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Top 5 Reasons That Suppliers of Retailers Should Implement AR Automation

AR Automation for Suppliers working with Retailers

Posted on January 10, 2018 by Liang McIntosh-Yee

At one time, transactions for suppliers were fairly straightforward.

Suppliers shipped their products to retailers’ distributions centers and invoiced the retailer for their goods. Retailers would then send a payment check to the supplier along with the remittance information letting the supplier know what invoices were being paid.

Cash application and management of the accounts receivable was simple and straightforward. In recent years, the environment has changed tremendously. Retailers have eliminated their distribution centers and suppliers are shipping directly to each store. The supplier invoices each store. The store, in turn, acknowledges receipt of goods and sends the invoice to corporate headquarters for payment. Corporate then sends a single electronic (ACH) payment for all the store invoices for that month.

The advent of ACH payments has caused remittance information to be decoupled from the payments.

Now the payment information is sent to the supplier by the banks and the remittance is sent separately by the retailers, if at all. This is because some large retailers have now gone one step further and placed the burden on the supplier to come to their websites and collect the remittance information there.

The emergence of large retailers has also made invoicing for the shipment of goods much more difficult. Many retailers have placed specific requirements on how invoices need to be submitted right in their contracts. Failure to follow the requirements is at the peril of suppliers and results in deductions and chargebacks. This is another way for retailers to delay payments or increase profit margins.

For suppliers that have accounts receivable (AR) with large retailers as part of operations, there’s an easier way.

Employees no longer have to spend hours toiling over ledgers and matching remittances with payments or ensuring that invoices are being sent with the proper supporting documents. Instead, they can use the latest AR automation tools to be more efficient and do more with less.

The development of accounts receivable management systems and Robotic Process Automation (RPA) have enabled companies to take tedious manual tasks away from employees and assign them to software robots. RPA’s can be used to go to websites and retrieve the information and then extract remittance data from emails and files.

Deduction management tools help to make sure that all required supporting documents for invoices have been provided to avoid deduction and chargeback issues. Deduction management tools also ensure that all documents are readily available in a central archive that allows collection specialists to quickly resolve deduction and chargeback issues.

Here are five great reasons for suppliers to automate their AR processes.

Faster Error Recognition

Suppliers to large retailers often process a number of large payments for thousands of invoices in a given day. The thousands of invoices are due to the supplier having to make individual shipments of its goods to the many locations several times a month.

When the supplier has to extract remittance information and match the payment information manually, it’s time-consuming and there’s a lot of room for human error. As a result, suppliers may find themselves spending an inordinate amount of time correcting incorrect cash application and dealing with calls from irritated customers who notice the error on their accounts that delays payment.

Cost Savings

When the right AR solution is in place, businesses can save money that they would have otherwise been spent on manual processing. Over time, this allows businesses the luxury of operating with fewer employees and may help them eliminate positions or shift the work employees do to more critical tasks or eliminate overtime. This can result in a significant annual cost savings.

Improved Productivity

Today’s suppliers deal with a wide variety of payment types, including checks, cards, ACHs, and wires. When workers are tasked with manually processing each of those transactions, the process is both tedious and time-consuming. Automation using RPA to extract data and to perform matches frees up those employees to focus on less repetitive tasks without sacrificing the efficiency of the work.

Better Supplier Relations

In addition to processing customer payments for cash application, AR software can also help businesses with bill presentment and deduction management activities. When everything is processed in a standardized manner, accounting teams can better manage business finances, ensuring they can improve cash flow and maximize profits for a business. This also enables businesses to ensure payments are applied in a timely manner and accurately, keeping their customers happy and avoiding future shipping delays due to non-payment.

Employee Satisfaction

When employees do work they love, morale tends to be much higher. When morale is high, businesses create a work culture that’s healthy and attracts better, more qualified employees. If your employees are happy, they will be more likely to refer other people they know who are looking for jobs. All of this combines to mean that businesses will spend less time recruiting and training new employees, leaving more time to focus on growing a business.

AR Automation can help suppliers with billing, cash application, and deduction management. In addition to being able to work more efficiently, AR automation also reduces errors and lets businesses accomplish more with fewer resources, which saves money and improves employee morale over time.

If you’re interested in learning more about Centreviews AR Solution, visit our AR Automation products page.

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