Accounts Receivable Automation
A Complete Guide
ScienceSoft draws on 17 years of experience in corporate financial software development to introduce seamless automation of accounts receivable processes.
Accounts Receivable Automation: the Essence
Accounts receivable (A/R) automation is a way for companies to eliminate manual efforts across all A/R-associated workflows, from bookkeeping to cash inflow forecasting to debt recovery. Accounts receivable automation software helps companies effectively manage customer invoicing, receivables tracking, and collection procedures.
A/R automation solutions integrate with CRM, general ledger software, cash management software, and payment gateways. The implementation of accounts receivable automation may take 8–12+ months. Average costs for building accounts receivable automation software range from $140,000 to $400,000, depending on the solution's complexity. Use our free calculator to estimate the cost for your case.
ROI for the automation in accounts receivable can reach up to 390%.
Did you know?
2022 Automating Accounts Receivable survey by BlueSnap revealed that over 50% of businesses have already adopted automation in their A/R processes. Midsize and large firms are capitalizing on A/R automation for higher employee efficiency, faster payment handling, and improved cash flow management. According to PYMNTS’ recent study, 93% of companies that have digitalized at least half of their A/R tasks are satisfied with the outcomes.
Main Accounts Receivable Processes to Automate
A/R bookkeeping
Automate 90%+ of enterprise-wide A/R transaction capture, processing, and recording tasks and achieve an over 3x increase in the A/R team productivity.
Get automated invoice creation and submission to customers to drive 2–3x faster invoicing cycle and eliminate manual billing errors.
Provide customers with seamless digital payment experience and rely on automated payment processing to benefit from a 30% improvement in timely cash inflow and get 100% visibility of paid invoices.
Employ AI to leverage fully automated planning, execution, control, and optimization of personalized collection strategies. It brings a 25–75% cut in past-due receivables and helps speed up debt recovery.
Ways to Automate Accounts Receivable
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Off-the-shelf accounting suite |
Market-available A/R automation tool |
Custom accounts receivable system ScienceSoft recommends |
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Essence
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Implementing an all-in-one accounting software product that includes digital accounts receivable features. |
Implementing pre-built accounts receivable software, which typically enables automated invoicing, A/R recordkeeping, and debt collections and provides payment control dashboards. |
Developing custom accounts receivable automation software to get all necessary functional and non-functional capabilities and digitally transform your unique A/R flows. |
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Pros
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Establishing a cohesive accounting automation environment. |
A fast and cost-effective way to set up the automation of accounts receivable for SMBs. |
Getting a solution fully tailored to your accounting, invoicing, and debt collection needs. |
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Cons
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High subscription cost, especially for large teams. Chances to obtain a significant share of unnecessary functionality. |
Pre-defined features, integrations, processing flows, and document standards. Inability to evolve the solution when needed. |
Software design requires additional time and investments. |
Which Approach to Automation Fits Your Needs Best?
Answer a few simple questions and find out whether you should opt for a custom A/R solution or a pre-built automation tool.
Do you need to automate specific accounts receivable tasks, e.g., invoice calculation taking into account regional taxes or creating payment and debt collection queues based on non-standard priority rules?
Do you need an automated accounts receivable solution providing compliance with the latest accounting standards (e.g., IFRS, local GAAP, ASC, ZATCA) of the countries you operate in?
Do you want to leverage AI-supported A/R automation, e.g., to accurately predict cash inflow and payment dates, get intelligent prescriptions on the optimal debt collection tactics, or spot accounting fraud?
Do you want to leverage blockchain-based A/R automation, e.g., for fully automated and immutable receivables recordkeeping, accountants' activity tracing, or crypto accounting?
Do you need to integrate your automated accounts receivable software with multiple back-office systems or legacy tools?
Do you operate in a regulated industry (e.g., healthcare, BFSI, public sector) and need advanced financial data security to meet strict legal requirements?
Do you need an accounts receivable solution with various interfaces for different roles in the A/R team (invoicing specialists, A/R collection specialists, reporting specialists, etc.)?
Do you plan to evolve the automation solution with new functional and non-functional capabilities in order to adjust it to changing business and legal requirements?
Do you have large teams involved in accounts receivable processes and look to avoid the software fees associated with the per-user subscription model?
Please tell us a bit more about your needs
Answer at least 3 questions to get results.
You can go with off-the-shelf A/R automation software
Looks like market-available solutions are a viable option to meet your A/R automation needs. Turn to ScienceSoft if you need help with choosing the optimal ready-made tools, their implementation, customization, or integration with your existing systems.
You definitely should consider custom development
A tailor-made A/R automation solution will help you reap the unique benefits that market-available software cannot offer. Turn to ScienceSoft to get the detailed assessment of a custom A/R automation system’s feasibility for your business situation.
Custom A/R automation software is your best choice
Looks like market-available A/R tools don’t fit your specific requirements and won’t be able to provide the expected operational and economic feasibility. Turn to ScienceSoft to get a consultation on custom accounts receivable software development and receive free cost and ROI estimates.
Accounts Receivable Automation Software: Key Features
Below, ScienceSoft shares a sample feature set that forms the core of the A/R automation system.
