Automation advice for accounts receivables

The future is bright for those ready to adapt and stay agile in an age of technological innovation, reports Xero in its 2016 State of Accounts Report – a survey of 2,000 UK accountants and small-to-medium business owners.

Chartered Accountant and co-founder of ezyCollect Raj Kuckreja says accounts receivables have joined the movement.

“Last year, ASIC reported that one of the leading causes of business failure is inadequate cash flow. Automating collections is one way to improve cash flow while freeing up time for business owners to get on with other things that grow their business,” Mr Kuckreja says.

Three years after teaming up with an old university friend and business owner who had experienced late payments problems in his own wholesale business, Mr Kuckreja’s automation solution is now displacing labour-intensive tasks in accounts receivables.

Advice for accounts receivables functions that are prime targets for automation:

1. Follow-up reminders

“Accounting and bookkeeping firms have highly skilled people spending their time sending hundreds of reminder emails per month. Their Outlook calendars are bursting with to-do lists that don’t make use of their skill set,” he says.

Automating follow-up reminders puts the chasing on autopilot until a collection is made. A streamlined system will also prompt users to reach their overdue debtors in a number of ways including email, SMS, post and fax.

“You’d be surprised how effective faxed reminders are in some industries because people pay attention to that thing in the corner that suddenly starts beeping.”

2. Mapping and tracking of ageing debtors

“If you can’t see your ageing debtors because they’re buried in your books, you could miss tell-tale signs your customer has a cash flow problem,” Mr Kuckreja says.

“You need to keep a close eye on indicators in your aged receivables so they don’t spiral out of control and you can take action before it’s too late.”

Software is allowing users to get a quick visual of their accounts receivables and users can get indicators like what percentage of their receivables are overdue, who owes the most money, where the oldest debts are, who’s over 30, 60, 90 days overdue, etc.

“Number crunching that used to take hours now takes seconds.”

3. Job allocation

“In an accounting firm, there will be a number of client tasks that need to be allocated to staff. That can mean a lot of back and forth about who’s doing what, and when, and that can lead to confusion,” Mr Kuckreja advises.

Automation software can record the complete history of collections communications, even down to details like the date and time a customer opened a reminder email. And with systematic allocation of tasks to team members, such as phone calls to be made, automation is providing a clear course of action based on a well-documented history.

4. Collecting money online

“If a debtor still needs to dig out a cheque book and stamp in order to settle their invoice, expect delayed payment,” Mr Kuckreja says.

The 22 million mobile handset subscribers in Australia (ABS, 8153.0 – Internet Activity, Australia, June 2016) are a clear indicator of how Australians are choosing to communicate.

Businesses not offering online payments aren’t acknowledging the on-the-go nature of people who need to interact immediately, anytime, anywhere.

Xero’s survey found that business owners still overwhelmingly view accountants as their most trusted advisers, above management consultants, growth experts and lawyers.

In the automation age, will it be the accountants who ride the cloud that can deliver the blue sky thinking their clients deserve?

By Mihiri Udabage, freelance writer