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Automate Accounts Receivable: How to Choose AR Automation Software

  • 20 min read

Learn what accounts receivable automation software is, what the value of automated accounts receivable is, and how to choose AR automation software.

This guide has everything you need to help you confidently choose the best AR automation software.

Person holding a large pencil writes a checkmark on a dashboard. A suitcase with cash lays open beside them.

Hot take: you have yet to fully unlock your accounts receivable’s potential for accelerating cash flow.

Why can I be so sure? Because in our recent survey of 1,000 C-level executives, 96% agree that there's still work to be done to digitize their AR. Also, because you’re reading an article titled, ‘How to Choose AR Automation Software’ (but that’s beside the point).

For businesses to remain relevant, gain that coveted competitive edge, and position themselves for sustained growth, many are turning to digital transformation projects—and rightfully so. There’s a wealth of benefits to be gained through modernizing your infrastructure, optimizing existing businesses processes, focusing on delivering exceptional customer experiences, and freeing your workers to prioritize more strategic, impactful work.

However, it’s only now that accounts receivable is getting its moment in the sun. Or perhaps, its 15 minutes at the town hall?

Why? Well, up until recently, it simply has been deprioritized in favor of other, more-seemingly lucrative digitization projects—as evidenced by the 60% of executives who agree that their company’s AR departments haven’t been prioritized as much as other departments for digitization.

The problem is, AR digitization is a fairly new concept, so for businesses looking to automate accounts receivable, there are understandably many questions that need answering.

And that’s what’s brought you here today! To learn what value there is in automated accounts receivable and to learn how to choose AR automation software. Buckle up—and save this to your bookmarks!—because this guide has everything you need, and then some, to help you confidently choose the best AR automation software.

Jump to a section or question of interest:

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    What is accounts receivable automation software (and why do you need it)?

    First, some housekeeping. Simply put, accounts receivable automation software is software—typically deployed on-premises or in the cloud—that helps you streamline how you perform common accounts receivable processes, like:

    • Generating invoices
    • Delivering them to your customers
    • Accepting and processing payments
    • Matching and applying those payments to open invoices
    • Ensuring financial reporting accuracy

    These solutions will ease your burden of manual, administrative tasks so your AR team can operate with greater efficiency.

    As for why businesses automate accounts receivable? Because they want to accelerate their cash flow. Yes, there are other reasons—including the benefits we list below—but this is a common objective. This is important, because organizations today face some of the most challenging headwinds in decades—not hyperbole.

    Ninety-nine percent of executives in that same survey agree that forces outside of their control are creating major headaches for their business. This is increasing the pressure on their AR department’s performance to close the gap.

    AR automation software is swiftly becoming a necessity.

    What are the challenges of manual accounts receivable collections?

    Maximizing accounts receivable performance requires a deft combination of elite efficiency, productivity, and yes, even customer service. Unfortunately, performing your collections activities manually makes finding that combination near impossible.

    Look, we all know that accounts receivable is challenging on a good day, and when your processes are strictly manual, they compound the difficulties your AR team deals with day in and day out.

    For more detail on the subject, see this comprehensive article on the common problems with accounts receivable. In the meantime, here are the top challenges AR teams tend to face, and the consequences of having manual collections processes:

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    What are the benefits of accounts receivable automation software?

    OK, now we’re getting to the good stuff. We teased earlier the rationale behind businesses choosing to automate accounts receivable, but the list of benefits is truly astounding. We've consolidated the benefits of AR automation for you into the four key points below.

    Here’s what AR automation software can do for you:

    1. AR automation accelerates cash flow

    A healthy cash flow is worth its weight in gold—or checks... or credit cards... or wire transfers?

    But actually having more cash flowing in than out—I.e., the essentials of sustainability—is easier said than done. Many businesses routinely burn through cash more rapidly than they bring it in—especially those in growth mode, or in the face of a tumultuous economy. The ugly truth is money and expansion are not forever (only diamonds are).

    Simply put, not having positive cash flows means not having enough cash on hand to capitalize on lucrative opportunities when they arise. Even business as usual can be compromised when cash flows are stagnant.

