Let’s see if this sounds familiar. It’s the beginning of the month and you are scrambling around trying to figure out the answers to the following questions:

• Which customers do we need to bill?
• What should each customer be billed for?
• Do these customers have outstanding balances?
• Do we need to send an outstanding statement along with the billing?
• Do these customers have any credits that should be applied to the invoice before sending?

This dance happens every billing period if you bill monthly, quarterly, etc, or literally every day if you bill on individual customer purchases or renewals.

If this is you, don’t fret, you are in good company. This is the situation with many companies we come across, each of varying sizes and in a number of different industries. You have likely been in the throes of this madness before and thought that there has to be a better way. The good news is that there is, and in this article, we’ll lay out the options that are available to you and the steps you can take to start digging yourself out of this mess.

How the other half lives

Before we jump into some of the detail of how to fix this situation, let us paint a picture of how it could look so that you know what you are working towards.

Imagine a world where:

• Invoices are generated automatically upon completion of the sale/service
• Invoices are distributed to customers automatically
• Within the invoice or invoice email, the customer has a link to complete the payment
• Upon the customer completing payment, the entire cash transaction is cleared through your accounting system automatically
• The only time your staff is involved is when the customer pays by check or other manual methods
• Recurring/subscription-based invoices are automatically generated each period without human involvement
• Customers accounts are drafted automatically to pay invoices
  • If you have established the ability to charge the customer’s card on their behalf or via ACH, the system goes ahead and performs this action, records the cash transaction in the system, and then applies it to the invoice in question. In this instance, you have literally just taken Accounts Receivable out of the equation. The only AR you have at this point is with customers that still prefer to pay via check OR do not allow you to draft their accounts automatically. With the amount of time and effort that this process removes on your end, and with how cash flow management is improved, it may now actually be worth it to you to modify some of the terms you offer customers to incentivize them to pay you electronically and automatically draft their accounts, even if you are losing a few points to payment processors or customer discounts for going this route.

Depending on where you are currently, this may seem like a fairy tale, or for others, this may not seem like a big deal. I can tell you first-hand from clients that we’ve made this a reality for, they think it’s a big deal. With this type of automation, some of our clients have been able to double or triple the amount of transaction volume and revenue their company generates and haven’t had to hire additional resources to manage the AR within the company because their existing AR folk are now just handing the exceptions and the small number of customers that are paying via physical check.

How do we get there?

I’m sure there are many tools, platforms, and processes that can make this a reality for companies out there, and I’m certainly not saying that the options provided below are the only ones you should consider or use. However, these are the sets of tools that we’ve proven that can provide the results above for our clients, and believe they will work for you as well.

Pick a core CRM platform that offers the ability for advanced customization and automation

For us this is Salesforce.com. It is the world’s leading CRM platform and is infinitely customizable and extendable. Yes, it is one of the more expensive CRM’s out there, but when you weigh its capabilities and how much runway your company has to grow on the platform, it quite well could be the last CRM you need to implement. You can basically run your entire business on the platform. This provides business continuity and savings in the long run.

Either pick an accounting suite that utilizes your core platform or has advanced integration capabilities

Our tool of choice is Accounting Seed. It is a non-opinionated Accounting “Platform” that is native to Salesforce.com. What this means to you is that it is not purpose-built for any one industry, but has the building blocks to be molded to your specific industry and business, so that you are not stuck doing working around processes built for a different industry because you are perhaps in the Media industry but your accounting suite was purpose-built for Manufacturing.

The combination of Salesforce.com and Accounting Seed creates an extremely powerful toolset in your organization for blurring the lines between front and back-office operations and really allows you to begin to obtain the “360-degree view” of the customer that all digital transformation evangelists are focused on. You will be hard-pressed to find this elsewhere.

Cross-platform integration tools or iPaaS (integration platform as a service) tools are getting better every day. So, with these technologies, you very well may be able to scaffold together this type of automation between other CRM’s like HubSpot, Pipedrive, etc with Accounting Applications like QuickBooks and Xero. However, there are a lot more moving parts when doing this, and often times while you can trigger the creation/sending of the invoices in the other systems, you still have your information scattered in multiple systems making it much more difficult or nearly impossible to pull the related information together in reporting or use the related information to drive other automation logic.

Not having the data under one roof for reporting is not optimal, but not having the Accounting/Finance related information for use in other related customer automation is the bigger of these two limitations for integrating with an external Accounting system and can have a significant negative impact on the customer experience you are able to deliver to your customers.

Determine the conditions you’d like to use to decide when to trigger the following

Invoice Generation

This can be different for different companies, or different products within the same company. The examples below are some of the most common we see and for which we’ve assisted our clients in removing humans from the process

• Subscription-based products (fixed recurring amount)
  • Typically these will be generated at the beginning of a subscription term, whether that be monthly, quarterly, annually, etc.
  • Example: Access to SaaS software or e-learning modules
• Physical goods products
  • This can vary by type and cost of the product, but typically an invoice is generated when the product ships
  • Example: E-Commerce businesses that are selling from inventory or drop-shipping from manufacturers
• Projects/Services
  • These tend to potentially have very bespoke terms, but can be broken up into a 50/25/25 type pay arrangement where 50% is paid upfront with a deposit at the time the deal closes, along with follow-up invoices when the project/service hits certain milestones.
  • Examples: Professional services firms that execute marketing, software development, or other service-based offerings.
• Usage-based subscriptions
  • Companies that bill in minutes used, gallons used, or any other type of usage metric can use the combination of a defined billing period along with gathered information on usage for that time period to generate an invoice
  • Example: Telecom/Telematics providers that sell a combination of subscription-based products that are coupled with IoT devices and are charged by how many IoT devices are active on the subscription during the billing period

Invoice Distribution

Once we’re able to define and execute the automatic creation of invoices, we need to get them in the hands of our customers. In the past, you may have relied on someone to manually stuff envelopes and mail invoices to customers. Not anymore, well, unless that’s still a requirement for you, in which case that can be accommodated and even outsourced to a 3rd party if you wish.

