The InvoiceSherpa Blog

How to Automate Accounts Receivable Process Through Software

Let's face it, managing accounts receivable (AR) can be a time-consuming process prone to human error. Yet, it's too important to the financial health of your business to be overlooked. 

Most small and mid-sized businesses can’t justify hiring full-time help or even outsource accounts receivable for that matter, which is why learning how to automate accounts receivable process is the best possible approach. 

We've successfully guided thousands of businesses through the transition to automated AR systems, and today, we’ll offer you the strategy to streamline this process and reap all the benefits that come with doing so - enhancing cash flow, minimizing administrative costs, and boosting customer satisfaction. 

The truth is, it's as easy as a few clicks with our accounts receivable automation software at InvoiceSherpa. Our solution helps you get paid faster without lifting a finger, all for as little as $49/month. Learn how you can take advantage of this opportunity below! 

Can Accounts Receivable Be Automated?

First things first…can accounts receivable be automated? Absolutely! This involves the use of software to handle tedious routine tasks such as invoicing, tracking payments, sending reminders for overdue payments, and generating financial reports. 

Automated systems can also integrate with existing financial software to provide a comprehensive overview of a business's finances, helping to improve decision-making and cash flow management.

This is just part of why automating accounts receivable is not just possible, but necessary.

Why Automating Accounts Receivable is One of the Best Investments You Can Make

Learning how to automate accounts receivable is one of the best decisions you can make for your business. 

The accounts receivable automation benefits range from better cash flow to enhanced client relations, lower operational costs, and more efficient use of internal resources. Any one of these reasons on its own is enough to justify investing in a billing automation system!

Enhancing Cash Flow and Reducing Days Sales Outstanding (DSO)

You hear a lot about cash flow in conversations related to accounts receivable, but why is cash flow management important? And how do cash flow problems usually start?

Cash flow is your business’ lifeblood. Failing to quickly capture payment for services rendered or products delivered can lead to a cascade of problems in your business, like not being able to meet your own debt obligations or fuel business growth.

Fortunately, automated invoicing and payment reminders ensure that payments are received more promptly, effectively reducing the days sales outstanding - a measure of how quickly cash can be generated from receivables. 

Companies can reinvest capital back into the business faster, supporting growth and operational needs by decreasing DSO. We’ll show you how our solution reduces DSO by 20% - but this is just the tip of the iceberg! 

Increasing Accuracy and Reducing Administrative Costs

Automation minimizes human error that can occur in manual entry and calculations, whether someone on your team is handling the process or even if you’ve outsourced to accounts receivable management services.

Automating AR ensures invoices are generated and dispatched with precision, and payments are tracked systematically. Accounts receivable reconciliation occurs automatically.

This not only enhances the accuracy of your financial data but also cuts down on the administrative burden. The labor and time savings here translate into cost reductions, allowing these resources to be allocated where they may be of better use.

Improving Customer Satisfaction and Relationship Management

Automated AR systems provide a more consistent and professional interaction with clients regarding billing. They ensure that invoices are sent on time and are easy to understand, helping to avoid any confusion or disputes. 

These systems also offer more convenient payment methods for clients, creating a more seamless payment experience. This level of efficiency and professionalism fosters better relationships with clients, contributing to increased customer satisfaction and loyalty.

How to Automate Accounts Receivable Process: Step-by-Step Guide

You can see why more and more businesses are investing in the best automated invoice processing software to streamline internal processes, get paid faster, and improve customer relations. 

If you’re ready to reap these benefits yourself, we’ll walk you through the process below. From choosing the right system to implementing the software and optimizing it over time, here’s everything you need to know.

Evaluating Your Current Accounts Receivable Processes

Starting with a thorough assessment of your current AR process is going to help you identify areas of improvement so you can choose a system that aligns with those needs.

Map out the entire AR process from invoice creation to payment receipt. Note the steps that involve manual data entry, multiple approvals, or any repetitive tasks that could be streamlined.

This will help you uncover common bottlenecks such as delayed invoicing, slow payment processing, or frequent errors in billing. These issues often indicate areas where automation could have a significant impact.

It’s a good idea to document your performance metrics from an AR standpoint, as this will come in handy when you assess the return on your investment later on. These include DSO, past-due deliverables, bad debt reserves, and more.

If you don’t handle the AR process yourself, talk with the team member who does and involve them in this decision. They are more familiar with challenges encountered, after all.

You’ll also want to take note of the current technological framework your business uses for accounting and CRM systems. This way you can choose AR automation tool that integrates smoothly. Speaking of which…

Choosing the Right AR Automation Software

With a better understanding of where you process can be improved you can begin searching for the best accounts receivable software that aligns with your needs. 

There’s a lot to consider here, and the stakes are high when it comes to financial health. Don’t stress though - here’s what you need to look for in choosing your system:

Essential Features

There are a few essential features any software should be equipped with, like automated invoice generation, electronic invoice delivery, online payment portals, automatic payment reminders, and real-time reporting capabilities.

Integration Capabilities

As we mentioned earlier, the ability to integrate with existing systems is paramount for a smooth transition over to this new process. 

Look for integrations like Quickbooks, Clio, Xero, PayPal, Stripe, or any that are relevant to your specific industry - like LawPay for the legal field.

