Why Accounts Receivable Automation Is More Important Now Than Ever Before

Accounts Receivable

Receiving payments on time is critical to your company’s finances, and the automation of accounts receivable plays a pivotal role in ensuring your success.

A sluggish and tedious billing process directly affects your cash flow.

This is where Accounts Receivable (A\R) automation comes to the fore.

AR Automation is a tool to help your accounts receivable team work efficiently by automating repetitive tasks. These include

  1. Manually chasing customers with unpaid invoices.
  2. Printing thousands of transactions in hard copies.
  3. Contacting customers by hand when reaching payment due date.

Catering to these problems – like any AI-infused software – A/R automation accelerates previously manual accounting and finance processes and helps avoid invoice mistakes, a common pitfall in complex A/R operations. A further drawback of manual A/R is the typical errors and failure to anticipate clients’ billing preferences.

A/R automation: what and how?

Imagine this: to facilitate sales, your company extends credit to customers. Now, it’s time to collect the debt. Selling products and services and getting payment are two essential aspects of running a business. In the absence of these payments within a set timeline, the company would miss out some much-needed cash to help finance its operations.

At its most basic, accounts receivable automation is just what it sounds like: a way to automate repetitive tasks that helps a business get the capital that customers owe them. A/R automation makes processing a large volume of customer invoices easier, saving significant time when collecting payments.

Is there a new way of doing this?

Accounts receivable (AR) automation software assists businesses in upgrading their billing and collection processes. The purpose is to ensure that customers pay for the services or products they use, simplifying financial transactions.

Studies show that companies that switch to automation also see an improvement in their days’ sales outstanding (DSO) – the average number of days it takes for a company to get paid after a sale. This, too, can have a beneficial effect on revenue and profitability.

The company’s bottom line and cash flow can benefit from more precise billing and payment procedures. Compliance-wise, A/R automation provides valuable data when preparing for regulatory financial reporting.

Modern accounting and financial system

A/R automation is more than just a piece of software.

It tracks various payments, matches invoices to sales orders, and monitors expired credit cards. A business can also establish incentives and fees for early payments to prevent late fees. The A/R database lets businesses know how invoices and payments progress and sends automated messages to customers.

Once processes are streamlined, you will receive prompt payments and maintain a solid cash flow.

Automation: How Will It Be Done?

The way a business works may be different from one to the next. Still, automation keeps the three main parts of accounts receivable the same: sending out invoices, collecting payments, and transaction matching.

Collections Management

When a company fails to collect debts from its debtors within a specified time frame, it has incurred bad debt. Therefore, to obtain payment from customers, your collection teams must treat them consistently. When it takes longer to receive payment, your cash flow becomes less stable. In other words, there was a capital disruption. Consequently, it is crucial to adapt to a system that provides value.

Any debts you collect will be reclassified as accounts receivable to ensure continuous cash flow.


The primary objective of a successful account receivable process is to collect the money owed to the business. The first step is to send invoices to customers. These invoices are generated automatically with AR automation and sent digitally within seconds. If VAT or sales tax is applicable, an automated system will calculate the tax rate for each transaction to collect the correct amount of tax.

Cash Application

Automating your A/R process will reduce the amount of manual data entry required and help your business generate more revenue. This functionality reduces the time necessary to apply cash to open invoices. Your company’s order-to-cash cycle will benefit from this enhancement.

Real gains from integrating AR automation into your business operations

Streamline your workflow

By reducing the time spent on each invoice and optimising the workflow, your AR team will be able to focus on dealing with late payments and forecasting cash flow. In other words, eliminating the most tedious tasks allows employees to concentrate on ensuring the business’s success.


Serving a global client can be daunting due to the wide range of local laws that must be adhered to. AR automation solutions can help you comply with local laws in these situations. It provides a single point of contact for global billing and allows you to be paid in different markets.

Improve accuracy and service to customers

If you consistently deliver accurate invoices, your clients will have more faith in your business. Conversely, companies that frequently send incorrect documents appear unprofessional while creating additional work for everyone. Regardless of the customer’s preferred digital medium or level of expertise–assisting your customers effectively is a breeze with the help of A/R automation.

Facilitating cash flow

When you save time in your workflow, you can send invoices more quickly. A 2021 survey indicated that 62% of businesses that automated their AR had a reduction in DSO. This results in quicker payments and an improved cash flow. Improved revenue inflows and outflows enable a company to minimise its days-sales-outstanding (DSO).

Enhance in reporting

Automated AR reports the status of customer payments in real-time and aid in keeping track of AR ageing, which is a method for categorising unpaid customer receivables based on the time they have been past due. With automation, you can accurately monitor the status of open receivables and act swiftly to increase the likelihood of getting paid.

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