The InvoiceSherpa Blog

What is AR Automation Software? Introducing Accounts Receivable Automation

Team members in small and mid-sized businesses often find themselves juggling multiple roles, including managing accounts receivable - a critical but time-consuming task. 

Without the resources to employ a full-time AR specialist, and facing the high costs and complexities of outsourcing, your business needs a practical solution to manage receivables efficiently. 

After all, the importance of maintaining accurate and clear accounts cannot be understated, as it directly impacts cash flow and financial stability. This is where accounts receivable automation software comes into play.

But what is AR automation software, and what can this emerging technology do for your company? Simply put, it streamlines invoicing, payment tracking, and financial reporting, reducing manual effort and minimizing errors. Businesses can ensure timely collections, improve cash flow, and free up resources to focus on core activities by automating this task.

We’ll show you how to harness the full power of a billing automation system below with tips on choosing the right solution for your company’s unique needs. However, your search for the best AR automation software ends right here at InvoiceSherpa.

Our system integrates seamlessly with existing accounting systems, enhancing efficiency without the need for significant overhauls.

 With features designed to automate payment reminders and reconcile accounts effortlessly, InvoiceSherpa not only simplifies AR processes but also accelerates your cash cycle. Learn more about how it works with a demo or free trial today!

What is Accounts Receivable Automation?

Let’s get right into the topic at hand - what is AR automation software? This is simply using technology to manage and streamline the invoicing and payment processes of a business. 

You let the technology handle tasks that would otherwise require manual input, such as sending out invoices, tracking payments, and following up on overdue accounts with a payment reminder email

Now, what is accounts receivable automation software comprised of? Here are the key components of any AR automation software:

Businesses can improve their efficiency, reduce the likelihood of errors, and enhance their overall financial operations by automating these functions. That being said, let’s take a deeper look at the accounts receivable automation benefits below.

What is AR Automation Software Going to Do For Your Business?

So, what is accounts receivable automation going to do for your business? What makes it a better choice than hiring accounts receivable management services or a full-time employee? 

The right software saves you time and stress while helping you get paid faster and improving client relations. It’s really that simple!

Enhancing Financial Clarity 

AR automation provides a clear, accurate view of your business's financial status by automating the tracking of invoices and payments. Real-time updates and detailed reports help you understand your financial position at any moment, aiding in better decision-making.

Saving Time and Resources

Automating routine accounts receivable tasks eliminates the need for manual input and follow-up, freeing up your team to focus on more strategic activities. 

This not only saves time but also reduces the labor costs associated with managing receivables, allowing you to allocate resources more effectively across your organization.

Impact on Cash Flow Management

AR automation software helps maintain a steady inflow of cash by ensuring that invoices are issued promptly and followed up automatically. It minimizes delays in payment collection, enabling more predictable cash flow management. 

But, why is cash flow management important? This regularity is essential for maintaining the liquidity needed to fund daily operations and growth initiatives. 

As we discuss in our guide on how cash flow problems usually start, it’s typically the result of having to constantly chase down payments from your customers. You can put this problem in the past with an efficient, streamlined AR management system.

Reducing Errors and Increasing Compliance

Manual processes are prone to human errors, from data entry mistakes to missed follow-ups on unpaid invoices. Automation reduces these risks by handling tasks consistently and accurately. 

AR automation software also keeps a digital record of all transactions, which is essential for audit trails and compliance with financial regulations

Improving Customer Relations

It’s not just you who will benefit from AR automation - your clients will as well. With faster, error-free invoicing and convenient payment methods, clients experience less friction and greater satisfaction. Translation: you get paid faster!

Automated systems also allow for more personalized communication and timely resolution of any billing issues, enhancing overall client service and retention.

Are There Any Drawbacks to AR Automation?

You can see why so many small and mid-sized businesses are making the switch to AR automation in favor of traditional management processes. But what is accounts receivable automation’s downside, if any exists?