Trade credit management
- Assigning and reassigning trade credit terms based on a customer's credit history.
- Pre-built standard (net 30, 45, 90, etc.) and custom trade credit terms.
- Defining customer discount percentages for early payments / customer penalty amounts for late payments.
- Multi-department trade credit approval.
- Creating custom formulas for customer credit rating assessment.
- Trade credit risk monitoring based on up-to-date customer credit ratings.
- Generating credit memos with customizable templates.
Invoice generation
- Automated invoice generation based on the data imported from ERP, CRM, customer portal, or order management system.
- Customizable invoice templates.
- Multi-currency invoices.
- Multi-language invoices.
- Automated calculation and application of taxes, discounts (including those on early payments), additional charges (e.g., interest on late payments, carriage, insurance), and billable expenses.
- Applying region-specific e-invoice elements, e.g., a unique QR code for e-invoice data validation for Saudi Arabia.
- Embedding a payment link into an invoice to enable direct payment via a pre-defined payment gateway.
- AI-powered invoice validation based on SLA/billing guidelines.
- Pre-defined triggers (invalid account, tax location, or invoice date) to identify suspicious invoices that require a manual check.
- Signing invoices using an e-signature.
- Multi-department invoice approval.
Invoice submission
- Automated invoice submission to customers via email, messaging apps, or a connected customer portal.
- Incorporating a “Pay now” button into emails to enable direct payment via a pre-defined payment gateway.
- Sending invoices:
- in advance/on delivery
- by schedule/on the spot
- on a single/recurring basis
Payment processing
- Real-time payment processing via the connected payment gateways (e.g., PayPal, Stripe, Authorize.Net, or a custom payment gateway).
- Support of multiple payment methods, including bank transfers, wire transfers, ACH, credit cards, checks.
- Multi-currency payments.
- Co-payments.
- Partial payments, including deposit payments.
- Split payments.
- Automated payment collection by direct debit.
- Automated allocation of received payments.
- Cash refund/chargeback to the customer’s original payment method.
Invoice tracking
- Recording invoice data in the A/R ledger.
- Real-time invoice tracking by status (sent, received, partially paid, paid, due, overdue, etc.).
- In-app/email user notifications on due invoices (on due dates), received payments, invoices written off to bad debts, etc.
Dunning management
- Automated customer notifications about upcoming payment card expiries.
- Automated payment retry in case of payment failure based on pre-set retry rules.
- Automated scheduled notifications on a payment method failure if a customer failed to complete payment.
Reconciliation
- Automatically aggregating data on the amounts received from the company bank accounts.
- Automatically matching the aggregated payment data with open invoices.
- Recording full/partial payments against outstanding invoices.
- Reconciliation of the A/R ledger end balance (against monthly bank statements).
Deduction management
- Deduction validation based on automatically matching deduction claims with the existing customer commitments.
- Automatically assigning deduction processing to the staff members performing deduction resolution.
- Multi-department deduction approval.
- Automatically sending customer notifications on denied and approved deductions (via email, messaging apps, customer portal).
- Assigning credit memos to customers upon valid deductions.
- Applying changes to invoices / invoice records based on approved deductions.
A/R collection management
- Creating collection queues by priority based on invoice aging and customer credit profile.
- Automated creation of collection schedules.
- Collections tasks assignment/reassignment.
- Personalized collection notifications to customers (via email, messaging apps, a customer portal), tailored by language, frequency, tone, etc.
- Scheduled collection phone/VOIP calls.
- Single view/record of all collection-related interactions with customers.
Customer self-service portal
- Portal customization to match changes in corporate branding.
- Setting up location-based portal content and ads.
For customers:
- Adding, saving, and updating personal info, billing details, including tax IDs, and payment methods, including payment card details.
- Managing subscriptions (update, cancel, pause, etc.).
- Paying bills, making advance and automated recurring payments.
- Tracking paid and outstanding invoices.
- Creating disputes and attaching supporting documents to claim deductions/chargebacks.
- Live chat, submitting support tickets via a portal.
- Real-time analytical dashboards and configurable ad hoc reports on revenue, received, due and overdue amounts, DSO, debtors, aging balance, etc. (by customer, date, and more).
- Scheduled monthly reports on A/R totals, A/R turnover ratio, etc.
- On-demand customer statements by time period.
Security and compliance
- Multi-factor authentication.
- Role-based access control.
- Payment data encryption.
- Invoice timestamping.
- Comprehensive audit trail.
- AI-based fraud detection.
- Customer data retention and deletion policies.
- Compliance with global regulatory standards, including GAAP (specifically ASC 606 and IFRS 15), SOC1 and SOC2, PCI DSS, SOX, GDPR (for the EU), ZATCA (for Saudi Arabia), and more.
Key Integrations for an Accounts Receivable Automation System
To ensure timely and accurate A/R data collection and eliminate double data entry across disparate systems, ScienceSoft recommends integrating an A/R automation solution with the following systems:
CRM
- To auto-populate customer data when generating invoices.
- To automatically match customer responses and payment details to the relevant CRM records.
General ledger software
- To quickly and accurately provide relevant data for financial close and financial reporting.
