5 Signs Your Accounts Receivable Process Needs an Upgrade (Detail Common Bottlenecks and Inefficiencies)

Maintaining a healthy cash flow is crucial for the success of any business. Yet, an inefficient accounts receivable (AR) process can create serious cash flow bottlenecks, damage client relationships, and drain valuable resources.

How do you know if it's time for a serious AR overhaul? Here are 5 telltale signs and the industry statistics that highlight why you shouldn't ignore them:

1. Manual Processes Reign Supreme

If your team still heavily relies on spreadsheets, manual invoice creation, and time-consuming email follow-ups, your process is ripe for errors and delays. These manual methods are not only tedious but also hinder your team's productivity.

• Industry Fact: A recent survey by PYMNTS revealed that businesses who use manual AR processes take 67% longer to follow up on overdue payments, compared to firms that rely on medium to high levels of automation for collecting receivables. 

2. Days Sales Outstanding (DSO) is Increasing

A steadily climbing DSO indicates a slowdown in your collections. This means customers are taking longer to pay invoices, directly impacting your cash flow and working capital.

• Industry Fact: The average Days Sales Outstanding (DSO) across all industries is 61.2 days (Source: AR Monitor 2023 Industry AR Management Benchmarking Report. Higher DSOs are often seen in industries like healthcare and professional services.

3. You Lack Real-Time Visibility

Without easy access to real-time data on outstanding invoices, aging reports, and customer payment patterns, it's difficult to proactively manage your receivables. A lack of visibility leaves you reacting to issues instead of preventing them.

• Industry Fact: According to multiple studies done in this space, businesses without real-time AR visibility risk making uninformed financial decisions that jeopardize growth.

4. Client Communication is Strained

Impersonal payment reminders and a reactive approach to collections can strain customer relationships. A lack of personalization and clear communication often leads to further delays and disputes.

• Industry Fact: Studies like this one by ResearchGate show that personalized communication significantly improves customer engagement levels and has the power to invoke positive emotions.

5. Your Growth Feels Stifled

An outdated AR process can't easily scale to meet the demands of a growing business. If administrative tasks and firefighting overdue payments are consuming valuable resources, it hinders your ability to focus on strategic expansion.

The Solution: Invest in AR Automation

If these signs resonate with your business, it's time to upgrade your AR process. Solutions like TurboAR streamline and automate the core functions of your receivables:

• Automated invoice creation & delivery
• Strategic payment reminders (with customizable schedules)
• Secure online payment options
• Real-time dashboards for AR insights
• Tools to personalize client communication

By optimizing these areas, you'll reduce errors, accelerate cash collection, improve visibility into your cash flow, and create positive customer experiences.

Don't allow outdated AR processes to sabotage your business growth. Take control, improve your cash flow, and invest in a solution that empowers your team.

Ready to learn how TurboAR can revolutionize your accounts receivable? Get in touch with us for a short 20 minute demo.