Top 7 Benefits of Accounts Receivable Automation for Businesses

Introduction

Your team is feeling overwhelmed with trying to manage and track incoming payments. They’re bogged down by tedious tasks like invoicing and payment follow-ups, leaving little time to focus on more strategic projects. On top of it all, your team struggles to stay organized and aligned on accounts receivable activities.

Sound familiar?

If so, it’s time to consider investing in accounts receivable automation. API-enabled automated AR not only tackles accounts receivable ERP concerns but also helps you create efficient workflows, minimize functional complexities and operational costs, and boost analysts’ productivity.

Want to find out how AR automation benefits your business and helps you scale by elevating your ERP capabilities? This blog covers everything about AR automation in great detail.

Let’s dive in.

What Is Account Receivable Automation?

Account receivable automation is the process of automating AR operations, from issuing invoices to managing credit to payment and collections. It helps eliminate manual and paper-based processes, simplifies managing and tracking past-due invoices, and captures remittances from emails into ERPs. 

One of the main purposes of AR automation is to harness the full potential of ERP integration. ERP integration is a key component in the accounts receivable processes. It aims to streamline the collection and deduction management processes and build a single source of truth for analysts, boosting their productivity. 

A well-designed, automated accounts receivable ERP helps you: 

Leverage out-of-box ERP integration capabilities.

ERP integrations offered by solutions like HighRadius’ accounts receivable automation benefit you by ensuring all the required data is readily available for your AR cloud. 

Remove dependency on IT dependency. 

A good AR automation solution will help you reduce your dependency on the IT team. Such software will offer a robust ERP integration that will require no IT involvement and let you install the program using installation guides. 

Faster go-live time

A good AR automation solution will eliminate the need to build activity by IT teams. So you can start realizing the value of AR automation cloud features and capabilities right away after implementation, ensuring faster go-live time.

What Are the Problems with Manual Accounts Receivable?

Today, most businesses have a vast consumer base spread across geographies and deal with huge volumes of transactions.Still, most of them use manual accounts receivable processes to handle customer and vendor needs, leading to severe operational inefficiencies. 

Moreover, with millions of invoices flowing into ERPs in a single day and no automation in place, it becomes increasingly difficult for businesses to post cash on time, support multiple payment options, recover deductions on time, remove operational silos, and so on. Here are some major challenges associated with manual accounts receivable. 

Manual remittance capture on ERP

Cash application is one of the most important functions of accounts receivable. It involvesqq matching customer payments with open invoices and allocating received payments to specific invoices. Without AR automation, businesses often have to do this manually, which makes it extremely hard to keep pace with the massive volume of incoming transactions. 

 The cash app teams have to manually aggregate remittance data from multiple sources, such as emails, EDI (electronic data interchange), etc., and post it on their ERPs. Moreover, with more customers preferring invoices to be updated on their accounts payable portals, cash app analysts have to log into innumerable portals throughout the day to retrieve remittance information.

Moreover, if you have fewer resources and a small team, it will be immensely difficult to manually process bulk invoices within the expected time frame, thereby impacting productivity and turnaround time. 

Inefficient deductions management process 

To validate disputes, deduction management calls for searching backup data and documentation, mapping it to reason codes, and then sending it to the relevant team for further review.Without a one-stop centralized view, your deduction analysts will manually drain their productive hours doing this mammoth task rather than focusing on recovering the capital blocked in invalid deductions. 

Additionally, invoices with high dollar values cannot be written off. They have to be scrutinized thoroughly and carefully. A lack of automated AR makes it hard to monitor and hinders visibility, leading to lower profitability and inaccurate prioritization. 

Increased operational silos

Despite implementing advanced operations models, businesses still have a hard time driving transformation across business units worldwide. Challenges escalate when they operate through shared service centers, making it even more difficult to centralize account receivable processes, as businesses often have siloed and non-standardized processes. This can be solved only when the system is automated. 

Lack of visibility over customer credit profiles 

Native ERP system accounts receivable can cause roadblocks when it comes to ensuring visibility within your credit processes. With numerous ad-hoc reviews to be done while your team manually aggregates credit data from various sources, it can become difficult for them to proactively assess credit risk, resulting in increased risks of bad debts. With ever-evolving complexities in credit assessment, you need a solution that helps you stay at the top of your customer portfolios and get 360-degree visibility.

