Accounts Receivable workflow template
Maintain a healthy cash flow with timely payment reminders, streamlined payment collection, and updated financial records with Nanonets’ Accounts Receivable workflow template.
About the Accounts Receivable Workflow Template
Do you update your financial records every time you make a sale on credit? Do you have a streamlined process to capture all your receivables in one go?
If not, it’s time to change this. Automate, enhance visibility & eliminate errors in the accounts receivable process using an automated accounts receivable workflow template in minutes. Speed up accounts receivable with periodic invoicing and timely reminders. Get real-time AR reports with seamless data exchange with your accounting software. Always know where your cash flows are with the Nanonets AR workflow template.
Steps in Nanonets Accounts Receivable Workflow Template
Automatically create & send invoices once a customer purchases using 3rd party integrations. Use workflows to determine whether the purchase is recurring, one-time, credit-worthy, or risky.
Apply necessary finance charges, taxes, or early payment discounts based on your criteria. Send finance charge invoice or statement to the customer with all the details.
Update Financial Records
Sync the payment details with your accounting software like Sage, Xero, QuickBooks, NetSuite and more using seamless integrations.
Benefits of using Nanonets Accounts Receivable Workflow Template
Pending accounts receivables can have ripple effects on cash flows. Manage your accounts receivables, track your cash flow, and speed up your payments with Nanonets. With Nanonets' accounts receivable workflow template, you can
Minimize human error
Sync data to your accounting software with seamless integrations automatically. Reduce manual data entry errors to 0.
Set up automated workflows with a few clicks. Use workflow templates, customize your workflows or let our team set them up for you.
Spot Cash Bottlenecks
Get a complete view of cash flows with real-time data on your accounting software without spreadsheets or documents.
Speed up payments, approvals, and financial reporting with auto-reminders to relevant stakeholders.
Integrate, Automate, and Get Paid on Time, Always
Automate every step of the invoice-to-cash cycle with intelligent workflows. Nanonets integrates with all major accounting software to stay on top of your Accounts Receivables with insightful tracking, automated reminders, and complete visibility.
Accelerate your cashflows with AR workflows today!
Automate your accounts receivable workflows with a no-code intelligent automation platform. Optimize your business performance, save costs and boost growth with Nanonets.
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What is Accounts Receivable?
AR, also known as Accounts receivable, is the money the company receives from its clients after their services. For easy understanding, let's take an example from real life. Imagine you borrowed money from your colleague to pay for the order because you didn't have money then. This could be called Accounts receivable, as you'll pay him back later. Now back to business, account receivable is the credit given by the firm, which could range from a few days to even a year, and is the 'IOU.'
After making the same or providing the services, if the company has yet to receive the money from the customer, it is called the company's receivables. Many companies offer this service for the convenience of the customers to pay them later. For example, A crockery manufacturer delivers the cutlery to the retail store. After billing the store for the things, the payment is directly recorded into accounts receivable. And when the retail store receives the articles, it'll pay for them.
AR processes can be complicated if handled manually, so a company should have an automatic AR process. It helps the company to manage the flow of income efficiently and allows the company to grow. In addition, the payments received and those left are clearly shown in the account, so it will become easy for the employees to track the amount.
What Is the Accounts Receivable Process?
Most companies have their accounts receivable process. This helps them to manage and track the payment easily. Therefore, creating and using an automatic accounting solution to manage and track the accounts receivable process allows the company to keep the transactions running smoothly. The steps of the account receivable process are as follows:
Establishing Credit Practices
Creating a credit application procedure in the company is the first step in the accounts receivable process. Based on the reputation of any organization or individual customers, the company will decide if they will provide their goods on credit. Moreover, the company needs to establish the terms and conditions for offering credit based on customers' needs and requirements. The document clearly states the interest rates and credit conditions in detail so that no discrepancy occurs.
The next thing in the credit process includes the period for which an organization lends credit to the customer. Large companies can lend credit for longer periods, while small companies need more cash.
The next step in the accounts receivable process includes sending an invoice to the customers. An invoice is a document stating the product details, costs, date of payment, and other banking details. It could be sent immediately after sending the goods so that payment could be made as soon as possible.
Tracking Accounts Receivable
An Accounts Receivables Officer tracks the order payment. The role of an AR officer is to check the amount deposited into the bank account, feed the data into the AR system, and allocate it to an invoice. Moreover, he has to reconcile the accounts receivable ledger to assure that all the payments are correctly posted and must issue monthly statements to customers.
There is a difference between the tracking process for large and small organizations. Large organizations hire a team of AR officers who use an advanced tracking software system. This reduces the time and effort and provides accurate results. On the other hand, small organizations usually need an advanced system, so they perform the tracking process manually. This may be performed by a professional accountant or a team of them.