    Here’s where AR automation can—and should—be used as a strategic lever. How quickly you collect cash hinges on the efficacy of numerous accounts receivable activities. Unfortunately, manual processes hamper all critical AR functions like invoicing, payment acceptance and processing, and collections management.

    In choosing to automate accounts receivable, businesses can more accurately assess the state of receivables and gain considerable advantages over those still reliant on antiquated processes.

    2. AR automation increases efficiencies and visibility

    Efficiency is deceptively simple. It is, after all, just a measure of productivity. Your AR staff, however, will forever struggle to maximize their productivity if they’re constrained and burdened by manual accounts receivable processes.

    Improving efficiency should be on every business’ to-do list. For by doing so, they:

    With AR automation software, complete digitization of virtually all routine accounts receivable tasks—those processes that slow down your ability collect payments—is achievable. For example, here’s how automating accounts receivable can positively impact three crucial collections activities:

    • Payment acceptance—a digital payment process helps you quickly collect billing information and encourages your customers to pay securely using their preferred methods.
    • Invoicing—automation of accounts receivable will allow you to satisfy the invoicing needs of your customers and save you immense time manually preparing and delivering invoices.
    • Cash application—acquiring the ability to automate payment matching will allow you to capture and reconcile payment data and eliminate data entry errors.

        3. AR automation helps you attract and retain talent (and makes them more successful)

        We surveyed 162 finance leaders to understand how AR automation software enables long-term remote work and ensures staff are equipped with what they need to add the greatest value to their companies. Respondents resoundingly agreed (75% of them) that by automating accounts receivable, they can increase bandwidth for their accounting and finance teams to take on strategic initiatives.

        Another 73% cite an improved ability to attract and retain accounting and finance talent as benefit.

        For CFOs, AR automation software can be the solution to their talent attraction and retention woes—which are becoming increasingly commonplace, even towards the tail-end of the great resignation. Specifically, it aids CFOs in the following ways:

        • Digitizing billing and payment processes helps staff maintain continuity while working from home. The ability to send invoices, request payments, and communicate more effectively with customers from anywhere crucially allows AR teams to embrace an operating model that’s more desirable than ever.
        • Through automated accounts receivable, you eliminate much of the tedium from the collections process. Many mundane tasks—like printing invoices and stuffing envelopes or manually processing card details over the phone—become obsolete, making for more enjoyable days.
        • Once no longer burdened by administrative mundanities, AR automation empowers AR professionals to take on more strategic work, enriching their involvements and opening opportunities for career advancement.

          4. AR automation delivers better customer experiences

          Your customers are the lifeblood of your business. So, it should come as no surprise that C-level executives widely agree (97% of them) that customer experience is an important component of their AR process.

          Interestingly, those same executives have clearly identified that the invoice to cash process—when gone unchecked—can negatively impact CX.

          Enter, AR automation software.

          Accounts receivable automation technology is known to strengthen customer relationships and simultaneously contribute to improved CX across the invoice to cash process. It can do so, by bridging the AR Disconnect—the chasm that forms between you and your customers during the payment process. Manual AR processes tend to lack transparency into receivables and are rife with ineffective communication methods. In automating your AR—with the right tools—you can circumvent this disconnect and deliver better CX.

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          🚨 If you're looking to create greater back-office efficiencies, accelerate cash flow, and improve customer experience, take our six-minute assessment and get personalized recommendations for how to transform your accounts receivable

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          What should you look for in accounts receivable automation software [checklists included]

          So, every accounts receivable automation software does the same thing right? Wrong. There are a lot of vendors out there; each touting different capabilities; each specializing in something unique; each promising something different.

          In an ever-expanding marketplace, it’s important you find an AR automation software that fits your exact needs. And, assuming you intend to grow and evolve your business, it’s vital you partner with an AR automation vendor that’s capable of growing with you, too.

          The last thing you want is to have to compromise on your digitization goals because the solution you ultimately select is incapable of supporting them.