Cash management software
- To quickly obtain data on the received payments.
- For faster invoice and payment reconciliation.
Customer portal
- For accurate and timely invoicing.
- To enable customers to pay invoices via the portal and easily access their invoice and transaction history.
BI tool
- To leverage data on A/R performance in enterprise-wide analytics.
- For advanced visualization of A/R reports.
Payment gateways
of banks or independent payment service providers (e.g., Stripe, PayPal)
- For smooth processing and real-time tracking of payments.
Success Factors for Automating Accounts Receivable
ScienceSoft’s consultants have defined important factors that help bring the customer additional value across A/R management workflows.
Real-time A/R data collection
To enable high visibility into the current status of the money owed to an organization (paid/partially paid/due, etc.) and ensure timely actions on debt collection.
Fully automated invoice generation
To eliminate manual errors in invoices and ensure rapid invoice creation for timely submission to customers.
ML-powered A/R forecasting
To accurately predict various A/R parameters (e.g., expected payment dates on invoices or total accumulated debt at a specific date in the future) based on historical customer behavior and payment data.
An AI-powered virtual assistant can be a strong helping hand for your A/R collection team. Intelligent bots can automatically process over 50% of customer responses and promises to pay from emails, messages, and recorded calls. Advanced assistants can predict customer behavior and prescribe the optimal actions, time, and communication channels for effective debt collection.
Featured Accounts Receivable Software Projects by ScienceSoft
How to Automate Accounts Receivable
Below, ScienceSoft shares a sample roadmap to building a robust accounts receivable automation solution:
- Business needs analysis and eliciting requirements for A/R digitalization.
- Designing the feature set, architecture, and tech stack for the A/R automation system.
- Project planning: deliverables, KPIs, duration, budget, team, etc.
- Custom A/R automation software development.
- Quality assurance in parallel with coding.
- A/R data migration (from spreadsheets or a previously used accounting tool).
- Establishing integrations with the required internal and third-party systems.
- User training.
- Continuous support and evolution of the automated A/R solution (optional).
ScienceSoft’s Tech Stack for Accounts Receivable Process Automation
Costs to Implement an Automated Accounts Receivable System
Accounts receivable automation costs vary from $140,000 to $400,000, depending on the automation solution complexity and the scope of integrations.
Want to know the cost of your A/R automation solution?
Benefits of Accounts Receivable Automation
With automated accounts receivable software, you can reach up to 390% ROI, based on Total Economic Impact™ Study.
Faster cash flow
Automated accounts receivable software helps cut DSO by over 2x due to quicker billing and convenient payment options. According to BlueSnap's survey, 89% of businesses with automated A/R are getting paid within their agreed payment terms or faster. PYMNTS’ recent research revealed that companies handling 20,000+ invoices per month that rely on automated bill delivery have on average 23 days shorter DSO than those stuck to manual, paper-based processes.
More accurate invoicing and collections
A/R automation solutions eliminate up to 90% of manual billing and debt recovery tasks, which minimizes the risk of human error and helps establish more accurate A/R flows. Field surveys show that 63% of organizations with highly automated accounts receivable processes report fewer invoicing errors.
Higher productivity of A/R specialists
With a drastically lower share of manual routine, A/R teams are getting free for higher-value tasks and can perform more efficiently. Automated debt collection alone proved to bring a 3–4x increase in employee productivity. 87% of firms leveraging accounts receivable automation report improvements in overall A/R process speed.
Operational cost savings
Automation drives significant cost savings across various A/R activities. Businesses may expect up to 80% lower invoicing costs and up to 70% lower debtor coverage costs.
Minimized revenue leakage
By automating accounts receivable, companies lay the ground for better revenue protection and lower financial losses. Case studies showcase that AI-supported dunning and collections help recover on average 10–30% of the organization’s monthly revenue that could otherwise turn into bad debts.
Accounts Receivable Automation with ScienceSoft
In financial software development since 2007, ScienceSoft helps businesses implement effective A/R automation to improve their invoicing and collection processes.
Accounts receivable automation consulting
- A/R automation needs analysis.
- Audit of the existing invoicing and payment processing tools (if any).
- Suggesting the optimal A/R automation software features, architecture, tech stack, and integrations.
- Creating a business case, including cost and time estimates.
- Delivering an implementation roadmap and risk management plan.
Development of automated accounts receivable software
- Accounts receivable solution conceptualization.
- Architecture design.
- Accounts receivable software development.
- Integrating the automation solution with the required systems.
- Quality assurance.
- User training.
- After-launch support and evolution.
Our Clients Say
The invoicing system created by ScienceSoft automates data integration from different sources, invoice generation, and provides visibility into the invoicing process. We have already engaged ScienceSoft in supporting the solution and would definitely consider ScienceSoft as an IT vendor in the future.
Heather Owen Nigl, Chief Financial Officer, Alta Resources
About ScienceSoft
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2007, we design and develop effective accounts receivable solutions tailored to each client's unique credit and cash collection strategies. Being ISO 9001 and ISO 27001 certified, we apply a mature quality management system and guarantee that cooperation does not pose any risks to our clients' data security.