How to automate accounts receivable

Before looking at the how of automating accounts receivable, it’s probably worth considering why you should consider automating accounts receivable. In simple terms, it’s all about cash flow and keeping income coming into your business. Collecting payments as regularly and smoothly as possible provides certainty for your business.

Accounts receivable automation enables you to plan your business knowing that accounts which are payable will be collected on time and in full. Working with GoCardless can have a huge impact on the way payments are collected by your business.        

What is ‘accounts receivable’?

In simple terms ‘accounts receivable’ refers to any money owed to your business for goods or services.

Why automate your accounts receivable?

Automation of accounts receivable ensures that invoices are prepared, sent and tracked efficiently, that any disputes are settled quickly because all relevant data is easily to hand, and that your cash cycle works to make it easy to plan weeks and even months ahead. 

Other advantages of automating accounts receivable through partnering with GoCardless include the following:

• Saving time and effort – the time and effort currently spent calculating charges, setting the dates when payment is due and actually sending invoices to customers could be much better spent working on the core activities of your business. This is particularly true if you have large numbers of customers and adjustments need to be made to invoices – the amounts purchased or the price negotiated up or down –  on a monthly basis. 

• Manageable cash flow – predicting what your cash flow is likely to be on a month-by-month or even week-by-week basis is a vital aspect of business planning, but manual predictions are never as accurate as those created by automated systems, due to the sheer volume of data an automated system can handle. Processes which can be automated include invoicing, payment notifications, reminders and emails, minimising bad debt while ensuring a steady flow of payments.

• Accessibility – most automated accounts receivable solutions offer an interactive analytical dashboard enabling you to track key performance indicators such as the average time taken to pay invoices and the effectiveness of your collection processes. 

Any switch to automated accounts receivable should involve your existing accounts department at every stage, so that the solution you choose is one your entire team is happy to work with. You should also introduce the automation gradually rather than as a one-off intervention, due to the level of training and on-boarding required.

Automation of accounts receivable through GoCardless

Working with GoCardless makes it easier to automate accounts receivable. With the authorisation of each customer, you can set the payment amount and the payment date, then plan the rest of your business around the certainty that the payment will arrive in your account on time. Our own research has highlighted the severe problems caused to UK small to medium-sized enterprises (SMEs) by late payments. One in six SME invoices remain unpaid after as many as 90 days, and the average amount owed to SMEs in the UK is £32,185. Such figures underline just how important it is that GoCardless can integrate with more than 200 partners, such as accounting software Xero, enabling you to combine automation of accounts receivable within your existing financial systems.  

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.