Not All AR Automation Tools are Created Equal
Jul 30, 2024
In the dynamic world of e-commerce and consumer packaged goods (CPG), staying ahead of the competition requires more than just a strong product lineup. It demands efficiency, speed, and the ability to adapt to changing market conditions rapidly. Especially relevant for brands who are expanding their wholesale presence, one of the most powerful ways to achieve this is through the integration of Accounts Receivable (AR) Automation tools that are specifically designed for the unique needs of e-commerce and CPG brands.
The Current Landscape of AR Automation and B2B Payments
Brands are rapidly adopting AI-powered tools to help with manual tasks. AR Automation is no different, with many tools promising to streamline operations, enhance cash flow, and reduce manual effort. However, not all tools are created equal. For e-commerce and CPG brands, the key lies in choosing AR Automation tools that are tightly integrated within their existing ecosystem.
Seamless Integration with Sales Channels
Speed and Efficiency
One of the primary advantages of embedding AR Automation tools within the commerce landscape is the significant increase in speed and efficiency. When these tools are directly integrated with sales channels, real-time data synchronization becomes possible. This means immediate invoicing and payment tracking can occur as soon as a sale is made or based on any event you'd like (ie. once an order is fulfilled).
For instance, Upsteer can automatically sync with Shopify to generate invoices instantly upon order confirmation. This reduces the days sales outstanding (DSO) and leads to faster cash flow cycles, which are critical for maintaining liquidity in a competitive market. This also allows invoices to be created with all relevant information like tracking numbers.
From Order to Cash
In addition to traditional accounts receivable functions, an integrated AR Automation tool can enhance the order management process for e-commerce and CPG brands. By extending capabilities to include pre-season order placement (ie. determine when an order should be pushed to Shopify), wholesale subscription orders, and general order intake, Upsteer provides a comprehensive solution that significantly enhances efficiency.
Seamless Integration with Accounting Platforms / ERPs
Optimize your Financial Reporting
Integrating AR automation tools with accounting platforms and ERPs ensures that e-commerce and CPG brands maintain an accurate financial picture by providing real-time updates to financial records. This accuracy is crucial for accrual-based accounting, where revenues and expenses are recorded when they are earned or incurred, rather than when cash is exchanged. Automated systems minimize manual data entry and errors, allowing for precise tracking of financial transactions.
With all financial activities consolidated in one platform, brands can easily monitor their financial metrics and make informed decisions. Real-time reporting aids in accurate cash flow forecasting and budget management, which are essential for effective accrual accounting.
Leveraging AI for Commerce-Specific Use Cases
Overview
AR Automation tools equipped with AI capabilities offer a plethora of benefits tailored to the commerce landscape. Automated invoice generation based on sales data, automated cash application, intelligent payment reminders, and follow-ups are just a few examples of how AI can streamline AR processes.
Specific Triggers
In the world of e-commerce and CPG, specific triggers such as shipment confirmations and delivery statuses can be used to automate invoicing and payment requests. This reduces the need for manual intervention and increases accuracy and consistency.
Automated Cash Application
By leveraging machine learning algorithms, tools like Upsteer can automatically match incoming payments to the correct invoices with high accuracy, significantly reducing the time spent on reconciliation tasks. This automation minimizes human error and provides real-time visibility into cash flow, enabling companies to maintain an accurate picture of their financial health.
Email Dunning
Automating the follow-up communications based on customer behavior and payment patterns is crucial for brands. Platforms that leverage AI can analyze previous interactions and tailor dunning messages to improve response rates, sending reminders at the perfect times to encourage prompt payment. Additionally, tools can prioritize accounts based on factors such as payment history and outstanding balance, allowing businesses to focus their efforts on the most critical cases.
Proactive Alerts
AI-powered AR Automation tools can also provide proactive alerts that enhance customer relationship management. For instance, Upsteer analyzes purchasing patterns to notify businesses when it's time to remind customers to reorder product. Additionally, by evaluating a customer’s payment history and current outstanding invoices, Upsteer is able to alert businesses when a customer may be at risk of delaying payment, allowing teams to proactively engage with those customers and mitigate potential cash flow issues.
Conclusion
In the fast-paced world of e-commerce and CPG, integrating AR Automation tools within your ecosystem is not just a luxury; it’s a necessity. By adopting these tools, businesses can enjoy streamlined operations, improved cash flow, and a competitive edge in the market.
If you’re an e-commerce or CPG brand looking to enhance wholesale efficiency and drive growth, consider integrating AR Automation tools that are specifically designed for brands.