Repetitive tasks to perform during collections

With manually driven collections processes and a lack of prioritization of tasks due to the absence of AR automation, analysts within the team are often stuck with redundant work.They have to deal with the duplication of mundane yet critical work, such as sending emails to the same customer, which further impacts the customer experience. Moreover, with no features in native ERPs like taking notes, creating promise-to-pays, and making in-depth reports, the process becomes highly inefficient and difficult to monitor, thereby affecting customer experiences.

7 Benefits of Accounts Receivable Automation 

AR automation benefits your business by eliminating manual efforts in the accounts receivables process. It enhances cash application, streamlines deductions, prioritizes worklists, increases visibility, reduces errors, and helps your team save time while accelerating payments.

To help you increase the scope of accounts receivable automation benefits in the best possible way, we offer a state-of-the-art AR automation suite. Our integration suite will not only complement these AR automation benefits, but also provide features around seamless data extraction from various sources. 

Higher cash posting rate 

AR automation offers robust features for cash applications that can significantly improve cash posting rates. It utilizes advanced algorithms and machine learning to accelerate payment processing, ensure precise allocation to outstanding invoices, and allow real-time visibility into payment status to monitor and manage cash flow effectively. Additionally, automated cash app modules will help your analysts handle increasing transaction volumes without manual effort. 

HighRadius’ thoughtfully built cash app solution helps make your AR process more efficient while saving your analysts’ time for other vital tasks. You can go live on numerous ERP instances without any friction with our cash app features. 

Apart from this, it auto-aggregates remittance data to ensure faster data extraction from emails, attachments, EDIs, customer portals, etc. In addition, you can process multiple remittance formats without any manual intervention, as the solution captures payment information across all standard bank file formats. It also offers a multi-OCR engine to auto-capture accurate remittance data from check stubs for quick processing. 

AI-driven worklist prioritization to avoid repetitive work

AR automation helps reduce duplication of work with AI-driven worklist prioritization. It prioritizes invoices and collections based on dollar values and provides insights into customer behavior by monitoring customer AP portals. It can also transcribe customer interactions, prepare notes, record promises-to-pays, and track responses. You can also automate sending reminders to customers for payments and avoid duplication. 

HighRadius brings an automated collections cloud with out-of-the-box features like touchless dunning. You can choose dunning letters from our pre-built customizable templates and auto-deliver via email or fax in multiple languages. It ensures a centralized dunning system where your analysts can view customer responses in the platform itself while avoiding duplication. AI will scan through customer email intent to recommend next steps like creating promise-to-pays. This, combined with AI-enabled worklist prioritization, helps you build an efficient and streamlined collection process. 

Real-time credit risk monitoring to mitigate risks 

AR automation enables you to monitor credit risk in real-time and get 360-degree visibility over customer portfolios. These automated systems utilize advanced analytics and robust ERP integrations to extract real-time credit data to assess customers’ creditworthiness, detect potential risks, and help finance teams make informed decisions for adjusting credit limits or implementing targeted collection strategies. Moreover, you can also get comprehensive insights into customer payment behaviors and optimize accounts receivable processes. 

Our automated credit solution offers credit decision history that ensures you a 360-degree view of all customer interactions and credit decisions your business makes for a customer. Our credit risk monitoring helps you with continuous, automated tracking for all customer portfolios and notifies your credit team of any changes to the credit health of customers, so you don’t have to wait till the periodic review while capacitating overall visibility and reducing overall risks. 

Seamless data extraction for speed and accuracy 

A robust AR automation solution is built on cloud-based ERPs that use API integrations to extract or update data. This means your team no longer has to go through high volumes of data and upload them to the ERP manually, saving time for other vital tasks.These are pull-based integrations where the ERP system pulls data from the ERP and calls these APIs at a scheduled time to pull data from the ERP or post data into the system. 

HighRadius’ AR automation is known for its state-of-the-box ERP integration that unburdens you from all manual tasks relating to data extracting and updating. The API integration seamlessly exchanges data through API calls based on HTTPS protocol. This is extremely useful for businesses that have lower volumes of data – a few thousand records. The cherry on top is that all our APIs are out of the box, so no installation is needed. 

