Accounts receivable automation software is important for your business, no matter how big or small. Without payments coming in on time, cash flow stops, and without cash flow, it becomes difficult to grow your business.
AR automation helps reduce the manual tasks that take up your time. This allows you to focus on bigger goals for your business. With accounts receivable automation software, you can stop worrying about late payments, manual collections, and posting cash. You might be wondering which tool or ERP system you should use.
Now, understanding AR automation and its benefits is a top priority for businesses looking to update their operations. In fact, 87% of businesses with AR automation report faster processes, and 75% say it improves customer experiences, according to the B2B Payments Innovation Readiness Playbook.
In this blog, we’ll explain what AR automation is, how it works, and how using the right software can improve your AR process. You’ll also learn how top accounts receivable automation software can make this transition easier for your business.
Let’s get started!
What is Accounts Receivable?
Accounts receivable is the money customers owe you for products or services you’ve already given them. It appears on your balance sheet as a total amount due. When customers choose to pay later, that amount becomes part of your accounts receivable.
What is Accounts Receivable Automation?
Accounts receivable (AR) automation streamlines how you manage incoming payments by handling invoices, payment reminders, tracking, and financial reports. It speeds up processes, reduces errors, and saves time.
It doesn’t replace human interaction but eliminates repetitive tasks like reminders and invoice creation. This frees up your team to focus on resolving customer issues and managing complex accounts.
How AR Automation Works?
Setting up an accounts receivable automation software simplifies payment management by handling invoices, tracking payments, and sending reminders. It reduces manual effort, speeds up processes, and keeps your records up to date. AR automation helps in these ways:
- Collects customer details at the time of purchase.
- Generates and sends invoices automatically on a set schedule.
- Tracks invoice status and sends reminders for overdue payments.
- Matches received payments to the correct invoices and updates records.
- Helps track who has paid and flags issues like expired cards or overdue payments.
Why AR Automation Matters?
AR automation keeps your business efficient while improving customer experience.
- Eliminates repetitive tasks, freeing up your team for more valuable work.
- Reduces billing errors and ensures financial accuracy.
- Speeds up payment collection and strengthens cash flow.
- Keeps records organized and minimizes manual workload.
- Enhances customer relationships by streamlining payment processes.
With Peakflo, you can automate invoicing, track payments, and reduce errors effortlessly.
10 Key Benefits of Accounts Receivable Automation Software
Using an accounts receivable automation software can greatly help your finance team and business. Here’s how it can improve your AR processes:
1. Get a Clear View of Your A/R Health
AR automation gives you a clear picture of your payments at all times. You can track important numbers like Days Sales Outstanding (DSO) and Average Payment Delay. This helps you see how well your payment collection and invoicing are working. You can also spot accounts that may be at risk of late payments and act before problems happen.
2. Make Customer Payments Easier
Offering your customers simple and easy payment options makes a big difference. By letting them pay with things like credit cards or ACH, you make the process more convenient. Sending smart, personalized reminders based on the customer’s account, not just invoices, also makes payments easier. This move from focusing only on transactions to caring more about the customer encourages them to pay on time and builds better relationships.
3. Speed Up Payment Collections
AR automation brings all your payment management into one place, making the process smoother for both your finance and sales teams. Good communication is key to clearing up payment issues. Since the sales team has the best relationship with the customer, they can help solve payment problems, which means you get paid faster.
4. Grow Without Hiring More Staff
As your business grows, AR automation helps you handle more work without adding extra staff. Tasks like sending invoices, reminders, and processing payments are done automatically. This allows your team to focus on other important tasks that help grow the business.
5. Improve Cash Collection Plans
AR automation helps you get paid faster and makes your cash collection strategies stronger. With the right tools, you can make payment methods work better for your business. This is difficult to do with spreadsheets or manual processes.
6. Make Workflows More Efficient And Cut Down On Mistakes
Automating repetitive tasks helps your AR team spend less time on paperwork and payments. This makes your workflow faster and allows your team to focus on bigger goals. Plus, AR automation reduces mistakes, making sure your invoices are accurate and there are fewer disputes. It also helps avoid issues like sending duplicate invoices by keeping your data consistent.
7. Boost Cash Flow
AR automation speeds up invoicing, which leads to quicker payments. Faster payments help improve your company’s cash flow. It also reduces Days Sales Outstanding (DSO), and studies show that over 60% of businesses that use AR automation saw DSO improve.
8. Cut Down On Operational Costs
With automation, you can get rid of paper invoices, reduce postage, and lower the need for manual work. This reduces costs and also cuts down on labor costs. It also helps lower write-offs from unpaid invoices.
