A Complete Guide to Account Receivable Process

When running a business, the most important factors are payment processes, financial checks, and balances along with other factors. It is underpinned by the account receivable process, accounts receivable department, and the steps included in the process.

Having an automated system for running the process of accounts receivable process will keep all the parts in congruence. The process of accounts receivable is quite simple and you can easily manage it with automated billing management software.

In this article, we are going to look at the account receivable process and the way SubscriptionFlow will help you in automating your business.

Accounts Receivable

Accounts receivable or A/R is the payment that clients have to pay for the service or product they use. Merchants need to send the bill of the incurred payments to the customers/clients while relying on the invoices clearly so both merchant and client know the segmentation of total charges.

For example, in various food apps, on the checkout page, there are proper segments to mention separately about the total price. Such as you will see the price for tax and delivery is separately written along with the food price.

The accounts receivable enables the clients or customers to pay after they get the product or service. Accounts receivable is the amount that customers have to pay and A/R is also known as IOU. IOU stands for I Owe You and here I is for customers.

Many businesses that work on account receivables need to maintain them seamlessly so that there is no revenue loss and loss of data. SubscriptionFlow automates the accounts receivable process in billing by regulating a four-step process using AI technology.

How to Process Accounts Receivable?

The process for accounts receivable can vary from business to business, however, here are the main four steps that are core of it. Let’s get into it.

Establish A Credit Application Process

Many businesses need to determine the credit card’s worthiness to analyze if the customers would be able to pay for the services or products or not. Many merchants prefer to deal with B2B rather than B2C and this mostly is dependent on the amount of card worthiness. To execute this, you need to consider the following points for implementation:

Determine the amount of credit you want to extend to customers
Establish the payment period
Decide on whether you want to offer early payment discounts, and if so the discount percentage
Determine late payment penalty fees
Identify other conditions that are specific to your business or industry

During the first process, you can set the payment guidelines and payment terms depending on the client. This will help in putting the foundation for the accounts receivable and secure payment terms. If you manage a small business, then you might want to set shorter periods for payment fulfillment for a smooth cash flow and turnarounds. However, enterprises can set a longer time duration for payment fulfillment. These all factors will out the basis for the accounts receivable smooth process.

Invoicing Your Customer

Once you have established the credit card application process, it’s time to send invoices to the customers. It must be kept in mind that the invoices for every customer may vary in information, due date, and other payment options.

For accounts receivable for the customer, it is important to break down the payment relay in which customers can see the total charges and what constitutes those charges.

For keeping the smooth flow of cash and not missing out on the due date it is highly recommended to use software for automating invoices. When invoices are automated, the burden is on the department of accounts receivable and the finance team. A billing management system like SubscriptionFlow can help you in automating the invoices along with customizing them based on the customer’s details and preferences.

With a billing management system, you can send the invoices pre-scheduled, track the progress of invoices, and send reminders to the clients to pay the bill ASAP.

SubscriptionFlow is a subscription billing management system that provides the feature of automated billing and invoicing will make the payment processes faster and quicker by 2 times. With our billing and invoicing management feature, you can customize the invoices in local currency, and get invoices in different languages such as Arabic, German, and so on.

Track Accounts Receivable

You cannot recline back once the invoice has been sent, rather it requires payment follow-up and invoice tracking so that you have the record of which amount has been paid or overdue. Therefore, it is important to track the invoices. Now, most businesses and merchants use digital methods for tracking and receiving payments, and to keep the track of invoices, it is better if you do the same by implementing invoice tracking technology using the billing system for the A/R process.

Tracking accounts receivable is not only about getting paid for your service rather other payment transactions can be tracked such as refunds, chargebacks, credits, and dunning using cloud-based billing software.

In case, you need to refund some amount to the customer than with the help of software you will have a track and a thorough database of the client.

Give your customers transparency using SubscriptionFlow.

Payment Reconciliation for Paid and Unpaid Invoices

Payment reconciliation and collection database are closely interlinked together as they give you the database on the paid and unpaid invoices.

For payment reconciliation, when a customer pays the bill for the service or product, you will need to check both ends – the customer end and the merchant end to confirm the payment transaction.

For late payments, you can implement different strategies such as late payment fees so that customers pay on time. Even for the overdue or unpaid invoices, the payment reconciliation system will help you to maintain the collection database of the payments and you will have a clear report of the customers who have paid the bills and vice versa.

With SubscriptionFlow, you can leverage our payment reconciliation feature to ensure payment processing from both ends.

Schedule a Demo and Automate Accounts Receivable Process with SubscriptionFlow

If you are looking for a billing management system that can automate the accounts receivable process for you using the accounting software integrated with the billing system directly then SubscriptionFlow must be your choice.

Powered by Artificial Intelligence, enables flexibility and customization for both merchants and customers, and you can unlock much more revenue with our software.

From maintaining creditworthiness to tracking invoices, our software does it all.

Schedule a demo now!