It’s almost a cliche to say that the modern workplace is one where the location of the business matters less than the ideas that hold it together. Events at beginning of the 2020s have accelerated the trend towards decentralized workplaces, making it critical that all business systems keep up.
Accounts receivable monitoring systems (ARMS) are just one of the many types of business systems that have changed significantly over the past few generations and are being pressured to change again in the dawn of the new decade. While online ARMS are nothing new, the emergence of democratized mobile internet technology as the primary way Filipinos go online has made it necessary to reexamine the potential of such systems, especially when integrated into enterprise resource planning (ERP) software or marketing automation suites.
Here are some ways Filipino businesses have already used newer ARMS solutions to take their organization to the next level:
1.) Make cash flow more predictable
Updated ARMS software can use past data to generate a picture of when certain customers are more likely to pay. More sophisticated systems can even use predictive modeling for a more accurate forecast. What this means is that the organization can have a better idea of the risks involved in using up its cash reserves, allowing it more flexibility in its day-to-day operations.
2.) Improved cash flow
Implementing a new accounts receivable system will typically give an organization’s cash flow a slight boost, due to the reduced manpower requirements for collections, the reduced time needed for collections and A/R paperwork and other minutiae, and the more efficient allocation of resources for collections, including transportation and time spent following up on each receivables account. While savings in each area may be small, taken together they can make a significant impact on the organization’s operating costs.
3.) Insights into customer behavior
Having an ARMS integrated into an ERP or marketing automation software can enable the business to gather data on customer behavior, particularly on the receivables accounts. Having data on customer payment behavior can be important from a sales, marketing, and operations perspective and help give managers an idea of the approaches they need to take when accepting staggered payments or credit.
This may be critical for businesses that rely on customers who are less likely to pay in full. Car dealerships, insurance, real estate businesses, and appliance sellers, for instance, will tend to offer installments, credit, lay-aways, and other similar payment methods. These types of businesses will, naturally, stand to benefit more from upgrading their ARMS.
4.) More efficient collections
A new accounts receivable monitoring system can make it possible for a smaller team to collect receivables more efficiently. In other words, you can keep your collections team smaller and use the ARMS to help them collect more receivables more consistently.
When integrated with marketing automation software, you can also use your ARMS to send regular SMS and email alerts to both your collection team and customers, improving collection rates and saving your team the trouble of sending reminder emails or making phone calls. Not only will an ARMS save you more time when you collect, but you can also expect to collect more each period as well.
5.) Fewer errors, returns, and defaults
If you set up your ARMS to send customers reminders on their payments, you can reasonably expect the incidences of non-payment and defaults to go down. While some instances of defaults and non-payment are to be expected, an ARMS linked to your customer service and marketing systems can help reduce the incidences that are a simple result of the customer forgetting about their obligations.
An ARMS can also help sort out collection issues from your end as well. As your business grows, it will often become difficult to keep on top of all your customers and their payment schedules. Without an updated ARMS, this becomes more and more difficult to do effectively and can result in errors from your end and resulting losses. With an ARMS, you can nip these tracking issues in the bud before they ever become problematic.
6.) Remote functionality
As with other business systems trends, more and more Filipino businesses are moving away from the onsite hosting of their accounts receivable monitoring systems in favor of cloud-hosted equivalents. In an era where teams can be based anywhere on the planet and where work-from-home benefits are the latest benefit dangled in front of talented employees and applicants, the ability to manage receivables from a secure cloud server is no small thing.
Cloud connectivity offers organizations plenty of flexibility in how they manage their teams. Plus, because these systems are managed by dedicated systems engineers rather than by onsite IT people who are probably tasked with other pressing matters, cloud systems typically offer much less downtime compared to average onsite equivalents.
7.) Better remarketing
As mentioned earlier, an ARMS can provide insights into the behavior of customers. This means that, when implemented correctly, an ARMS will allow you to sell products to existing customers that are likely to appeal to them directly. Based on their payment behavior, you can put customers in different tiers and use different sales and marketing strategies to appeal to each segment. This can allow you to make better use of your marketing budget, reducing the cost per sale.
Summary
Contrary to what you might expect, an accounts receivable management system is not just for the benefit of the collections team. Rather, it can perform a number of vital functions in your business by passively reducing inefficiency in your collections system whilst simultaneously giving your sales, marketing, and management teams a potent tool for reaching out to customers and increasing overall sales. In short, upgrading your ARMS can be just the ticket to your organization’s immediate profitability as well as its long-term growth.
