Automation of the process of collecting and managing Commercial Accounts Receivable is a complex procedure that, in general, consists of the following aspects.
1. Billing
2. Collection of invoices for payment
3. Accepting payments
4. Remittance processing
5. Drawing up reconciliation acts
6. Tracking and forecasting
1) Billing
Billing or advanced invoicing is the process of generating invoices for customers on a regular or ad hoc basis, depending on the type of plan the customer has chosen.
Invoicing in accounting is a step-by-step process of requesting payment from customers through invoicing.
The electronic invoicing system should potentially allow the implementation of a complex billing procedure. Automation of the invoicing system for payment will improve the efficiency of business processes in the company by reducing the time spent on managing invoicing and eliminating possible errors.
Here is what your automated billing system should provide:
- Invoice generation based on tiered pricing, late fees and local taxes;
- Delivery of invoices corresponding to specific payment terms, cycle and customer preferences;
- Sophisticated invoice generation to create individual or template invoices;
- Sending reconciliation acts online and converting them into invoices for payment;
- Individual payment plans for each client;
- Flexible invoicing for subscriptions, services, or products to make it easier for customers to pay.
2) Collection of invoices for payment
You have generated your invoices for payment, but you still need to collect and store them somewhere and then send them to your client (payer).
To do this, you need some “Infrastructure and mechanisms for collecting invoices for payment”.
Automated collection and storage of invoices (collections) eliminates the need to spend hours working with spreadsheets or browsing email.
The main tools for automating the strategy for collecting invoices for payment:
- Multi-channel notifications to remind customers about payment without making them feel like spam;
- Possibility of integration:
- with accounting systems, for example, 1C;
- with e-shop shopping carts e.g. Woocommerce, OpenCart, PrestaShop, osCommerce;
- with CRM systems, for example, AmoCRM, Bitrix24;
- Import invoices for payment in CSV format;
- Automatic registration and tracking of interactions with customers, which makes it easier to organize and find them for future use;
- Maintaining customer portals allowing for a self-service option;
- Centralized data to store all information about your invoices for payment in one place;
- Automated scoring (assessment) allows you to find out who is most likely to pay on time and in full;
- Integrated task management to track escalations and customer requests.
3) Accepting payments
Creating a flexible payment experience or user experience (User eXperience, UX) is an important aspect of automating the collection of receivables (commercial) debt. Payment portals are the cornerstone of automated payment acceptance, creating a seamless payment experience for customers and allowing you to collect payments with multiple payment methods.
The payment acceptance system can potentially (and should) support the following functionality:
- Portals for customers, where necessary, should include a white label option to provide a secure and consistent user experience or interaction experience (eng. User eXperience, UX);
- Individual payment methods should include options such as recurring (recurrent) payments, automatic payment (auto-payment), early payment discounts, and tax information;
- Embed various options for issuing invoices for payment:
- from the shopping cart of the e-shop,
- by API (butch mode),
- manually by the seller manager for MOTO payments when orders are accepted by phone or by E-mail.
See pay.diginet.md for an implementation example;
- If necessary, build in the possibility of issuing an “open invoice for payment”, when the buyer himself can issue an invoice for payment, or when the payer is unknown in advance;
- If necessary, provide the payer with the opportunity to pay in parts (partial payment);
- The cash register application should automatically link invoices and balances;
- Availability in client portals of the possibility of integration with various forms of offline payments: bank transfer (wire transfer), direct debit (deposit), credit line, etc.;
- Acceptance of various forms of online payment: bank cards (or Debit Card), POS terminal, instant payments, ACH transfers, Prepaid Debit Cards and Gift Cards;
When accepting online payments, it is important that the online seller (merchant):- followed the “Credit Card Fraud Prevention” guidelines, and
- preferably implemented a “Fraud Risk Assessment Service“, especially if there are buyers outside of Moldova
- If necessary, provide for the possibility of accepting (cash) payments at the checkout, in the office or by courier: cash payment, POS terminal, Prepaid Debit Cards or Gift Cards.
For information – payment methods available in Moldova.
4) Remittance processing
Once you’ve been paid, you still need to be able to match and track those payments, as well as change payment statuses for each of your invoice for payment. Accounts receivable automation allows you to automatically “Settling payments against invoices”, i.e. match payments with invoices for payment and balances.
The payment processing system can potentially (and should) provide the following:
- Payment processing: comparison between any payment options and invoices, as well as, prompt change of payment status for each invoice;
- Accounting for the payment option when one/single payment was made for several invoices for payment;
- If payment in installments is allowed, then accounting for all payment options made on one invoice for payment;
for example: in cash at the office when drawing up the contract, and subsequent payments, including bank transfer, online bank card and final payment to the courier upon delivery; - Customizable cash payment rules;
- Automatically detect and process money transfer notices;
- Automatically open, scan, deposit and match invoices or balances.
5) Drawing up reconciliation acts
Compiling a reconciliation act is an important aspect of the receivables collection process. An automatic reconciliation report allows you to reconcile invoices and payments made with the general ledger and show a summary of activity.
Reconciliation automation should provide:
- Ability to create custom date ranges for viewing reports;
- Summary of activities, including invoices created, payments received, and adjustments;
- Accounting for all possible options for underpayment or overpayment.
6) Tracking and forecasting
When all stages and steps have been implemented in your automated system for recording and collecting commercial receivables, you should be able to track each step of the process and predict future activity.
Future implementations of AI for cash forecasting, as well as installment plan information and historical payment behavior, may be envisaged to give you an enhanced understanding of payment flows and trends.
