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What Is AR Automation?

by Sophia Riley

October 5, 2023

AR Automation

Selling services or products and collecting customer payments are key business roles. However, handling these tasks can be challenging if your AR professionals process payments and send invoices manually. They may need help with a lot of paperwork and get frustrated, especially if they’re tracking customer payments. 

The good news is that AR automation can revolutionize your finance department and make your business successful. It will streamline your accounts receivable process, accelerate cash flow, and reduce human errors. Ultimately, your AR team will have more time to analyze other aspects of your company’s finances and increase its bottom line. Keep reading to learn more about AR automation.

What’s AR Automation?

AR automation uses cutting-edge technology to optimize financial processes. It automates tiresome and repetitive tasks and helps businesses collect money customers owe. It also speeds up a company’s approach to receiving payments from customers who purchase services or goods on credit. Businesses that use automation systems are likely to witness improved sales outstanding, profitability, and cash flow. 

Before automation, employees performed accounts receivable tasks manually, following several details and steps. AR automation systems eliminate this laborious process, giving employees time to work on other vital tasks. This increases the rate of collecting money owed and minimizes billing errors. 

How Does Accounts Receivable Automation Work?

AR Automation relies on sophisticated algorithms and software to handle repetitive and time-consuming tasks. Every company has variations in its workflow. However, AR automation relies on three elements: payment collection, invoicing, and reconciling accurate information. 

Automation simplifies the process of generating invoices required to meet customers’ needs. It reduces the process of entering data manually, thanks to its features that allow it to take and store payment terms, invoice details, and customer-specific information. When inputting data during purchase, it remains in the customer’s account throughout the payment journey. For instance, if a client is supposed to be billed on a particular date, say the 5th of every month, it will automatically generate and deliver invoices on that day. 

Moreover, AR automation can manage payment methods, track collection, match sales orders with invoices, and identify expired credit cards. Companies can also use it to encourage early payments and discourage late payments. AR databases provide real-time reports on payment statuses, making it easy to communicate with customers. This technology will enable you to accelerate your workflow, slash pesky human errors, and ensure the utmost accuracy in your financial dealings. 

Advantages Of AR Automation

Improved Cash Flow

Cash flow is the lifeblood of any business, and AR Automation knows how to keep it pumping. Automating your invoice and payment processes will enable you to receive payments faster. It will also let you reduce your company’s DSO. In 2021, about 60% of surveyed businesses witnessed an improvement in DSO after AR automation. 

Streamlined Workflow

Say farewell to the chaos of scattered paperwork and endless back-and-forth emails. AR Automation is your secret weapon for a smooth and organized workflow. It works like an expert conductor orchestrating your financial symphony. With everything in perfect harmony, you’ll have more time to focus on growing your business.

Increased Accuracy

Human errors are difficult to avoid, and they can cost you dearly. AR Automation eradicates these slip-ups, ensuring every “i” is dotted and every “t” is crossed. Automation will enhance your data consistency, minimize billing disputes and instances of duplicated invoices, and ultimately make your customers happy. 

Reduced Costs

As they say, “Time is money,” and AR Automation can save both. It eliminates manual tasks, frees valuable resources, and reduces operational costs. Through AR automation, your business will use e-invoicing to keep you from using paper and ink and reduce postage charges. Automation also reduces the need to write off unsettled invoices. 

Better Reporting

Clear, concise, comprehensive reports are the backbone of sound financial decision-making. AR Automation equips you with real-time data and visually appealing reports, offering real-time insights into customer payment statuses. With automation diligently monitoring open receivables, managers can proactively take measures to increase the likelihood of receiving timely payments. This can boost the company’s financial health.

Increased Compliance

Staying compliant with financial regulations can be as tricky as untangling a knot, but AR Automation can make you stay on the right side of the law.

As your business expands its markets, you may be required to adhere to several geographical-specific requirements. Each state or country may have distinct laws and regulations that must be followed. Automation software acts as a vigilant guardian. It will meticulously track these complexities, ensuring compliance.

Improved Customer Relations

Customers are the heartbeat of your business, and AR Automation knows how to keep them happy. Through timely reminders and efficient handling of accounts, it will help you build rock-solid relationships that last a lifetime. 

Disadvantages Of AR Automation

Challenging To Use

As with any new technology, using AR Automation systems might be challenging. Your employees may require some time to learn how to use the software. However, they’ll get the hang of it with practice, reducing their workload. 

Expensive To Implement

It’s true; quality comes at a price. Implementing AR Automation might require some investment upfront. Nonetheless, these costs typically balance out with the company’s substantial savings through heightened efficiency and productivity.

What Processes Can Your Company Automate?


Tired of manually sending out invoices and tracking payments? AR Automation has your back. With just a few clicks, you can automate the invoicing process and watch payments roll in like a gentle rain shower on a summer’s day.

Processing Digital Payments

Cash and checks are so yesterday. AR automation can handle digital payment processing, increase convenience and security, and enhance payment flow. 

Customer Outreach

Communication is vital, and AR Automation ensures you never miss a beat. Through this technology, you can send personalized reminders, thank-you notes, and gentle nudges to customers effortlessly. 

Key Features Of An AR Automation System

Automating Emails

AR Automation systems are masters of email wizardry. They can automatically send reminders, acknowledgments, and follow-ups while maintaining a personal touch. 

Distributing And Generating Invoices

Remember the days of printing and mailing invoices? Those days are long gone. AR Automation can distribute invoices electronically, saving you time, money, and paper. 

Matching Transactions

Reconciling transactions can be a tedious task. However, AR Automation can handle it with finesse. It matches your payments to invoices and ensures that your books are always balanced.

Several Payment Options

AR Automation gives customers choices. From credit cards to digital wallets, your customers can pay in ways that suit them best. 

Data Reporting

Data is the heart of intelligent decision-making. Thankfully, AR Automation systems are designed with several data reporting tools. Visualize your financial landscape with charts and graphs that make tracking and analyzing payments easier.

Managing Credit Risks

Staying on top of credit risks is essential for a healthy financial ecosystem. AR Automation will monitor credit limits and alert you of potential risks.

Wrapping Up

AR Automation can be your financial ally. If you install this software, you’ll conquer your accounts receivable challenges and revolutionize your economic landscape. Implement this technology in your business today and watch it soar to new heights.