The InvoiceSherpa Blog

Accounts Receivable Challenges and How Automation Can Help

A streamlined accounts receivable (AR) process is essential for maintaining your business's financial health, ensuring that cash flows efficiently without unnecessary delays. 

Yet, many businesses face challenges in managing AR, be it delayed payments, invoicing discrepancies, and/or extensive administrative overhead. Each of these can stifle growth and strain resources.

The good news? An accounts receivable automation software like InvoiceSherpa can help you overcome all these hurdles. It increases your operational efficiency, reduces errors, and speeds up your payment cycles.

We’ll highlight some of the common accounts receivable challenges and how automation can help below. But if you just want to get started improving your financial management, get set up with the best automated invoice processing software today at InvoiceSherpa.

Our solution helps you get paid faster while removing manual human entry from the process. See what’s possible with a 14-day free trial!

The Importance of Your Accounts Receivable Process

Effective AR processes ensure you collect payment from clients in a timely manner, directly influencing your company’s liquidity and operational capabilities. 

By maintaining a steady stream of income you no longer have to stress about covering day-to-day expenses, investing in growth opportunities, or maintaining financial stability.

Improving your AR process will also help you predict cash flows better, which is crucial for accurate budgeting and financial planning. It minimizes the risk of bad debt, too, which is a common pitfall that can impact a business’s bottom line. 

If you don’t already know how cash flow problems usually start, it’s a direct result of a fragmented AR process. Given the importance of cash flow management, this is an area worth investing time and resources into. So, let’s get into some common accounts receivable challenges and how automation can help.

Common Accounts Receivable Challenges and How Automation Can Help

There are four main obstacles businesses face in overseeing their accounts receivable process:

  1. Delayed payments
  2. Time-consuming manual oversight
  3. Discrepancies and human error
  4. Poor communication between departments

The good news? You can effortlessly overcome these and reap the accounts receivable automation benefits with the help of InvoiceSherpa! Learn more below.

Delayed Payments 

Delayed payments directly impact your business’s liquidity and financial planning. These delays often occur due to inefficiencies in the billing process, such as slow invoice generation or lack of a timely overdue payment follow-up email process. 

Automation can tackle these issues head-on by streamlining invoice delivery and setting up automatic reminders for clients. This ensures payment requests are consistent and timely, reducing the occurrence of late payments. 

You don’t just have to take our word for it, either - we have the data to back it up. Our billing automation system has helped clients reduce their Days Sales Outstanding (DSO) by 20%!

Moreover, automated systems can escalate reminders progressively by applying increasing urgency to overdue accounts, which helps secure payments within the desired timeframe. 

They can even go as far as tacking on the maximum invoice late fees by state and allowing you to customize your invoice late fee wording.

Time-Consuming Processes

AR tasks can be incredibly time-consuming, especially when handled manually. Activities such as data entry, invoice creation, and accounts receivable reconciliation not only drain time but also divert resources from core business functions. 

Sure, you could consider accounts receivable outsourcing so that your team can focus on what they do best instead. 

But, accounts receivable management services are too expensive for many small and mid-sized businesses. They’re also still prone to human error and don’t support optimal communication between departments (two other accounts receivable challenges we’ll discuss momentarily).

Automation is the solution here. It integrates these processes into a single platform that performs tasks rapidly and with fewer errors. 

This not only speeds up the workflow but also frees up staff to focus on more strategic activities that add value to the business rather than mundane administrative tasks.

Discrepancies From Human Error

Mistakes in invoicing can lead to disputes that are not only difficult to resolve but also damaging to client relationships. Moreover, errors in the AR process can create massive headaches for your team as you’re stuck unraveling the mistakes and looking for discrepancies.

Automation software minimizes these risks by ensuring that invoices are generated with precision and consistency, backed by digital records that can be easily referenced. 

When disputes do occur, automated systems provide detailed audit trails and documentation, making it easier to understand the origins of the dispute and address any issues accurately. 

Poor Communication Between Departments

Effective AR management relies on seamless communication between various departments, such as sales, accounting, and customer service. This is important as poor communication can lead to errors in billing, inconsistencies in customer data, and delays in processing payments. 

Automation bridges these gaps with a unified platform where all relevant data is accessible to authorized personnel across departments. This ensures everyone has access to the same up-to-date information, reducing misunderstandings and enhancing operational efficiency.

Ready to Get Started Overcoming Accounts Receivable Challenges With Automation?

With an understanding of some of the most daunting accounts receivable challenges and how automation can help, you’re probably interested in learning how to automate accounts receivable - look no further than InvoiceSherpa. 

In just a few clicks you can overcome all the challenges we’ve discussed today, streamlining your financial management. Our solution is trusted by leading companies like Patagonia, Datanyze, Smartsheet, and many more.

From the moment an invoice is generated, our software ensures it is sent out promptly utilizing customizable templates that maintain your brand's professionalism. This mitigates delayed payments so your cash flows like an open faucet.

To further combat late payments, InvoiceSherpa's automated reminder system sends timely notifications to your clients, ensuring due dates are clearly communicated and adhered to.

Clients get their own portal for 24/7 access to outstanding invoices, and they can even set up recurring payments for subscription-based business models. 

You get your own dashboard as well where you can monitor and stay on top of cash flow, improving financial clarity across the entire organization.

InvoiceSherpa addresses the issue of discrepancies by maintaining precise records and providing clear audit trails for every transaction. This helps quickly resolve the rare dispute you encounter and reduces the likelihood of errors that can lead to discrepancies in the first place.

Plus, it automatically reconciles payments over into your accounting software - whether it’s Quickbooks, Xero, or Clio. Other integrations include PayPal, Stripe,, LawPay, Propay, and more.

Getting started is easy, too. You have a 14-day free trial awaiting you with no credit card necessary. Simply create an account, sync with your accounting software, automate your AR process, set up integrated payments, and let our software do the rest!

Many have said that leveraging InvoiceSherpa is one of the best decisions they made for financial management. It’s like having your own full-time AR employee for just $49 per month, and you’ll see improvements in past due deliverables, days sales outstanding, and bad debt reserves.

Don’t just take our word for it, though. Get started today and harness the power of the best accounts receivable automation software at InvoiceSherpa!

Final Thoughts on Accounts Receivable Challenges and How Automation Can Help

There you have it - all the most difficult accounts receivable challenges and how automation can help. Automation streamlines invoicing processes, reduces errors, improves payment times, and fosters better communication within your business.

Our blog has additional accounting tips and tricks including the basics of AR automation software, how to calculate accounts receivable, demand letter for payment, how to bill lawn care customers, how to send an invoice to collection, forecasting accounts receivable, unbilled receivables, and more.

At this point though, it’s time you put the common challenges of accounts receivable in the past for good by leveraging automation in your business. Whether you need a legal invoicing software, plumbing invoicing software, or anything in between, InvoiceSherpa will support your financial goals.

Start with InvoiceSherpa today and see for yourself how the power of automation can optimize your financial operations. Experience the ease and efficiency of our comprehensive AR solutions tailored for your business needs!

Posted on June 5, 2024

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