The truth is that there is really no reason to hold off on investing in automation. That being said, we do want to highlight a few considerations to keep in mind:

Initial Setup and Integration Challenges

Integrating new software with existing accounting systems may require significant time and effort, particularly if the existing data formats and processes differ substantially from those supported by the new system. 

The transition period can temporarily disrupt normal operations and may require additional training for staff. In the end, though, it’s going to improve productivity and transparency across the business - it’s like taking one step backwards so that you can take a gigantic leap forward!

Costs of Implementation and Maintenance

The financial investment in AR automation software includes not only the initial purchase price or subscription fees but also ongoing costs related to maintenance, updates, and potentially, additional hardware. 

For smaller businesses, the upfront and recurring costs can be a significant consideration, weighing against the anticipated efficiency gains. However, these costs pale in comparison to hiring full-time help for AR management or even outsourcing. In the end, you’re still paying less while enjoying peace of mind. 

Dependence on Technology

Relying heavily on automated systems introduces a degree of risk, particularly if the software experiences downtime or technical issues. 

Such dependencies can lead to disruptions in billing and collections processes if the system fails. Ensuring that there are adequate support and contingency plans in place is crucial to mitigate these risks. Much of this can be avoided by investing in a dependable, proven solution like InvoiceSherpa.

Potential for Over-Automation

There's a risk that over-reliance on automation might lead to a lack of personal touch in customer interactions. In industries where client relationships are key, the impersonal nature of automated communications may potentially alienate clients. 

It’s important to find a balance between automated processes and personalized service, ensuring that communications retain a human element where necessary. 

For example, taking the time to fully customize invoice templates and continue to check in with key accounts manually. You’re not automating the relationship, after all - just the payment side of things.

Data Security and Privacy Concerns

Automating AR processes often involves storing sensitive client information in digital formats, which can be vulnerable to security breaches. 

Again, though, this can be avoided by ensuring the software you choose complies with relevant data protection regulations and uses robust security measures to protect client data is essential to prevent potential data theft or leakage.

That being said, any of these “downsides” are really just the result of choosing a low-quality invoicing solution. So, let’s offer some tips on picking the right to avoid these headaches!

Tips on Choosing the Right Technology to Streamline Your Accounting Processes

It’s clear that investing in AR automation delivers tangible benefits for businesses across all industries. However, not all solutions are created equal. 

So, here are some tips on choosing the best automated invoice processing software for your unique needs - from key features to look for to integration, cost considerations, and more. It all starts with considering your specific operation, though…

Assessing Your Business Needs

Conduct a deep analysis of your business’s specific needs before choosing a software. Where are the biggest points of friction in your billing process right now, and what do you need to be able to do with the software?

Consider the volume of transactions, the complexity of your billing processes, and any specific challenges you face with accounts receivable. This assessment helps ensure the software you choose can handle your current demands and scale as your business grows.

Key Features to Look for in AR Automation Software

Essential functionalities include automated invoice generation, real-time payment tracking, customizable payment reminders, and comprehensive reporting tools. 

Everything should be customizable, right down to applying the maximum late fees by state, the wording on your invoices, and the different payment methods you accept.

You should be able to set up recurring payments for subscription-based products or services as this will reduce the hassle of billing for you and the customer.

Integration with Existing Systems

The best AR automation software should seamlessly integrate with your existing accounting systems and software platforms so that you don’t have to stress about updating other processes. 

Integration simplifies data transfer and reduces the risk of errors associated with manual data entry. Ensure that the AR solution is compatible with your current infrastructure to avoid costly changes to your established systems.

This includes the basic accounting software like Quickbooks, Xero, or Clio to payment process like PayPal or Stripe along with more advanced integrations like, Forte, LawPay, and more. Again - this goes back to considering your specific needs.

Ease of Use

The whole point of investing in this software is to enhance your operations, not complicate them. Opt for a solution with a user-friendly interface that your team can easily adopt and utilize effectively. 

