The Impact of Accounts Receivable Automation Software Solutions

Are you sick of managing unpaid invoices manually? Accounts receivable (AR) automation is the remedy that can improve efficiency, decrease human error, and provide a clear, up-to-date picture of your organization's cash flow.

In this blog:

• What is accounts receivable (AR) automation?
• Why is it beneficial to my team?
• How do I automate accounts receivable processes?

What is Accounts Receivable Automation?

Accounts receivable automation involves using software solutions to help accounting & finance teams streamline processes for:

• Invoice generation and delivery to customers
• Collecting and processing payments
• Management of credit, disputes, and deductions
• Report generation and real-time analysis

AR automation can be accomplished by using best-of-breed enterprise resource planning (ERP) software like Sage Intacct, Acumatica, or Microsoft Business Central. However, most organizations rely on separate tools for different departments.

In 2024, midsize organizations use upwards of 112 SaaS applications. Many of those applications are ones that accounting and finance teams don’t usually touch, including customer resource planning (CRM) platforms, eCommerce stores, project management tools, and more. 

To improve visibility and align cross-departmental processes, software integration can sync critical data (needed for accounts receivable processes) to your ERP or accounting software.

Important Note: Automation should not eliminate human intervention

We always like to remind people that automation is not designed to eliminate the human touch. Not only do you need technical experts to ensure automated processes are working properly, accounting and finance professionals will always be needed to interpret data, collaborate with other departments, and provide financial oversight technology can't replace.

If you don't know where to start when it comes to preparing your organization for automating processes, we created a guide to help you strategize your tech integrations.

Benefits of Accounts Receivable Automation

Invoicing

AR automation syncs data from other systems to your company’s accounting or ERP to create invoices automatically, saving your team tons of time and ensuring accuracy. Invoicing workflows can run at a dedicated time or even after business hours without a human in the loop.

On top of invoice generation, email workflows can streamline the process of sending invoices to customers. By transitioning to electronic invoicing, teams save between 41 and 60 hours per week of handling unpaid invoices, making the process efficient and cost-effective.

Payment Processing

With software integrations to various payment gateways, businesses can offer a variety of electronic payment options to their customers, such as credit card payments, digital wallets, bank transfers, and more. Plus, transactional data will automatically sync to your accounting system the moment a customer pays.

Subscriptions & Auto-Pay

Automation can ensure subscription management processes, such as invoice generation, failed payment recovery procedures, and usage allotment tracking are running smoothly.

Setting up autopay or recurring payments can:

• Make it easier for customers to pay on time, thus reducing late payments
• Establish predictable cash flow
• Reduce bad debts through automated notifications and reminders

Disputes & Deductions

Disputes and deductions can delay payments and complicate the AR process. Automated AR systems can help by:

• Quickly identifying and resolving disputes by providing precise and accurate payment records
• Flagging discrepancies and initiating resolution processes
• Ensuring that conflicts and deductions are handled efficiently

Credit management features in AR software allow tracking and managing client disputes with quick turnaround times. This helps to maintain customer satisfaction while ensuring efficient collections.

Features of Accounts Receivable Automation

Automated Emails

Maintaining consistent communication with customers regarding their payment obligations helps in timely collections and improves overall customer satisfaction. This feature is essential for reducing manual tasks and ensuring that payment reminders are sent out promptly.

Automated emails in the AR process can:

• Send reminders for outstanding payments to customers
• Significantly reduce the likelihood of late payments
• Personalize reminders with more customer-specfic information
• Send reminders via multiple channels, including email, SMS, or customer portals

Multiple Payment Options

Offering multiple payment options is crucial for customer convenience. Best-of-breed accounting software can be integrated with various payment gateways to provide electronic payment options such as credit card payments, ACH transfers, and EFTs. These options can boost conversion and retention rates by accommodating different customer preferences.

Automated billing reminders and multiple payment options encourage timely payments and reduce delinquency. This ensures that businesses get paid faster and improves overall cash flow.

Credit Management

AI-based automation tools can fast-track reviews and help manage credit risk by identifying negative payment trends. Automated periodic credit reviews supported by integrations with leading credit risk agencies can expedite credit approvals.

Using analytical data to segment customers based on payment patterns helps manage credit risks more effectively. This ensures businesses can maintain healthy cash flow while minimizing the risk of bad debts.

Implementing Accounts Receivable Automation

The implementation of AR automation encompasses several steps, including:

1. Choosing a suitable accounting or ERP software
2. Integrating the software with existing systems
3. Clear goal-setting to ensure that automation is scalable for ongoing business objectives

Integration with Accounting Software

For efficient data synchronization, integration between other business software and existing accounting systems is essential. Using APIs to enable real-time data exchange and synchronization ensures all teams are connected and working with the most up-to-date information.

Thorough integration testing before full deployment ensures all data flows correctly and reduces potential disruptions that come with unexpected costs and resources to fix.

Customization Capabilities

Many AR automation solutions include customization as a key feature, allowing businesses to:

• Tailor the software to match their specific processes and industry requirements
• Enhance overall efficiency and customer satisfaction
• Match the software to their particular needs
• Meet diverse business demands
• Use customizable workflows

When deciding to build AR automation solutions in-house or outsource them, it's important to carve out dedicated resources for ongoing support and future customizations.

Integration with CRM

Integration can bridge the gaps between customer relationship management (CRM) and accounting software, keeping sales and finance teams on the same page and AR processes automated.

Consider this: if you were to integrate HubSpot and Sage Intacct, you'd be able to sync customer information, new deals, subscriptions, products, and more between each system. Automated workflows can ensure invoices are generated for new deals, whether it’s a one-time sale or contract. Once a customer's invoice is paid, sales teams are notified in HubSpot.

Conclusion

Accounts receivable automation offers numerous benefits, including improved cash flow, reduced errors, and enhanced decision-making. Businesses can significantly improve their AR management and overall financial health by automating invoicing, payment processing, and data reconciliation tasks.

Implementing AR automation requires careful planning and integration with existing systems, but the rewards are well worth the effort. As businesses continue to seek ways to optimize their business processes, AR automation stands out as a need for scaling SMBs and even nonprofit organizations.

About Venn Technology

Team Venn builds custom integrations for busy teams looking to automate their most painful, time-consuming manual processes. We collaborate with your team to identify unique pain points and create automated workflows that scale with business objectives. Our mission: Integrate. Automate. Be Free!

Schedule a consultation with Venn to get started with AR automation.

Frequently Asked Questions

What is accounts receivable automation?

Accounts receivable automation uses software to automate tasks like invoicing, payment tracking, and collections, streamlining the AR process and improving efficiency.

How does AR automation improve cash flow?

AR automation improves cash flow by speeding up the order-to-cash cycle and reducing the day's outstanding sales, resulting in faster payments and enhanced business liquidity.

What are the key features to look for in AR automation software?

When looking for AR automation software, prioritize features like automated invoicing, multiple payment options, credit management tools, seamless integration with existing systems, and robust security measures. These will ensure efficient and secure operations for your organization.

How does AR automation help reduce manual data entry errors?

AR automation helps reduce manual data entry errors by capturing and recognizing data from various sources, minimizing human errors, and ensuring data consistency.

What steps are involved in implementing AR automation?

To implement AR automation, you must select the right software, integrate it with existing accounting systems, customize workflows to match your business processes, and ensure robust security measures for financial data. These steps are crucial for a successful implementation.