How to Improve Business Cash Flow with Automated Receivables
Automated receivables help businesses streamline incoming payments, improve cash flow visibility and reduce manual processing so funds are available sooner.
What are automated receivables for businesses
At a bank level, automated receivables focus on how payments are received and processed, and not how invoices are created or sent. This is an important distinction as some businesses use accounting or enterprise software to automate invoicing and collections, while bank-based receivables automation focuses on payment methods, settlement timing, reporting and cash availability.
In practice, automated receivables will typically include electronic payments, digitized check processing, faster deposits and structured reporting that reduces overall manual effort. The primary goal with automated receivables is to make incoming payments more predictable, easier to manage and available sooner for business use.
Since businesses accept payments through many different channels, automated receivables are not a plug and play solution that works the same for every business. A well-designed receivables strategy will align payment tools to customers' payment preference, whether that is electronically, by card, by check or with cash.
Common receivables challenges that hurt cash flow
Many issues surrounding cash flow and cash flow management for businesses stem from inefficiencies in the receivables process. Common challenges will typically include:
- Slow payment processing that delays when funds become available, in turn delaying the ability to use the funds for business purposes.
- Manual handling of checks and deposits, which increases the overall float labor costs.
- Limited visibility into incoming payments, making cash forecasting difficult and potentially hindering the ability to make quick decisions.
- Errors in posting or tracking payments, leading to timing delays and rework.
- Time spent reconciling payments across multiple systems or locations that add to labor costs and time.
Overall, these challenges can create gaps between when a sale is made and when cash is available to support payroll, inventory, vendor payments or growth initiatives. Over time, these inefficient receivables processes can add up and strain working capital or distract teams from higher-value activities.
How automated receivables improve cash flow management
Automated receivables help businesses address these challenges by improving the speed, accuracy and visibility of incoming payments. Some of the primary ways that automated receivables help improve cash flow for both large and small businesses include:
Faster access to funds: Electronic and digitized payment processing can reduce delays caused by mail float, physical deposits or manual batching. Faster settlement and extended deposit cutoff times can improve cash availability and reduce overall idle funds.
Greater visibility and control: Automated receivables often include reporting that shows when payments are received, how they were processed and when the funds are available for access. This visibility supports more accurate cash flow forecasting and planning, ultimately providing greater control.
Reduced administrative effort: By minimizing manual steps such as data entry, physical deposits and paper handling, receivables automation helps reduce errors and frees up staff to focus on running the business instead of chasing payments.
More predictable cash flow: When payments are processed more consistently and efficiently, businesses can better anticipate incoming cash and manage expenses with confidence.
Common automated receivables solutions that support cash flow
There are a few different receivables tools typically used to support automation in different ways. Determining the right mix for your business depends on how customers pay and the volume of transactions.
ACH receivables
ACH receivables allow businesses to receive electronic payments directly into their accounts. These payments streamline cash flow, improve efficiency and reduce reliance on paper checks. Detailed remittance information can be delivered in multiple formats, supporting easier posting and reconciliation.
ACH receivables are especially useful for recurring payments or customers who prefer electronic transfers.
Merchant services
Merchant services support card-based sales and digital payments through point-of-sale systems, ecommerce platforms and other payment channels. These tools help businesses meet different customer payment preferences while enabling faster settlements and centralized reporting.
By automating customer-initiated payments, merchant services can play an important role in improving the speed of receivables and visibility of cash flow.
Remote deposit
Remote deposit allows businesses to scan and transmit digital images of checks directly from their desktop or office location. This reduces trips to the bank, extends deposit cutoff times and helps speed up availability of funds.
For businesses that still receive a significant number of checks, remote deposit provides a practical way to automate processing without changing how customers pay.
Advanced receivables solutions for growing or high-volume businesses
As businesses grow or handle higher payment volumes, additional receivables tools and solutions can help to further streamline operations and cash flow management.
Image cash letter
Image cash letter services support high-volume check processing by allowing businesses to scan and transmit check images electronically, often on a 24/7 basis.
This reduces physical handling and helps to accelerate the processing of checks for organizations with large volumes.
Lockbox solutions and eLockbox
Lockbox services help automate receivables by routing customer payments directly to a secure processing location. This allows payments to be processed quickly, with same-day reporting and reduced internal handling. The eLockbox further enhances this process with digital imaging and reporting tools, offering greater control, speed and visibility.
Lockbox solutions are well-suited for businesses that receive payments by mail and want to reduce overhead while improving the posting speed.
Vault services
For cash-intensive businesses, vault services help to streamline cash handling by reducing branch visits and improving the tracking of daily activity in real time. Secure vault services support better control and reporting while reducing operational risk.
Account reconciliation’s role in receivables automation
Receivables automation and management is not complete without effective account reconciliation. Even when payments are received electronically or processed quickly, businesses still need to match payments to invoices, customers or accounts accurately.
Automated receivables support reconciliation by:
- Providing detailed remittance (payment) data
- Offering reporting options that align with internal systems
- Reducing manual exceptions and errors
Improved reconciliation accuracy helps businesses close books faster, reduce discrepancies and gain confidence in their cash position playing an important role when automating receivables.
Getting started with receivables automation
To get started with receivables automation, begin with first understanding how your business currently gets paid.
Businesses may benefit from reviewing the:
- Payment types received (ACH, card, check, cash)
- Volume and frequency of transactions
- Current delays or bottlenecks with receivables
- Reporting and reconciliation needs
After establishing your business’s information, a receivables strategy can then be built around tools that best align with your customers’ preferences and your operational capacity and growth plans. Many businesses start by incrementally automating one part of the receivables process and then expanding over time.
A thoughtful approach ensures receivables automation supports cash flow without disrupting customer relationships or internal workflows.
A receivables strategy works best when it is designed around how your business gets paid. An Associated Bank professional can help you explore receivables solutions that support stronger cash flow, improved visibility and long-term growth.
FAQs
What are automated receivables?
Automated receivables are technology-driven processes that streamline how businesses receive, process, deposit and reconcile incoming payments to improve cash flow.
How do automated receivables improve business cash flow?
They help businesses get paid faster, reduce delays caused by manual processing and improve visibility into when funds are available for use.
Are automated receivables only for large businesses?
No. Small and midsize businesses can benefit from receivables automation by reducing manual work, improving payment speed and gaining better cash flow control.
How do merchant services support automated receivables?
Merchant services support automated receivables by enabling faster, electronic customer payments through point-of-sale and ecommerce channels, improving settlement speed and reporting.
Can receivables automation work if customers still pay by check?
Yes. Tools like remote deposit, image cash letter and lockbox solutions help automate check processing without changing how customers pay.
What is the role of account reconciliation in receivables automation?
Account reconciliation ensures payments are accurately matched to accounts or invoices, improving accuracy, reporting and confidence in cash flow data.
For Informational/Educational Purposes Only: The opinions expressed may differ from other employees and departments of Associated Bank N.A., or any bank or affiliate. Opinions and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results. (1513)