          Unsure how exactly you’ll achieve your digital transformation goals? Take our 6-minute assessment and learn which AR automation tools can bring your dreams to life.

          Below are 12 evaluation criteria buckets designed to help you cut through the noise when choosing accounts receivable automation software. Each has its own checklist, so you know just what features to look for during your search.

          Click on the evaluation criteria to jump straight to it:

          1. Invoicing and statements
          2. Payments
          3. Collections
          4. Deductions and dispute management
          5. Customer analytics
          6. Cash application
          7. Collaboration and communication
          8. Customer experience
          9. Customer adoption
          10. Ongoing support
          11. Security
          12. Cost

            1. Invoicing and statements

            Looking to automate invoice delivery across all channels? Here’s what you should look for:

            2. Payments

            Looking to easily facilitate business-grade online payments and give your customers the convenient payment experience they expect? Here’s what you should look for:

            3. Collections

            Looking to take the work out of accounts receivable collections? Here’s what you should look for:

            4. Deductions and dispute management

            Looking to track, manage, and resolve disputes more efficiently and capture more revenue? Here’s what you should look for:

            5. Customer analytics

            Looking to understand your accounts receivable successes and performance and find new areas for improvement? Here’s what you should look for:

            6. Cash application

            Looking to automate your cash application process, easily capture and reconcile payment data, eliminate data entry errors, and speed up cash flow? Here’s what you should look for:

            7. Collaboration and communication

            Looking to engage your customers and work more collaboratively with them to accelerate payments and build extraordinary customer experiences? Here’s what you should look for:

            8. Customer experience

            Looking to give your buyers better billing and payment experiences? Here’s what you should look for:

            9. Customer adoption

            Looking to implement an AR automation solution that’s actually used by your customers? Here’s what you should look for:

            10. Ongoing support

            Looking to partner with a vendor that’s committed to helping you successfully transform your accounts receivable? Here’s what you should look for:

            11. Security

            Looking to partner with a vendor that takes security as seriously as it does AR automation? Here’s what you should look for:

            12. Cost

            Looking for a solution that delivers substantial return on investment across the board? Here’s what you should look for:

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            How should you evaluate accounts receivable automation software?

            Now that you know what to look for to automate accounts receivable, it’s time to evaluate AR automation solutions—pro tip: share the checklists above with your team and use them as you work through your evaluation.

            Here’s our suggested course of action for determining which solution is best suited to your unique needs. Click on each bulleted step to jump directly to its section:

            • Step 1—Talk to your team
            • Step 2—Define your challenges and goals
            • Step 3—Identify the vendors that can meet your requirements
            • Step 4—Determine what post-implementation success looks like
            • Step 5—Get demonstrations of your shortlisted software
            • Step 6—Get stakeholder buy-in and make a final decision

            Step 1. Close your laptop and talk to your team (after reading this guide, of course)

            Before you even consider firing up another tab to search furiously for all accounts receivable automation vendors—or some variation on that—take some time to connect with your team members whose work would be directly impacted by an AR automation solution.

            Use this time to understand their modus operandi, and home in on the source of their frustrations. Work to disseminate opportunities, but also to ensure you don’t embark on a journey that’ll ultimately result in you duplicating what may already be in place.

            Questions to consider asking during this step:

            • What are the issues we would like to resolve?
            • What are the risks of not making any changes?
            • Are these issues due to gaps in our technology stack, knowledge, or headcount?
            • Which internal stakeholders should we include in the evaluation process?

            Step 2. Begin your research by defining your current challenges and future goals

            A principal factor in determining which AR automation software you ultimately choose should be how well it addresses your unique challenges and future goals. After all, it does you no good if your specific objectives cannot be achieved during your digital transformation journey.

            Now, before you can find a solution to your troubles you need to first identify the gaps that exist within your current AR processes. Only once you’ve defined those will you understand where you have room to grow.

            Questions to consider asking during this step:

            • Which of our AR processes are currently under-optimized, and where can we streamline to relieve pain around wasted time, under-utilized talent, and delayed cash flow?
            • Which AR processes do we believe are ripe for transformation (and what can we improve so that it’s hyper-efficient, drives sustainable positive cash flow, and plays a pivotal role in creating exceptional experiences for customers and vendors)?

