Debtor management or accounts receivable seems fairly simple: money arrives, you note that the customer has paid and book the money into the company bank account. A piece of cake! But those who know the process a little better, know that accounts receivable, especially in the automotive industry, is rarely that simple. Of course, money comes in, but finding out from whom and for which invoice can be quite difficult.
Why should you, as an automotive company, speed up your process?
Speeding up the accounts receivable process can save a lot of time and money. Not a superfluous luxury, because major changes are taking place in the automotive industry. For example, the shift from owning to using is causing many more people to stop buying cars and to start leasing or using shared cars.
For example, in 2020, one in four consumers was planning to lease a car and half of them were thinking about private leasing. This development means that car (leasing) companies deal more often with monthly payments that need to be processed. Car suppliers will also supply more cars to lease companies. In short: the money flows are changing, and the number of payments will increase. This is already happening: in the last 5 years, the private lease car fleet has increased more than 5 times: from 33,000 at the end of 2015 to almost 215,000 at the end of 2020.
If you use a manual system, you will therefore have to deal with an even larger quantity of data and do everything yourself: correct old information, enter new data, communicate with customers and resolve complaints.
Download the whitepaper Financial stability within automotive
5 top tips for speeding up your accounts receivable process
So how can you speed up your accounts receivable process and improve your cash flow at the same time? Here are our 4 top tips:
1. Stop using spreadsheets
Spreadsheets are powerful and effective tools when used for the right purpose – and they’re also convenient because you usually already have the software on your computer. Unfortunately, they are less suitable for the extensive and often complex information that is collected and stored during the accounts receivable process. Spreadsheets are prone to errors, are difficult to update and can become cluttered if they contain too much information.
2. Automate
Managing accounts receivable can be a monotonous process with a lot of manual work, such as entering data and searching for information. When everything is done manually, it’s a slow and difficult process where mistakes can easily creep in. The good news is that computers are great at handling some of the process much faster and more accurately than a human. By automating accounts receivable, you improve your own data and payments are processed faster. This leaves time to provide better service to customers.
3. Invoice electronically
Sending invoices by e-mail offers a number of advantages. Customers receive their invoices very quickly and you save the costs of printing and sending the invoices. In addition, e-invoicing contributes to improving and speeding up the total accounts receivable process. Because everything is done by computer, nothing goes wrong with the accuracy of the data, and you immediately meet important compliance standards. Accounts can be allocated more quickly (account reconciliation) because the customer can send a statement (remittance advice) with the electronic transfer with the paid invoices, planned payments and possible debit, credit and modified entries.
4. Embrace blockchain
Blockchain could revolutionise payments. Important advantages of blockchain technology are improved data security and easier international and corporate payments. In particular, blockchain technology makes payments safer thanks to decentralised security functions and built-in safeguards against cybercrime. This is also important in the automotive sector, which is potentially more vulnerable to money laundering than other industries.
5. Analyse results
Regular reviews of the accounts receivable process help to prevent errors and identify risks before they become problems. Reporting is often regarded as time-consuming only if you don’t have the right tools for it.
For more information on shifting your accounts receivable into the right gear, download the Whitepaper | Financial stability within automotive.
