Improving Cash Flow through Effective Invoice Remittance Strategies
In this post, we're cracking the IR nut wide open and revealing six best practice strategies. But before we look at what getting right looks like, we need to start by looking at what getting it wrong looks like.
What does sub-optimal invoice remittance advice (IR) look like?
Without further ado:
- Your customers are taking longer to make payments than needed, leading to cash flow shortages and knock-on effects on operations
- Human error is causing hiccups in your manual invoice matching and payment processing, leading to misapplied payments and discrepancies
- Your AR teams are frazzled from having to resolve IR issues, keeping them from other critical tasks
The 5 Invoice Remittance Tactics That Improve Cash Flow
1. Guide customers through the invoice allocation process
Need to speed up your payment process? Start providing customers with a list of all outstanding invoices and their corresponding balances so they can easily tick off the ones that apply. Providing your clients with guardrails that walk them through exactly how to allocate their payments to specific invoices eliminates the mistakes that often clog up this process.
2. Allow for flexibility in remittance forms
B2B transactions vary greatly, which is why remittance forms should cater to the diverse needs of your customers, including the option for partial payments or allocations against specific invoices. Flexibility also leads to happier customers since they can align payments with their financial needs.
3. Implement smart checks for online remittance advice
If you're using an online remittance system, incorporating smart checks can go a long way to preventing mistakes in financial reporting.
4. Automate notifications for remittance advice
Here's a software feature every Accounts Receivable (AR) management system should have: 24/7 alerts that ping your AR department seconds after a customer submits their remittance advice.
Real-time notifications allow teams to verify and process the payment promptly. That means a cascade of invoice remittance rewards like improved knowledge of the true amounts outstanding and a culling of errors in the allocation process.
PS. Look for advanced platforms like System1A that can integrate into leading ERPs. This makes the dashboard available to any department company. To know more about AR and ERP, visit our in-depth guide: Accounts Receivable Management: Beyond your Accounts ERP system.
5. Leverage Accounts Receivable (AR) software
Because invoice remittance is closely connected to cash flow, streamlining its management keeps the lights on for any B2B business - and makes them burn brighter.
But streamlining isn't just about automation - it's about creating a seamless and error-free experience for customers while ensuring the efficient allocation of funds.
AR software features that streamline invoice remittance (IR)
- Intuitive and easy for customers to interact with: Allow customers to complete their remittances on a standardized, online form with all information to aid their process being readily available.
- Guideline clarity: Customers receive clear remittance guidelines, minimizing confusion and errors
- Payment transparency: Offers real-time visibility into payment status, enhancing transparency and customer satisfaction
- Reminder System: Sends automatic reminders to past-due customers, improving collection rates and reducing bad debt
- Real-time exception reporting and notifications: Allows AR teams to keep track of all unallocated amounts that still need to be dealt with and monitor if and when customers complete the remittances requested
For more tips on automating invoice remittance, check out our in-depth guide: An AR team's guide to Invoice Remittance Advice
Still wondering if it's worth automating your IR function?
Businesswire reports in a B2B payment study that organizations that automated AR processes save 23 days on their Days Sales Outstanding (DSO).
PYMNTS reports that with AR automation, AR teams can process functions 87% faster and that 79% say it boosts team efficiency.
How does System1A optimize invoice remittance management?
We provide One Application to manage all your company's Accounts Receivable needs. No matter the size of your company.
Check out our explainer video.
Financial Information Symmetry streamlines the AR process, improves invoice remittance financial stability, and enhances customer satisfaction.
- Automation of invoice and statement distribution
- Streamlined payment tracking
- Clear communication channels for customers
- Integration with leading ERP and accounting Systems
- System1A offers detailed bulk reporting features, providing insights into the remittance process and alerting AR teams to delays or issues.
Talk to us about advanced AR automation that integrates with your existing systems… in minutes. We'd love to take you through a 20-minute demo.
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