            Unsure how to answer these questions? In taking our 6-minute assessment, we’ll uncover your AR needs and suggest the best path forward.

            Step 3. Use the criteria (and checklists) above to identify which accounts receivable automation vendors can deliver what you need

            Now’s the time to get your hands dirty! Cast a wide net and quickly build your shortlist using the checklists above. Not all the information you need will be publicly available—I.e., on the vendor’s website—so, you might need to get crafty.

            Visit review sites and reputable third-party domains to try and fill the gaps. For whatever you can’t easily find, be sure to request an answer if you decide to request a software demonstration.

            Bonus—be sure to compare AR automation solutions directly:

            Step 4. Determine what post-implementation success looks like (and which vendors can ensure you’re successful long-term)

            While out-of-the-box capabilities are cool, it’s equally cool to be confident that the partnership you enter will be fruitful for many years. Some solutions will be plug-and-play; others, less so. One’s not necessarily better than the other, as what benefits you is highly circumstantial.

            That said, if your needs are complex, it’s important you gauge during your evaluation how competent each AR automation solution is—or will be—at scaling to meet your demands. It’s important you work with a vendor who can deliver against a host of requirements, whether you need them now, or years down the road.

            But perhaps most crucial—and most critical to long-term success—is determining upfront whether your customers will adopt your newly implemented software or not. Customer payment portals, for example, are common features of AR automation software. If the vendor you partner with is incapable of helping you drive adoption of it, that’s a red flag.

            Questions to consider asking during this step:

            • Does the vendor provide the right amount of training for employees to master the new features within the system?
            • What support can the vendor offer us to ensure our ongoing success post-implementation?
            • Does the vendor have a strategy to encourage rapid adoption among employees and customers?

            Step 5. Once you’ve whittled down your shortlist, get demonstrations of the software

            Now the fun part! Once you’ve narrowed down your list of suitors, reach out and request a demonstration of each. This is the best way to get a feel for the software.

            During this step, be sure to push the vendor to show you functionality that is hyper-relevant to your use case. A vendor that defaults to you showing you a generic demonstration might not be capable of delivering against your needs. Also, be sure to consider any customizations you may need, and factor in any additional costs that may come with them.

            Looking to save yourself some time? Here’s a link to Versapay’s get a demo page 😉.

            Questions to consider asking during this step:

            • Can you show me how your software helps me achieve this particular goal?
            • I have a particular problem. How can your software help me?
            • What other clients within my industry do you serve? Can you provide me with testimonials and case studies?

              Step 6. Get stakeholder buy-in and make a final decision

              Last—but certainly not least—you'll want to consolidate your findings and vendor analyses and share them with all stakeholders involved. Note that some of these stakeholders should be involved during the other stages, too—primarily the demonstration and other high-level discussions you find yourself having with vendors.

              Then, request quotes and proposals from whichever vendor(s) you’re most satisfied with. And that is how you choose AR automation software.

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              Next steps for digital transformation

              Now that you know what AR automation software is, the benefits of accounts receivable automation software, and how to automate accounts receivable, it’s time to figure out which solution is best suited for solving your unique challenges.

              Alongside connecting customers with AR teams over the cloud to increase efficiency, accelerate cash flow, and deliver exceptional customer experiences, Versapay’s Collaborative AR automation platform is designed for growth. Versapay offers a variety of solutions that can be purchased individually or together to meet your business’ unique needs, including:

              Versapay is designed to scale your AR automation when you’re ready, however you need it to. You’ll never have to compromise on your goals—even if you haven’t yet defined them.

              About the author

              Jordan Zenko Headshot

              Jordan Zenko

              Jordan Zenko is the Senior Content Marketing Manager at Versapay. A self-proclaimed storyteller, he authors in-depth content that educates and inspires accounts receivable and finance professionals on ways to transform their businesses. Jordan's leap to fintech comes after 5 years in business intelligence and data analytics.

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