The Benefits of an Automated Accounts Receivable Solution

Your business' success is dependent on two factors: customers and cash.

That means it's vital for the accounts receivable process to run seamlessly. And you've likely heard that the key to improved accounts receivable is AR automation, but what exactly does this technology offer?

In this blog post, we'll explore how AR automation provides comprehensive benefits for every stage of the credit-to-cash process; improving your cash flow, your team's performance, and your customers' satisfaction

Continue reading to discover how AR Automation:

Reduces manual AR work
Improves AR metrics
Lowers costs for a higher ROI
Provides a better customer experience
Increases visibility into important AR datapoints
Allows for accuracy across

How does AR automation impact your productivity?

One of the most significant benefits of AR automation is improved productivity for your accounts receivable team. Routine tasks such as data entry and invoice delivery are handled by the software, freeing up staff for more strategic and value-driven activities.

An AR automation solution helps you to:

Decrease time spent on invoicing, follow-ups, and dunning – By integrating with your ERP, automation software can handle the invoicing process for you. Invoices are created automatically and sent to the customer via their preferred method of communication. Workflows can be set up to allow follow-up emails or messaging to be handled automatically, and at set intervals. On top of this, dunning workflows can be used to send out communications on a set schedule once an invoice has gone past due.
Streamline reporting functions – The typical reporting process involves manually gathering data from your accounting software or ERP, analyzing the data, and then inputting it into a shareable form, such as a spreadsheet. Using automation software, vital reports like AR aging can be created with the click of a button. Not only does this save your team time on the front end, but it also eliminates the possibility of data errors that could lead to lost time as your team no longer needs to make corrections.
Optimize cash application – In cash application, payments must be matched to orders and applied back to your ERP. It's not uncommon to receive split payments, or payments with missing remittance information, all of which delays the process and withholds money from your coffers. Automating cash application can eliminate these delays through tools like optical character recognition (OCR) and machine learning which automatically matches payments to their respective invoice.

Teams that automate their accounts receivable process stand to gain significant benefits*, including:

50% reduction in manual work
16 minutes saved per invoice
3x increase in overall productivity

*Statistics from Forrester's total economic impact (TEI) on Quadient AR.

How does AR automation improve your financial metrics?

It's simple. The better your AR metrics — such as Days Sales Outstanding (DSO) and Average Days Delinquent (ADD) — the healthier your organization's finances will be.

Automation helps you to improve the essential processes that directly impact the key performance indicators (KPIs) that matter most to your business.

Automated customer communications – Whether it's invoice delivery, payment follow-up, or dunning communications, automation ensures that messages are sent out in a timely and consistent manner until an invoice has been paid. This keeps payment top of mind for your customers, clearly communicating what they must do to keep their account current.
Predictive analytics - Automation that leverages AI can analyze customer payment behavior and accurately predict which invoices are likely to be paid late, and how late payment will be received. This allows your team to take a proactive approach toward high-risk accounts, reducing the risk of late payment and bad debt, and improving metrics like DSO and ADD.

These features not only minimize the amount of manual work that your AR team must execute on. They also free up time to take a strategic approach to collections. Taken together, teams that employ AR automation typically see:

34% reduction in DSO
25% reduction in bad debt

In addition, our customers have seen improvements such as:

Overdue AR reduced by over 40%
Disputes resolved 3 weeks faster than before automation
Paper checks reduced by 50%

How does AR automation lower your costs?

With your team freed up to work on late-paying accounts, you can eliminate the need to hire additional headcount and ensure fewer write-offs. This generates significant savings. In fact, Forrester has found that the return on investment (ROI) on our industry-leading solutions reaches as high as 400% over three years.

Calculate your organization's cost savings and ROI with AR Automation using our cost calculator⬇️

How does AR automation impact your customer experience?

Automation doesn't just improve the collections experience for your AR team and improve your metrics, it also helps keep your customers happy. Using automation software, you can:

Automatically send out invoices and follow-ups – Regular communication is vital to customer satisfaction, and with automation, you can create workflows that use your customers' preferred method of communication. The software also allows you to schedule communications such as “thank you” notes, letting your customers know that their business is valued.
Ensure accurate billing - By eliminating manual data entry in the creation of invoices, you reduce the risk of incorrect statements being sent out to customers and decrease the likelihood of disputes.
Quickly resolve disputes – Invoice disputes don't just impact your cash flow. They are also frustrating for your customers. With automation, the software scans all incoming disputes and acts on those that can be resolved without human intervention. For others, it assesses the dispute, prioritizes it, and flags it for follow-up with a representative, reducing the time it takes to resolve.
Provide flexible payment options – With 63% of customers stating that they are more likely to buy from an organization that offers their preferred payment methods, flexibility is no longer a luxury, but a necessity. AR automation software allows your customers to pay using their preferred method — be it credit, ACH, or wire transfer.
Offer a self-service payment portal – Like flexible payment options, 60% of customers state that they prefer the ability to make payments through a self-service portal. Automation software provides this option, allowing your customers to make payments on their own schedule and increasing the likelihood that they will pay on time, or even early. Self-service portals also provide customers with account access to view information like payment history and other vital data.
Faster response times – With automation handling routine tasks, your AR team is free to respond faster to customer queries and concerns. Automation software that employs AI also assesses incoming customer questions, routing them to the most appropriate team member for response.

What impact does automation have on your data visibility?

When AR is managed manually, teams lack the ability to quickly access vital data such as open and past due invoices. Data is split between systems, or in some cases, stored in physical files in the office.

AR automation software integrates with the rest of your tech stack to give you one centralized location for all your data. It provides you with a complete overview of the credit-to-cash process, from the moment an order is placed until the invoice is paid by the customer. It also allows you to easily access customer history information.

With these visibility benefits, your team can:

Create standardized communications, tracking which are effective and which are not
Examine the underlying causes behind customer late payments
Analyze and reduce the average time it takes your team to resolve disputes
Examine your AR aging to prioritize accounts that are the most delinquent

Using AI-powered predictive analytics, you can go beyond reactive analysis and anticipate when cash will come in, lowering your need for cash reserves. You can also gain an accurate sense of which accounts are likely to pay late and take a proactive approach to helping them stay up to date.

How does automation improve your AR accuracy?

No matter how diligently the members of your AR team perform their duties, they will likely make mistakes. It may be a simple slip of the finger that causes an erroneous keystroke, or accidentally transposing numbers. Unfortunately, these small mistakes can cause significant issues for your collections process.

An error in invoicing can create disputes that require members of your team to research and correct before payment is made. Even when data entry errors do not impact invoicing, they can cause problems in vital processes like cash forecasting.

In general, manual data entry has an error rate as high as 4%. In contrast, automated data entry is typically between 99.59% and 99.99% accurate.

Optimize performance and customer experience

The benefits of AR automation span the entirety of the credit-to-cash process, helping your organization to get paid faster and work smarter. With tools like predictive analytics, you can reduce late payments and speed up cash flow, while automated communication workflows and self-service options allow you to improve customer experience at the same time. This means that not only are you increasing cash flow in the short term. You are also ensuring the long-term value of your accounts.