions, you may need to modernize your accounts receivable: Can your customers pay their bill directly through the invoice you send them? Can they pay via credit card and/or automated clearing house? – Joseph Orseno, Tiltify
2. Contactless Transactions
Contactless transactions had already been widely adopted before the pandemic, and safety concerns accelerated their growth. Moving forward, I would expect to see more businesses expand their contactless transaction capabilities—and enable customers to use preferred payment methods—by accepting digital and mobile payments. – Jenn Flynn, Small Business Bank at Capital One
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3. A Focus On Cash Flow Generation
Some of the best companies have found ways to turn the negative cash flow cycle of accounts receivable into a positive cash flow. Offer your customers discounts with a deposit or even require a deposit. Sell at a lower price than your competition, and focus on cash flow generation. – Kyle Cerminara, Fundamental Global®
4. Automated AR Processes
Automating the AR process is a major trend in AR collections. Automating the AR process significantly improves positive cash flow. Automated software tools improve accuracy and substantially reduce late payments. They free up personnel to handle the more complex tasks associated with collections by significantly reducing the number of hours required in the AR process. – Jared Weitz, United Capital Source Inc.
5. Frequent Unpaid Invoice Notices
To get a better handle on accounts receivable collections, business owners need to automate the process as much as possible. The technology is already here, and since the trend is automatization, clients don’t mind the constant reminders that they have an unpaid invoice, even if it’s not due yet. Make sure your AR system sends constant notices so your clients are always aware of unpaid invoices. – Vlad Rusz, Centaur Digital Corp
6. Enhanced Cybersecurity
Cybersecurity is a critical path item due to the continued trend of automated invoicing and collections. Small to mid-sized organizations that lack in-house expertise will need to engage a consultant to limit exposure risk for their tenant information and electronic payments. Having barriers that prevent hackers from hijacking your cash or information is becoming ever more important. – Katherine Jackson, Bayer Properties, LLC
7. AI-Generated Cash Flow Forecasts
A trend I’ve noticed (and am developing) is AI-generated cash flow forecasts. Before AI, small businesses could take weeks to predict future cash flow. Using advanced tools, owners and accountants can automatically generate rolling forecasts using accounting data and simultaneously access powerful scenario-planning tools. These tools can show an early warning for cash gaps and encourage smarter choices. – Nick Chandi, ForwardAI
8. Automated Alerts And Reports
The most important factor in AR is aging. Too many small-business owners are unaware of how much money is aging. Most finance apps will generate automated alerts for this sort of thing. Configure your finance app to send you a weekly email report about how much money you’re owed that’s outstanding. This is really simple, but it works. – Todd Sixt, Strait & Sound Wealth Management LLC
9. Leveraging The Flexibility Of ‘Cash Apps’
We recently added the PayPal feature “Pay in 4” to our website purchases. This allows the end user to either pay in full at checkout or pay in four installments through their agreement with the payment vehicle. By accepting various “cash apps,” we provide our end users with the ability to own the decision of how to fund their purchases without having to change our business model. – Cynthia Hemingway, Fourlane, Inc.
10. AR Platforms Linked To An ERP System
AR platforms such as Gaviti with links to an ERP system are the latest trend. Details can be pulled from the ERP system, and custom dunning letters can be assigned and sent on a schedule to AR accounts based on past historical trends and customer status. Just as a CRM can help pre-sales, automation can help manage the AR collections side to improve your cash flow with faster AR collections. – Dave Sackett, Visibility Corporation
11. Introduction Of New AR-Focused Apps
Just as bill.com and others launched applications-focused vendors, companies such as Biller Genie are using that same model for accounts receivable and automated collections. The key trends are alerts, integrations with accounting packages to pull and push data, and various seamless payment options for the customer. Recently, Bill.com and Expensify added AR to their apps to stay relevant. – Kurt Kunselman, AccountingSuite™
12. AR Credit Line Options
There are some really good, low-cost AR credit line options available today, as well as automated billing options that can email a link to your customers to pay you via ACH or credit card. They also follow up automatically if the bill is unpaid. – Joe Camberato, National Business Capital
13. Debt Forgiveness
There is a trend in the AR space where you get large press for forgiving or helping at-risk debtors with their debt load. With the current environment of quick news cycles and social media power, along with a more progressive political and social environment, debt forgiveness for at-risk and marginalized lenders goes a long way toward backing up a company’s social justice mission. – Aaron Spool, Eventus Advisory Group, LLC
14. Incentive Programs For Accounting Teams
I believe in incentivizing the accounting team to become creative in AR collections. Many business owners allow these accounts to drag, making them harder to collect. Likewise, small-business owners are often very poor performers when it comes to AR. Therefore, creating incentive programs such as bonus programs can help mitigate AR issues. – Justin Goodbread, Heritage Investors