Accounting for Accounts Receivable
The next step involves the Collections Officer fixing the payment due date. Then they need to maintain a journal for recording the orders after organizing the data for unpaid debts. This process is used for accounting unpaid debt and identifying early payment discounts.
Why is Accounts Receivable So Important?
The standard procedure of returning the money is just a myth. People need to follow the ideal procedure, which is why the accounts receivable process becomes essential. If the payment is delayed, it could lead to the organization's downfall, and the whole cash-flow system could halt. Moreover, it could lead to a scarcity of cash to invest for further production and payment to shareholders. Thus accounts receivable procedure is essential for the smooth functioning of any organization. It shows how much cash you need to receive and the timeline to maintain a healthy cash flow.
How to Automate Accounts Receivable?
The purchasing department takes the first step in the automation process. It places the order and sends a copy of the purchase order to the accounts receivable department. Then the organization sends an invoice stating the payment and other details after receiving the order.
Invoice processing could be done manually as well as electronically. However, manual processing is an extremely time taking procedure, so it is suggested to go for automatic data processing. This helps to reduce the errors and provide accuracy, which in turn helps to run the whole can flow process smoothly.
Similar to invoice processing, invoice approval could be conducted manually and electronically. This involves matching the information with the purchase order so that the payment received accurately fits the order. Then documents are prepared about the cost, time of delivery, number of times, and other essential details.
Then comes the payment, which could be received in cash, and a cheque could be processed automatically. An accounts receivable manager must approve the payment and conduct all the formalities so that payment can be smoothly received.
It is necessary to check up with the client if he faces any issue related to the payment. It is the duty of the accounts receivable department to check whether the invoice is still in the approval process or the payment has been received.
To automate the accounts receivable process, it is essential to keep the ERP (Enterprise Resource Planning) system upgraded by installing new versions of software as required by the team to conduct the payment process smoothly.
Reporting and Analyzing
The last step in the automation process for accounts receivable is reporting the prepared sheets for orders sent and payments received by the AP department. After that, analyze the transactions and survey the department's performance so they can make changes if there's something behind them. Again, this helps to run the organization smoothly.
Tips to Improve Accounts Receivable
Maintain Detailed Consumer Details
Let's say an organization uses manual data entry; it could lead to errors affecting the billing procedure. Thus, the automatic accounts receivable system should load all the essential details, especially payment and credit terms. Automated AR process helps to maintain accuracy in regularly checking the database, informing the deadlines, and training staff to manage the details correctly so the cash flow is smooth.
Offer Positive And Negative Incentives
Incentives could do wonders for the overall cash flow procedure. It's the same as the real-life example of purchasing goods; when discounts are offered, the sales rise. In the same way, positive and negative incentives work for rejecting cash from businesses and individuals. An example of a positive incentive could be offering gift hampers if payment is received early. An example of a negative incentive could be penalizing them with extra charges if payment is delayed. This could instill some fear, and they start taking payments seriously, which could benefit your organization.
Ensure Your Credit Policies are Clear and Concise
Before lending money for any goods and services, ensure your organization has a robust set of credit policies. This is important so that the credit flow should be maintained properly. This is the duty of the finance and sales team to set credit limits and penalties if the date is extended. The staff should also schedule meetings to ensure the policies meet the changing economic conditions.
Stay in Contact with Your Clients
Many times it happens that clients may need to remember to pay for the order as this is a common human instinct. Or other times, they may have genuine reasons for not paying the bills on time. Whatever the reason may be, it could be solved with healthy communication. With the help of the accounts receivable process, this could be solved. You can send reminders, so they remember the payment or directly call them to find the solution.
Use Regular Monthly Fees Rather Than Standard Invoices
It is always advised to send monthly bills if the order is huge or there is a regular transaction between businesses. In contrast to irregular invoices, monthly bills are more productive for any organization. It helps the company regulate the cash flow, improving the production process and helping the company grow. Moreover, monthly bills mean clients can pay with Direct Debit, simplifying the whole payment procedure.
Simplify Your Invoicing Workflow
To smooth the accounts receivable cycle, it is essential to be free from any errors. Errors could range from spelling mistakes to entirely incorrect details. Thus it is advised to use invoice templates that contain a format so that you can remember what to include and what not. This, in turn, speeds up the whole accounts receivable process and helps in the smooth functioning of any organization.
Offer Payment Choices To Your Clients
An organization should offer its client payment options for timely receiving the cash. It makes them comfortable with making payments in the mode they want preceding the money timely. The patent options include cheques, cash, debit cards, credit cards, direct debit, and bank transfers. Among these options, Direct Debit is the most effective as it is a pull payment instead of a push payment. This implies that it is pre-approved, and the client does not need to conduct to ratify payment.