Accounts Receivable Automation Improves Business Accounting With These Benefits

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Accounts receivable automation is one way your business can streamline workflows to save time and money while becoming more accurate and effective. Using accounts receivable (AR) automation streamlines detailed, labor-intensive tasks for the finance team, allowing faster collection of debts owed to your company.

Every company needs to ensure that they receive payment for their goods or services. With many organizations dealing with a large number of customers, often on individual contract terms, the process of managing accounts receivable can consume exorbitant amounts of time, effort, and money.

However, many of these business processes are prime candidates for automated AR. Research from the fintech news and analysis provider PYMNTS shows that a staggering 80.8% of firms are still using actual paper checks to pay invoices.

Even the most basic applications of AR automation are lagging behind what technology can offer, and the businesses that embrace the solutions available today have a major advantage.


What Is Accounts Receivable Automation?

Accounts receivable automation is one of the many ways that automation is transforming business processes for companies around the world. It takes many aspects of accounts receivable (AR), from sending out invoices to different parts of the collections process, and eliminates the tedious and repetitive tasks involved.


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AR automation platforms greatly streamline how AR teams operate. Though automation can’t replace human experts entirely, these tools let your team focus on tasks that actually require their insight and expertise, rather than wasting time on simple routine tasks.

However, these routine tasks are essential and require both accuracy and speed, but they can be broken down into steps and rules that an automated solution can handle. Here are some of the benefits of using accounts receivable automation.

The Benefits of Accounts Receivable Automation

Your finance department is one of the most labor-and detail-intensive departments in your business, and it’s imperative that your bookkeeping information is accurate and up-to-date. Other than automating the most tedious processes, using accounts receivable automation adds other benefits for your business.

Using Resources More Efficiently

Like any other business activity, the AR process consumes resources. Accounts receivable automation benefits let companies shift the balance of those resources away from expensive human efforts toward affordable digital automation.

With improved workflows that feature automation, your company can reduce the hours dedicated to the accounts receivable process. In turn, you can instead focus valuable human and economic resources on other aspects that contribute to their continued growth.

using accounts receivable automation
Credit: Kindel Media

Getting Invoices Out Faster

Much of the AR process focuses on invoicing. Instead of compiling information from customer accounts every time an invoice is required, AR invoice automation can automatically draw information from the relevant work and purchase orders under a given account.

The generated invoices can then be distributed to customers automatically, whether through paperless or conventional billing methods. The overall synergy of ebilling automation makes the process easier on both ends, keeping both your AR team and customers happy.

Reducing DSO

Days sales outstanding (DSO) is one of the most important KPIs in AR. It’s the average number of days it takes the company to actually collect their payments. On top of the standard net 30 days, businesses can see DSO add up to weeks of additional time.

Making the shift to AR automation to better manage customer payments can have a massive impact on DSO. Research from PYMNTS and American Express has shown that businesses that embrace automation have an average DSO 23 days lower than those that still rely on paper-based business processes.

Improving Cash Flow

Robotic process automation is a powerful tool to improve cash flow in multiple ways. From preventing bad debts to detecting fraud, automation performs countless minute tasks that keep a business in the black without the need to devote extensive resources to do so.

Accounts receivable is intrinsically tied to cash flow, as allowing invoices to go unpaid outside of set terms keeps cash tied up where it can’t be used for purchases or investments. Automation can ensure key contact points are completed throughout invoicing and collections to make cash flow as fluidly as possible.

Cutting Out Human Errors

Accounts receivable isn’t only about speed—it’s also about accuracy. Failing to maintain accurate invoicing and collections can allow products and services to go unpaid. Even minor human errors can incur high costs, and conventional accounting systems are often unhelpful in identifying mistakes.

Automation minimizes the number of opportunities for human error. It eliminates simple, repetitive tasks that include aggregating and managing values. A single human error at any point, whether entering a value into the wrong form or a simple typo, can propagate through the entire process. Accounts receivable automation keeps that from happening.

Streamline Credit Management

Allowing customers to open a line of credit to use at your business is critical to maintaining positive customer relationships. However, it’s also a considerable trap that can lead to time-consuming and expensive collections processes if credit management isn’t handled properly through accounts receivable.

Through automation, credit management strategies can be implemented as planned with automated monitoring and notices. Businesses can easily track all credit extended to specific clients without worrying about invoices falling through the cracks due to human error. Automated notices will let customers know when it’s time to pay.

ar automation
Credit: Sora Shimazaki

Accelerate the Collections Process

Implementing a robotic process automation solution can improve the collections process in terms of both speed and effectiveness. Along with avoiding invoices reaching collections through improved communications and monitoring, automation can also handle many aspects of collections management.

With all of the appropriate information readily available, employees won’t waste time searching for the details they need to initiate the collections process. Any follow-ups and scheduled contacts can be handled through automation in AR collections, eliminating the need for constant check-ins on existing collections cases.

Leave Your Customers Happier

Accounts receivable is often a point of strife with customers. Inadequate and unclear communication can leave customers deeply dissatisfied based solely on the billing and collections process, decreasing their likelihood of buying again.

Automation makes the process easier and more straightforward on both sides, providing a better customer experience. When customers can expect accurate and timely invoices and reminders, there’s less chance of misunderstandings taking place.

Automation solutions can also expand payment methods and management practices to include a wider range of payment options like credit cards, making paying invoices easier.


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Spend Less Time Putting Out Fires

Whether making corrections to invoices because of new customer information or dealing with irate customers with billing issues, significant time and resources are committed to fixing mistakes made in accounts receivable. Gartner research has found that avoidable rework can account for up to 30% of an accounting employee’s time.

With increased accuracy and invoices and other communications going out on time, automation resolves these issues. This means that employees can spend time putting their valuable skill sets to use to work proactively instead of playing catch up with mistakes and disputes.

Synergy With Other Solutions

Accounts receivable is far from the only area in which automation stands to improve business processes.

A comprehensive solution can bring together many different financial processes to streamline the links between them, improving accuracy and reducing the need for time-consuming switching between disparate solutions, programs, and databases.

The overall management of a company’s finances can now be more closely integrated through automation solutions. HR, accounts payable, accounts receivable, tax reporting, and so many other business processes can all be improved simultaneously through robotic process automation.

ar invoice automation

Taking Advantage of the Benefits of AR Automation

Businesses need to be sure that they find the right solution to truly exploit the benefits of RPA services. The simple accounts receivable automation in QuickBooks and other off-the-shelf software packages can only offer a fraction of the impact of a dedicated solution for your business.

By working with the right automation solutions developer, your business can implement automation at the key points that provide the greatest impact on your unique business processes.

A true end-to-end accounts receivable automation solution will include these key features:

  • Automated transaction identification that can aggregate data directly from emails and other communications to eliminate repetitive tasks and improve accuracy.
  • Robust data verification that analyzes the validity of data across multiple sources and databases to ensure that information is consistent and accurate.
  • Automated communications connected to invoices, collections, notifications, and more to ensure that both internal and external communications support a streamlined process.
  • Consolidated access to important documents and information for all relevant stakeholders to ensure seamless collaboration and communication.

These are just a few key examples of the functions that businesses need from their automation solutions. Developing the most effective automation solution requires closer insight into individual needs.

At 1Rivet, we develop custom robotic process automation integrations for businesses across many industries, including the finance sector. We translate your needs into a cost-effective, non-intrusive solution that benefits your business.

Contact our team today for a free consultation.



Eric Middleton

Embodying the 1Rivet culture, Eric asks himself and others daily: "What have you done for the client today?" He’s a passionate leader who brings an innovative approach and a burst of energy to every client organization.