How automated invoicing leads to better efficiency and control for your cash flow

In the architecture, engineering, and construction (AEC) industries, manual invoicing can be a major disruption for your business. It can slow up your overall operations, making it harder to build your cash flow.

In the architecture, engineering, and construction (AEC) industries, manual invoicing can be a major disruption for your business. It can slow up your overall operations, making it harder to build your cash flow.   

One potential way to reduce this friction is through the automation of your accounts receivable (AR) and accounts payable (AP) processes, which can help limit the time it takes to get paid and to make payments.  

If you’re still handling invoicing manually, you could be so much better off – here’s why automation is the way to go.  

Why automated AR and AP beats manual processing every time 

Many AEC firms still have manual AR and AP processes. For some, it’s an extension of the way they’ve always done things. For others, they find moving to a new process to be too intimidating. But automation can help your firm cut down on mistakes while making the entire invoicing process smoother for you, your clients, and your vendors.   

Relying on your email inbox and disparate spreadsheets to manage your invoices leaves too much to chance. It can lead to overlooked payments and delays in your Days Sales Outstanding (DSO), along with making it harder for you to finalize payments to vendors.  

When you automate your AR and AP processes, you free up your financial teams to focus less on tracking down or making payments. Plus, the price tag for using your old, manual methods can be steep – leading to projects coming to a standstill when payments going in or out are delayed.  

The real cost of manual AR/AP processes 

Manual AR/AP processes may seem like a comfortable routine, but there are plenty of reasons for you to avoid the status quo. Here's the real price your organization pays for clinging to manual processes: 

  • Tedious, labor-intensive manual tasks escalate operational costs 
  • Data entry and data management is often full of errors, potentially straining customer relationships and stalling payments 
  • Your DSO/Days in AR will be longer, impacting cash flow and financial planning 
  • You can hinder growth as resources get caught up in outstanding invoices 
  • You can get stuck upside down with your cash flow due to a lack of coordination of your incoming versus your outgoing dollars  

So, what can you do to avoid falling into the manual processing trap? Embrace automation.  

Automation tools to fuel your invoicing 

Having automated, well-defined AR processes can help you get paid faster and easier. which in turn increases cash flow. For AP, having the ability to quickly process vendor invoices while ensuring timely payments supports your bottom line.  

But how exactly does automation help you? That depends on the solution you use to process payments. Here are the features to consider in whatever AR and AP automation solution you choose: 

  • Can it speed up the invoice process for both customers and vendors? Streamlined invoicing processes for both AR and AP and planned automatic deliveries can cut down cycle durations – whether it’s money you’re receiving from payments or money going out to pay vendors.  
  • Can you accept online payments? Providing a variety of online payment options can better accommodate customer preferences and, in turn, help them make payments faster.  
  • Will it integrate with your other systems? Incorporate AR platforms with your existing enterprise resource planning (ERP) and project management tools for seamless data exchange and process collaboration. 
  • Can you leverage scanning technologies to automate the journal entries associated with sending or receiving payments? There is a lot of efficiency gains here.  

While features are critical, you’ll also want to evaluate the provider behind the solution. A solid partner will offer a robust platform, deliver superior support, and evolve with your business needs. 

Some questions to ask yourself when evaluating the right solution and partner include:  

  • What capabilities does it provide? Does the platform cover all your pivotal needs?  
  • Can it scale? Can the solution grow with your business, delivering the same value whether you're a small enterprise or a global behemoth? 
  • What kind of customer support service does it provide? If you run into any problems, will you be able to easily connect with someone for help?  

Implementing AR/AP automation 

Once you’ve settled on a solution, you’ll then need to implement it. Develop a well-defined project plan to supervise the transition and consider phased rollouts for complex systems. 

Below are the steps you’ll want to take when implementing automation into your invoicing:  

  • Set goals. Decide what success looks like for your firm. Is it a decrease in DSO, an increase in punctual payments, or simply liberating your team's time for higher-value tasks? 
  • Data clean-up and preparation. Before launching new systems, ensure your data is correct. This might mean cleaning outdated data and establishing sound data governance practices. 
  • Talk to your team. Your people are at the heart of this transformation. Give them with the knowledge to adapt to new tools and workflows effectively. 
  • Take your time and roll out in stages. Tackle one segment at a time to manage change effectively and learn from each phase before scaling up. 

How AI/ML will factor into AR/AP 

Artificial intelligence (AI) and machine learning (ML) represent the next evolution in AR/AP automation, promising even greater levels of efficiency and insight. AI/ML technologies can: 

  • Automatically categorize invoices. Reduce manual data entry with optical character recognition (OCR) to process invoices. 
  • Forecast payment behaviors. Predict when clients are likely to pay and customize follow-up strategies accordingly. 
  • Identify payment patterns. Provide analytics that point out potential cash flow obstructions and areas for growth. 

It’s this kind of next-level functionality that refines your AR and AP processes, decreasing the time it takes to close payments even further.   

Preparing for AI 

The adoption of AI/ML technology starts with gauging how ready your firm is to make that leap.  

  • Standardize your data and processes. AI thrives on consistency. Ensure your workflows are standardized and universally understood to reap maximum benefits. 
  • Organize your data. Clear categorization and storage protocols are what fuel AI algorithms. 
  • Encourage adoption at multiple levels of your organization. Encourage a culture of data-driven decision-making and continuous improvement to create an environment where AI can thrive. 
  • Stay secure. Using AI requires having sound cybersecurity principles in place to safeguard sensitive financial information. 

Automating your AR and AP processes not only saves you time and expedites invoice closure but also enhances the service you provide to your clients, strengthening your finances. Automated AR and AP is the key to getting paid – and making payments – faster, more consistently, and with less hassle.