AR automation, or accounts receivable automation, is the digitalisation of manual accounts receivable tasks through the introduction of digital software.
Sometimes known as the order-to-cash process, this common but necessary procedure can be digitised; converting time-consuming, manual processes to electronic document and data exchange.
In simple terms, the technology driving AR automation simplifies day-to-day work. It is beneficial for e-invoicing, for example, as it speeds up the payment process by converting sales orders to electronic invoices as soon as orders are fulfilled.
Furthermore, the finance systems of suppliers are connected with a business network, enabling a company to instantly send invoices electronically. As part of this process, the software automatically checks documents for information and figure accuracy, aiding with compliance requirements. It also increases the chance of invoices being approved instantly by reducing the amount of errors.
Helpful automation continues with billing schedules and payment management. Subscription billing ensures customers receive invoices promptly and automated payment management matches customer payments to open invoices. This enables businesses to avoid the reconciliation process.
Finally, when it comes to collections, automated payment reminders can be scheduled to help ensure payments are on time. Altogether, this helps businesses reduce manual accounts receivable work.
Benefits of AR automation for businesses
Businesses of all sizes can benefit from automating accounts receivable. In particular, it can help medium to large companies simplify their order-to-cash process, saving employees time.
Key benefits include:
- Speed – First and foremost, faster cashflow is possible with a streamlined system. Suppliers are connected with a business network and the integrated software automatically checks documents for the correct information. Once an invoice is submitted in a preferred format, it can be processed instantly, translated, and validated, ready for customers to pay straight away. This combats the delays encountered when doing this manually.
- Insight – When manually undertaking accounts receivable activity, organisations can become overwhelmed by data from multiple sources. With AR automation, information can be gathered, and data analysed through reporting tools and dashboards within the software. Things such as having visibility of when a customer has received, opened and viewed an invoice are useful for businesses and were not previously possible. Centralising data allows for a holistic view of the whole AR process.
- Time-saved / cost efficiency – AR automation means a more efficient AR department, as time is saved on previously manual, repetitive tasks. Staff no longer need to manually input data or create invoices. Things such as automatic payment reminders and collection emails can be set up, meaning chasing payments is not needed. This allows the AR workforce to focus on cashflow forecasting and financially lucrative activities which add value to the business. The use of technology also means customer accounts can be more closely managed, reducing the monitoring time needed from staff.
- Reduced human error – Human error is also eradicated. The software removes simple mistakes which can cost time and money. There is no need for teams to manually key in data, which can lead to errors, as AR automation takes care of this. Furthermore, as requirements become more complex, having an automated system in place allows companies to be confident about the future.
Globally, businesses are shifting from manual processes to AR automation because of the substantial benefits it offers. Quadintel's 2022 Accounts Receivable Automation report predicts that Europe’s Accounts Receivable Automation Market will grow by 12.6% CAGR between 2022-2028.
The report discusses invoicing challenges and the importance of receiving payment on time. Inefficient distribution and a failure to meet customer invoicing criteria were highlighted as issues that take up the time of accounts receivable staff. As these things can hamper a company's cashflow, AR automation is considered a solution.
Want to know more?
Adopting AR automation is sensible for companies looking to future-proof their operations.
Combining this with accounts payable automation (AP automation) helps a business to create a fully digital supply chain. You can read about the benefits of AP automation in our recent article.
A compliant, outbound solution such as Unifiedpost Group’s Channel for order-to-cash processes is a step towards modernisation in the accounts receivable field. Channel can transition your company to electronic documents and data exchange and is a fully automated solution.
Combined with Collect, which is designed for AP automation, the two can create a holistic solution which saves time and money. Get in touch to learn more about both solutions.