The less time spent on learning new software, the quicker you'll see benefits in productivity and error reduction. Consider solutions that offer strong customer support and training resources to help your team make the most of the software’s features. A free demo is a must.

Value for the Money

Finally, evaluate the cost versus the benefits of each option you’re weighing. The right AR automation software should offer a clear return on investment through improved efficiency, reduced errors, and better cash flow management. 

Compare pricing models, including any setup fees, monthly or annual subscription costs, and potential costs for updates or additional features. 

Think about the savings a system offers you on what you’d otherwise pay for a full-time employee or to outsource accounts receivable to an AR management company. It’s about considering value rather than cost.

Discover the Power of Accounts Receivable Automation Software Today at InvoiceSherpa!

While there’s a lot to consider in choosing the ideal AR automation solution, and even more options at your disposal, your search for a simple AR automation software that delivers a clear return ends here at InvoiceSherpa. 

Our solution empowers you to get paid faster and is like having a full-time employee for just $49/month. We’ve helped customers bring down past due receivables by 25%, days sales outstanding (DSO) by 20%, and bad debt reserves by 15%. Learn more about what we can do for you below!

What Makes Our AR Automation Software the #1 Choice for Small and Medium Businesses?

InvoiceSherpa is the leading AR automation software that helps you accelerate your cash flow and stay on top of every single receivable without actually having to lift a finger. 

It sends out structured reminders on whatever schedule you decide on with automatic late fees added as necessary. No more follow-up emails or calls, you can focus your attention on what matters most to your business while InvoiceSherpa does the heavy lifting.

Your clients will love that you’re set up with our system, too, as they can easily execute payments in real-time directly from the invoice you send out through InvoiceSherpa. Clients even get their own dedicated portal to make payments through at any time. Payment options range from credit cards to ACH.

Customers are notified when an invoice is created, when the due date is approaching, and when it’s past due. You can effortlessly customize the invoice late fee wording, too. Upon confirmation of payment, they’re sent a thank you follow-up.

SaaS businesses and other subscription-based businesses can set up recurring charges on a monthly basis without the need for an administrator or an accountant to follow up on these monthly fixed invoices.

Whether you’re looking for the best lawyer invoicing software, plumbing invoicing software, or anything in between, there’s no question that InvoiceSherpa is the optimal solution. 

But don’t just take our word for it - try it yourself risk-free for 14 days! No credit card is necessary to begin your free trial. The best part? Getting set up takes just a few clicks.

Getting Started With InvoiceSherpa Today

It’s as simple as connecting to your payment processor and syncing with your accounting software, which will pull in invoices and customer data. From there, you can configure invoices and other touchpoints to align with your branding.

Then, just automate all necessary AR processes. Choose the customers to bill, select the payment gateway to use, and pick invoices to be automatically paid.

That’s it - the system will automatically handle everything on your behalf once you create new invoices, and upon payment being received, will sync into your accounting system.

It couldn’t be any easier, but we also offer world-class customer service every step of the way if you need help. So, what are you waiting for? It’s time to experience the power of AR automation in your own business.

Wrapping Up Our Beginner’s Guide to AR Automation Software

So, what is AR automation software? As we wrap up our guide to accounts receivable automation, this type of system can transform your financial management to enhance efficiency and accuracy while accelerating cash flow.

By automating invoicing and collections, you free up valuable resources, allowing your team to focus on growth and service excellence. What is accounts receivable automation going to do for your business specifically, though? There’s only one way to find out - get started today.

Our blog has more accounting tips and tricks on managing unbilled receivables, demand letter for payment, when an account becomes uncollectible and must be written off, how to send an invoice to collections, legal billing for dummies, increase in accounts receivable, is a high accounts receivable turnover good, and more.

Otherwise, we invite you to take complete control of your financial operations and discover the benefits of InvoiceSherpa, designed to streamline your receivables efficiently. Optimize your financial workflows and improve your bottom line today!

May 3, 2024

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