Efficient deductions management process 

The deduction management process is one of the most important elements of a streamlined accounts receivable process. AR automation solutions will help promptly validate claims, match them to reason codes, prioritize claims, centralize deductions-related data, and send no denial correspondence. This will help you reduce day deductions outstanding (DDO) while you solve disputes with a speed like never before. 

Our Deductions Management software in the AR automation suite makes writing off low-dollar valued valid deductions a breeze. Our solution will automate the deduction validation process customized to fit your business rules so your team can focus more on extensive research on high-dollar value deductions and critical customer portfolios. It will also auto-aggregate and link backup documents and proof-of-delivery to help your analysts channel their efforts toward recovering revenues from invalid deductions. 

Standardizing processes across business units 

An automated AR solution will help analysts from different departments collaborate and establish a standardized process. For instance, sales teams will learn about customers’ past-due invoices, while finance teams can get insights into collections so they can define better strategies to maximize reserves otherwise. Automated AR systems become the single source of truth that is impossible to achieve with ad hoc spreadsheets and reporting.

Our AR suite offers full integration with ERPs like SAP and Quickbooks and ports all the data, serving as a single source of truth across all teams. You get a single interface for multiple tasks and functionality that ensures seamless visibility and fosters cross-team collaborations. It will also help you unlock data integrity and set standardized order-to-cash operations across all business units.

Enhance ERP dashboards 

ERP dashboards in accounts receivables systems play a critical role in streamlining processes. Your dashboards make it easy for you to access data and customize it to drive informed decisions. A cutting-edge AR automation solution will help you get customer-level specific data like real-time AR aging reports, customer master files, transcriptions of customer interactions, etc., in both summary and detailed levels. You will get deep insight into key indicators like AR turnover, DSO, processing output, dispute and collection rate, etc.

Our HighRadius O2C solutions exhibit deep expertise in the AR and CPG model of operation, serving as a one-stop solution for cash applications and deductions. With our integrated ERPs with out-of-the-box features, you can get a single interface for multiple tasks and functionalities and customize it to create your own workflows that best suit your business needs. 

Steps to Prepare for AR Automation

The advantages of an automated ERP system are many, and this is the right time to invest in one. But before you make a decision, here are some steps to choosing the best AR automation solution for your business.

• Have an internal discussion with your teammates to identify the pros and cons of your existing ERP system.
• Have a discussion with your finance team to evaluate costs and ROI.
• Track how advanced solutions help to scale with your current ERP system to enhance AR functions.

Streamline Your ERP Needs With Accounts Receivable Automation Solution

 Accounts automation is critical to ensure the success of O2C processes. It not only streamlines your manual tasks and removes inaccuracies but also ensures better cash flow, reduces DSO and DDO, maximizes collections, fast-tracks deduction validation, and improves customer experiences. To help you leverage the AR automation benefits, we bring a cutting-edge AR suite with out-of-the-box integrations and features to optimize collections and deduction management processes, improve cash application, and ensure easy allocation to invoices.

• Our automated invoice matching will help ensure faster payment processing. 
• Our systems seamlessly capture various payment formats, saving time and effort.
• Touchless cash application and dunning streamline collections while credit decision history enables a 360-degree view of customer portfolios. 

The result? You can unlock 50% increased invoice productivity and improve net recovery by 30%. 

FAQs

What is ERP in accounts receivable?

ERP, or Enterprise Resource Planning is a solution that includes an account receivables module. Automating AR processes helps pull data from or post updates into the ERPs without any human intervention. It also helps in auto-deliver invoices to customers, resolve disputes in less time, monitor customer behavior, etc. 

Why is it better to automate your AR process?

AR Automation removes manual efforts in critical business processes such as collections, e-invoicing, finance management, and reporting. This helps streamline deductions management, make informed credit decisions, and extract data seamlessly. It also improves accuracy and cash flows.

What is an example of accounts receivable automation?

Let’s consider deductions management in an AR automation solution. Companies often have nearly a thousand open deductions, but only 3-5% of them are invalid. However,finding them through thorough research takes 20X longer than needed. The AI-based deductions validity predictor helps identify these invalids, fast-tracking recovery.

What types of roadblocks does an ERP face?

Here are a few challenges with an ERP without AR automation: 

• Non-intuitive accounting functions
• Scalability concerns with ever-increasing customer data
• Limited capabilities for reporting and analytics
• Loopholes in the AR module leading to the absence of account prioritization in collections