User Interface

We also recommend you assess the software’s user interface. After all, part of what has drawn you to learn how to automate accounts receivable is for a simpler, more seamless process! User-friendliness can reduce the learning curve and lead to quicker adoption across your team.


Don’t make the mistake of choosing your software solely for today’s needs - think about where you forecast your business being a few years from now. Will the system scale with you, or are you going to be forced to restart the process again if you outgrow the system?

Security Features

Given the sensitivity of financial data, ensure the software is backed by strong security measures to protect against data breaches. 

It needs to be compliant with regulations like GDPR or PCI DSS. This not only protects you but also your customers, making it an essential investment in peace of mind.

Value for the Money

We know that you have a budget to stay within, but we do want to caution you against shopping based on price alone. Instead, consider the overall value you’re getting from the solution - especially compared to more expensive solutions like hiring full-time or outsourcing.

Evaluate the pricing models of different software solutions and consider the total cost of ownership, including setup, subscription fees, and any additional charges for support or updates. 

The software should offer a good return on investment by enhancing AR efficiencies and reducing overhead costs. You should also have access to a free trial to get a sense of just how much value the system provides before having to commit and put your credit card down.

Vendor Reputation and Support

Last but not least, take a moment to assess the reputation behind the software you’re choosing. Look at reviews and testimonials to gauge customer satisfaction and the quality of customer support provided. 

Just remember to take testimonials with a grain of salt and look for general themes and trends rather than reviews in isolation. What did (or did not) work for one business may not align with your specific needs.

We said it before and we’ll say it again - automating accounts receivable is as simple as a few clicks when you choose InvoiceSherpa. You can get up and running in minutes today. But whether you choose us or someone else, let’s talk about implementing your chosen software.

Implementing the Software

Pan the implementation process in detail before the software goes live. This includes setting a realistic timeline, allocating resources, and defining the scope of the implementation. Involve all key stakeholders in this phase to align goals and expectations.

Carefully migrate your existing accounts receivable data to the new system. This step often involves cleansing data to correct any inaccuracies and ensure that only valid and current data is transferred.

Then, integrate the AR automation software with your existing accounting systems and other relevant business applications. This supports data consistency across all platforms and streamlines the flow of information.

Be sure to provide comprehensive training to all users of the software so they can make the most of the software and reap all the benefits it has to offer. Make it clear that they have access to ongoing support to address any issues as they arise, helping to mitigate resistance and increase user adoption.

Now is the time to go live with your system and customize your invoices to align with your brand - right down to the invoice late fee wording with the maximum late fees by state applied at your discretion. 

You can also set up recurring payments for certain customers so that the process becomes entirely hands-off for both parties after the initial setup. 

Monitoring and Optimizing the Automated System

By this point, you should have your automated system up and running. Anytime you generate an invoice for a client it will be sent out automatically. 

Overdue payment reminder emails will fire off on a set schedule if you don’t get paid. When payment does come through, it’s automatically reconciled in your AR software.

Despite the hands-off nature of automation, though, there is still going to be some oversight and management necessary to make the most of the solution. Regularly assess performance of your KPIs and compare with prior to implementation to make sure things are improving.

You can continue to optimize your system’s performance based on the feedback and data you’re getting. Be prepared to adapt the system in response to changes in business processes, regulatory requirements, or financial strategies. 

But that’s it - you now know how to automate accounts receivable! Now, there’s only one thing left to do… 

Automating Accounts Receivable Systems is Easy and Affordable With InvoiceSherpa!

Whether you’re looking to implement lawyer invoicing software, plumbing invoicing software, or even lawn care invoicing, learning how to automate accounts receivable process is as simple as syncing your accounting software with InvoiceSherpa and setting up your system.

Brands like Patagonia, Datanyze, Smartsheet, Yieldmo, and others all trust us with their AR processes and you can too. 

It’s quick and easy and you’ll begin reaping the benefits of automation in no time - including faster payments, reduced resources, and stronger customer relationships. Here’s what makes it the #1 choice for your business:

Not only can you see up to a 20% dip in DSO with InvoiceSherpa, but our customers have seen a 25% reduction in past due deliverable and a 15% drop in bad debt reserves. 

The system integrates with your accounting software and other software, syncing in just a snap. Once you have it all set up, you can truly but the day to day of AR out of sight, out of mind.

The best part? You can get started today risk-free through a 14-day trial. No credit card is necessary. That’s how confident we are you’ll want to stick around once you see how automating accounts receivable with InvoiceSherpa transforms your financial health!

Final Thoughts on How to Automate Accounts Receivable Process

Hopefully, you have a clear understanding of your next steps as we wrap up this guide on automating accounts receivable. It’s as simple as considering your needs and determining whether or not InvoiceSherpa can meet them. We are certain it can.

Automating this process enhances efficiency, improves cash flow, and strengthens customer relationships. It’s a smart investment for any business, particularly small and mid-sized operations that can’t justify full-time AR employees or outsourcing to other services.

Find additional accounting tips and tricks in our blog, like how to calculate accounts receivable, how to send an invoice to collections, legal billing for dummies, how to forecast accounts receivable, unbilled receivables, demand letter for payment, increase in accounts receivable, and more.

Or, take the first step towards automating AR today at InvoiceSherpa. Unlock the potential of efficient, effective AR management in just a few clicks!

Posted on May 3, 2024

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