9. Build Stronger Customer Relationships
The accuracy and efficiency of AR automation help keep customer relationships strong. With fewer billing mistakes and faster problem-solving, customers have a smoother payment experience, which improves trust and satisfaction.
10. Improve Reporting And Compliance
Automated AR dashboards give you real-time updates on payments and let you see the status of your receivables. You can easily keep track of overdue payments. Automation also helps you stay compliant by managing the rules and requirements in different markets, making it easier for your business to follow local laws.
By using AR automation, you can make your business run more smoothly and prepare it for growth.
How to Implement Accounts Receivable Automation in 6 Steps?
Switching from manual accounts receivable (AR) processes to automation takes careful planning. These six steps will help you do it smoothly:
1. Consult With Key Stakeholders
Involve everyone connected to your AR process. This includes your AR team, IT department, and management. Talk to customers to learn their expectations. Customize the automation software to fit your company’s needs. Get feedback from stakeholders to improve the process.
2. Define The Goals of AR Automation
Explain why you’re moving to automation. It could be to improve efficiency, support growth, or let employees focus on more important tasks. Make sure everyone understands how automation will improve the workflow. Address any concerns about job security.
3. Integrate With Existing Accounting Software
After choosing your AR automation tool, connect it with your existing accounts receivable automation software. This keeps your data aligned and makes automation easier. Proper integration helps avoid mistakes and speeds up financial work.
4. Automate Payment Reminders
AR automation helps collect payments on time. Set up automatic payment reminders for customers with unpaid invoices. You can decide how often and when to send these reminders. This saves time and keeps cash flow steady.
5. Select and Integrate Payment Options
Today, businesses offer many payment options. Choose the ones your business will accept, such as virtual accounts, bank transfers, or digital wallets. Integrate these payment methods with your accounts receivable automation software. This makes payments easier for customers and your team.
6. Reconcile and Report
Regularly check your accounts receivable to make sure records are accurate. This prevents sending reminders to customers who’ve already paid. Use this process to evaluate how well AR automation is working. Make improvements when needed.
By following these six steps, you can smoothly implement AR automation and improve your accounts receivable management.
Key Features of Peakflo’s Ultimate Accounts Receivable Automation Software
Peakflo offers a range of features to help businesses manage their overall accounts receivable (AR). Let’s break them down clearly:
- Automated payment reminders: Peakflo sends reminders automatically. These reminders are sent by email, SMS, or phone. This helps make sure customers pay on time without extra effort from your team.
- Customizable workflows: You can create workflows that fit your customer’s needs. This makes the invoicing process faster and helps avoid overdue payments.
- Integration with accounting software: Peakflo works with your existing accounting software. This keeps all your data in sync, reducing the chances of mistakes.
- Invoice tracking: The system keeps track of overdue invoices and upcoming due dates. This makes it easy to see which payments are pending and helps stay on top of collections.
- Proforma invoice validation: Before finalizing the invoice, customers can review and approve proforma invoices. This ensures all the details are correct and prevents issues later.
- Dispute management: Peakflo helps you manage customer disputes. This makes it easier and faster to resolve problems so payments can continue smoothly.
- E-Invoicing: Peakflo lets you send digital invoices. These invoices can include approval policies and e-signatures. This speeds up the invoicing process and reduces delays.
- Finance CRM & task management: Peakflo tracks customer interactions and helps organize tasks. This keeps your team organized and ensures nothing is missed during collections.
- Customer portal: Your customers can view and pay invoices through a simple online portal. This makes it easy for them to handle payments directly.
- AI-powered reports: Peakflo generates detailed reports. These reports show overdue invoices and customer payment trends, helping you manage cash flow.
- Automated cash application: Traditional software often mismatches payments and invoices, causing manual work and delays. Peakflo automates this by linking payments to open invoices instantly, ensuring accuracy, eliminating manual effort, and speeding up cash application.
These features make managing your accounts receivable easier and faster through Peakflo and its excellent automation. Peakflo helps businesses get paid on time, reduce errors, and stay organized at all times.
Conclusion
Automating accounts receivable can make a big difference for your business. It helps you get paid faster and reduces mistakes. With tools like automatic reminders, custom workflows, and easy integration with accounting software, your team can focus on more important tasks. An accounts receivable automation software also makes tracking payments and solving problems easier.
Peakflo and its accounts receivable automation software can help you manage payments, improve cash flow, and stay organized. Get ready to make the switch by experiencing a demo or by going through the product tour to learn more and start today!