However, before you go all in and turning on this automation, it’s always good to ensure that your invoice generation from the steps above are solid before you completely automate this. It’s a good rule of thumb to still have someone manually verify the invoices that are generated automatically for a billing cycle or two to ensure that all of the automation up to this point is producing accurate invoices and make any tweaks necessary to get the invoice generation dialed in before automating the sending or paying of invoices. The last thing we want is to make mistakes happen faster and with more efficiency than a human and create customer experience issues!

Once you have ensured that your automated invoice generation processes are complete and accurate, it’s time to automate the distribution of these invoices. Typically this is done via the status of the invoice. A common scenario is that invoices are created in an “In Process” status, and during the manual review period, someone is assigned to review invoices that are in the “In Process” or “Waiting for Approval” status, and upon performing the review that are graduated to “Approved”, at which point they are posted to the ledger and distributed to customers. In our new automated world, we can skip this process and automatically promote the invoices to “Posted” and trigger the sending of the invoice to the customer via email.

Invoice Payment

Invoice payment is likely the part that may take the longest to get your customers on board with paying you automatically. There are also other factors about your business that could impact how willing customers are to allow you to do this. If you are selling something that from month to month or cycle to cycle is very repetitive and the invoice amount does not vary widely, your customers are likely to get on board without much friction.

If you sell services or something with consumption-based pricing and there are drastic variances from one month to the next, you will likely be met with some hesitation to this approach due to customers wanting to control their cash flow as well as be able to review/confirm the amount prior to letting cash fly out the door.

There are several payment processes that work seamlessly with the tools we’ve mentioned above (Salesforce and Accounting Seed) that allow you to seamlessly create and execute payments on the customer’s behalf. One of our favorites is AuthVia for Salesforce. With AuthVia, once you have charged your customer’s card or performed an ACH draft the first time, the customer can select to allow you to save this payment method for use on future transactions and you can then use the stored payment method to automatically charge their account on subsequent invoices. This is a game-changer for many organizations. If done correctly, you can literally create the invoice, post it to the ledger, trigger a payment via the customer’s stored payment method, and then send the customer an invoice that reflects the payment already being made with a $0.00 balance.

Automate

Once you’ve laid out all of the logic for when and how to generate, distribute, and ultimately solicit payment for your customer invoices, it’s time to build out the automation. Having a robust platform like Salesforce and having your Accounting package directly on the Salesforce platform makes this a smaller lift than it would be otherwise.

A good approach to this automation is to start with a sample size of customers and put some sort of field or indicator on the customer account that the account is enrolled in “Automated AR” so that you can easily segment your customer accounts. This will allow you to roll your automation out on a smaller scale to de-risk the initiative and work out the kinks with a small group of customers before taking it to the masses

Another thing you should consider doing in this process is also having the invoices generated have some sort of indicator on them that clearly shows they were created by your automation. This will allow you to more easily audit and confirm the accuracy of these invoices in the early stages of testing and in general serve as a means to segment these invoices in the case you need to act upon them differently than manually generated invoices in the future.

Test, Test Test. I cannot stress this enough. Automation is great when the automation is creating accurate results. In my opinion, the only thing more painful than repetitive, manual processes, are faulty automations that automate the creation of errors at a rate that a human never could.

Build Dashboards

With any type of significant automation like this, having the system surface meaningful information about the records that are being impacted by automation is a good way to keep a finger on the pulse of how the automation is performing.

Some examples of potentially meaningful dashboard reports are:

• Manually Generated Invoices Month over Month(count and dollar amount)
• Automatically Generated Invoices Month over Month(count and dollar amount)
• Total Generated Invoices Month over Month(count and dollar amount)
• Sent Invoices Month over Month
• UnSent Invoices Month over Month
• Manual Payment Invoices with Balance Month over Month
• Automatic Payment Invoices with Balance Month over Month
• AR Aging with Manual Payment Invoices
• AR Aging with Automatic Payment Invoices
• Invoices with Failed Automation (it’s important to ensure that you have some sort of automation status on the invoice so that if the generation, distribution, or payment of the invoice has an error/issue of any type, it is marked as such and can be followed up on)

Conclusion

AR Automation brings with it many things that need to be discussed, ironed out, and ultimately may lead to some process re-engineering within your company. However, you can also see that the benefits of taking on this challenge far outweigh the challenges for most companies. The impact this automation can have on cash flow management by reducing AR aging significantly, overall cost management by allowing you to more effectively utilize your human resources, and customer experience by delivering a frictionless billing process is significant and will continue to pay dividends with each billing cycle.

If this is something that you and your organization would like to learn more about, reach out, we’d love to hear from you