All About AR & AP Management
In terms of business accounting, Accounts Receivable (AR) is the current asset account - the amount that the company is due by its customers. Accounts Payable (AP) is the current liability of a company - the amount owed to its suppliers.
With up to 30% of SMBs in North America facing problems with cash flow management, the need for advanced AR and AP management tools is essential. Some of the risks of poor AR and AP management are:
- Inability to pay staff on time
- Difficulty calculating true net profit and loss
- Legal and financial liabilities
- Invoice fraud exposure
- Faulty forecasts
Read on to find how automation for AR and AP helps to improve productivity, accuracy and accountability.
By creating accounts payable automation, you can eliminate tedious manual tasks and improve visibility, accuracy and accessibility of payment records.
Here are the main features of a top invoicing software provider called Tipalti that helps in AP automation, as covered in our Tiplati review:
- Invoice Credibility Check: Businesses can conduct PO matching, data capture and audit-trails to ensure accuracy and compliance of bills to prevent invoice fraud.
- Tax Automation for Domestic and Overseas clients: With Tipalti AP automation software, you can automate tax calculations based on KPMG-certified and FATCA-compliant tax modules, as well as regular OFAC screening for international suppliers.
- AP reporting: By tracking performance and reporting it back to you, accounts payable software from Tipalti saves time and allows you to see an accurate picture of expenses at all times.
- Bulk Payments: Speed up the process by 25% and reduce workload up to 80% by making payments in bulk.
Like AP automation, accounts receivable processes can be automated for convenience and accuracy.
Here are some of the benefits, as offered by one of the leading invoicing software providers, FreshBooks.
- Streamlining The AR Processes: Capture invoices and share AR files on the platform to increase transparency and accessibility.
- Integration: FreshBooks offers three integrations, including Fundbox, which is excellent for collecting advance on unpaid invoices.
- Accounts Receivable Reconciliation: Known for its accounts receivable aging reports, this service provider estimates outstanding invoices by the date issued.
- AR Workflow Customization: Create automated invoice processing with terms and reminders that you can use to collect due payments promptly.
- Online Payments Support: Clients can pay via Stripe or other methods, with ease.
- Time Tracking: Keep a tab on the total hours you worked, using their billable time tracking software to accurately and automatically invoice customers.
- Mobile Invoice Automation App: FreshBooks keeps AR up-to-date and accessible so that you can manage receivable billing tasks on the go.
Benefits of AR & AP Automation
Adopting automation for accounting can make it a seamless process, therefore saving time and resources for small businesses and freelancers. It can also upgrade your business processes by tackling the challenges of working remotely.
Here are the benefits for small and medium businesses:
- Save Time & Dime: By automating repetitive tasks, you remove extra work while using resources where they are truly needed.
- Error Management: Elimination of manual errors by improving accuracy of payment records.
- Enhancing Customer & Supplier Relationships: You can upgrade your rapport with clients and vendors by paying, and getting paid promptly via accounting automation.
- Avoid Penalties: Automation keeps things up to date so as to prevent late fees and the like.
- Productivity: Boost your accounting productivity and use them where they are needed, overall productivity is improved
- Fraud Prevention: Accurate accounting helps you prevent fraud and maintain a spotless record for financing audits.
While good invoicing software with pre-built automatic features for incoming and outgoing payments is excellent to assess the overall health of your finances, expense tracking itself is highly important too. Many software providers will give you a handy mechanism to take a quick photo of receipts to track expenses, and store them conveniently.
Investing in automation for AR and AP allows the software to create inferences from your outgoing expenses, and this is particularly helpful as it can generate insightful reports for smart cash flow management.
Adopting technological advancements in accounting helps businesses and freelancers keep abreast of the challenges that arise every now and then. Switching to automated accounting can help you manage payment transactions while keeping accounting processes accurate.
AP automation software on Tipalti streamlines your debts and liabilities in addition to other benefits outlined in our Tipalti review. For AR automation, FreshBooks can bill your time to the second, besides generating receivable aging reports. Read our review here to learn more.