Automated Accounts Receivable Solutions

Dec 3, 2020 by Daniella Bourguetts

Understanding Accounts Receivable Automation

Accounts Receivable Management is the cornerstone of a steady and healthy cashflow, keeping your business in a better position to drive growth, operate better, and optimize your team's time and resources.

In the post-covid economy, it's clear that some AR processes are outdated, being heavily reliant on paper and manual procedures that limit cashflow and scalability in already trying times

On average, U.S. businesses have 24% of their monthly revenue tied up in AR payment terms and credit debt. In this post, we're going to cover why AR automation is important and how it can help your business improve cash flow, reduce DSO, and save payment processing time.

Why is Accounts Receivable Automation Important?

Accounts Receivable Automation solutions can help you get a better hold of your cash flow, maximize efficiency by speeding collection times, and get an overall better view of your financial state. Automation can provide an AR team with the tools to make the most of their time and abilities by focusing on strategic problems instead of everyday tactical activities.

Imagine not having to spend the bulk of your time every day going through accounts, matching payments with invoices, and updating the ledger. Instead, a modern software platform can do that for you in a fraction of the time, allowing you to carry out more important projects and plans with the information gathered automatically for you. 

Automation can help reduce human errors in an AR process and optimize the way your company approaches collections, reconciliation, and the entire enterprise cash cycle. Robotic Process Automation increases efficiency by 44% by automating manually repetitive tasks. (Digital Workforce, 2019)

78% of finance professionals predict that all future accounting methods will be automated. (Thomson Reuters, 2019). However, we're seeing these changes happen sooner rather than later out of necessity due to the COVID-19 crisis.

As employee health and safety became a priority for businesses, it became clear how outdated traditional AR processes were. Many structures rely on paper checks and needed hours of manual work to be handled within an office. That quickly became an impossibility with remote workers, safety concerns around handling mail, and coordination between multiple internal departments across many geographies.

The chart below illustrates one of the key problems with B2B payments — namely the preferred and still most widely used method for payments is paper checks.Paper checks stats for automation

But sending out invoices and collecting payments caused enormous operational slowdowns and also put workers in a vulnerable position that ceased to be scalable in the new economic normal given COVID-19 concerns.

That's when we saw a rise in AR Automation as a tool for post-COVID recovery. The main benefit? Faster up AR processes, according to the chart by PaymentSource and Suntrust.

automation chart 2

Another thing to consider is how much it costs to get paid. Cash is king in this new economy, and collection through checks and paper procedures have a steep cost in the long run and are difficult in the present due to everything discussed above. In PwC's COVID-19 CFO Pulse Survey, 80% of CFOs suggested that they are implementing cost-containment measures due to COVID-19.

  • The average cost of processing and paying a single invoice is USD 17. According to the Federal Reserve Bank, small businesses spend an average of USD 9 billion on paper invoices alone.
  • Comdata estimates that it takes businesses around ten days to process a single invoice, pushing out time to receive cash up to 30 days for one invoice.

    Putting it all together, The Federal Reserve estimates that the direct and indirect costs of processing paper checks and invoices total to $150 billion a year.

3 Tips and Reminders for Accounts Receivable Automation

AR automation is catching on quickly because it opens up a new panorama of conducting business focusing on a strategic approach rather than the tactical matters that take up too much time. There's room for versatility in the automation arena since most solutions can adapt to your business needs. We're going to present three things to keep in mind if you decide to go fully automated.

1. Digital is not the same as automated


By now, we established that staying in traditional AR methods can be time-consuming, slow, and may compromise employee's safety, leading to situations that businesses can't afford anymore (or at least shouldn't have to).

ERP software like Netsuite, Xero, or Magento provides solutions for centralizing accounting processes, allowing controllers and CFOs to get a better view of their company's finances. However, they remain the same paper processes only carried out on a digital platform.

Most ERPs are not completely automated. They do not allow to set up recurring payments, determine payment options within the platforms, or generate immediate reports, to name a few.

There are payment tools that integrate seamlessly to ERP platforms to close the loop on automation, such as Paystand, that have proven to help companies cut down on time and optimize processes.

2. A good AR strategy means steady cashflow

According to a U.S. Bank study, 82% of business failures are due to poor cash management. Automation can certainly help make the most out of any AR process, but strategizing is vital to ensure you genuinely are reaching your goals

Hint: Automation is part of the plan, but using it with these strategies can help you get ahead of the competition.

3. In many cases, automation solutions are not only for AR processes but also for Accounts Payable.

Automation can work as a one-stop solution for accounting. Depending upon the company's size, a business can save $16/invoice or more via A.P. automation, and it starts paying for itself within an average of 6 to 18 months (Vanguard, 2018).

Businesses are shifting away from paper checks in favor of digital payment solutions. 17% of deposited checks are now image deposits, 93% of image deposits are by businesses, and 71% of businesses are also accepting digital payments.

If you want to make the most out of your accounting team, automation offers multiple roads to take.

In conclusion

Accounts receivable automation is finally having a moment. Businesses are finding more benefits of automation in their finance teams due to COVID-19 fueled changes.

We have become used to automating numerous processes within a company, from candidate screening in HR departments to digital marketing campaigns in multiple channels at once. It seems more natural than ever to look for alternatives that can prove useful in cashflow management and forecasting.

AR automation solutions will continue to gain traction and provide a better way to work as more businesses choose to go digital in their accounting. As a pioneer in B2B digital payments, Paystand is one of the leading platforms, with a network of over 160,000 businesses.

If you want to know more about how automated solutions can enhance your business, don't hesitate to reach out or request a demo with one of our experts. B2B Payments Platform is a digital payment and AR management platform that helps companies streamline and automate payment processing and accounts receivable management. We integrate with most ERP software systems and offer flat-monthly pricing to keep your costs low and predictable.

Get ready to discover just what your business is capable of achieving with the right tools in place.

Request a demo today