Managing accounts receivable (AR) isn’t just about collecting payment — it involves handling supporting documentation, checking the accuracy of transactions and following up on overdue payments. Everything from invoices, delivery tickets to discount approvals and customer correspondence should be available to your AR team in the right place, at the right time.
This article explains how a document management system (DMS) and its automated workflow capabilities support AR staff by digitizing manual tasks, strengthening compliance, improving audit readiness and accelerating response time for answering customer questions.
This article explains how a document management system (DMS) and its automated workflow capabilities support AR staff by digitizing manual tasks, strengthening compliance, improving audit readiness and accelerating response time for answering customer questions.
Table of Contents
- Why should you automat your AR workflows
- Key benefits of automating AR workflows
- How it works: automating AR workflows with a DMS
- Implementation: How to get started now
- How to choose the right solution for AR automation
- Case Study: How Mercury Air Group streamlined accounts receivable and payable workflows thanks to automation
- Conclusion
Why you should automate your AR workflows
According to the most basic definition, accounts receivable staff invoice customers to collect money they owe your company. The reality is more complicated. AR teams also set payment terms, verify transactions, track late payments and work closely with sales, order management and customer service. Their other responsibilities include sending reminders, reconciling payments and producing reports.Your AR department's inability to reduce the number of overdue payments results in more limited cash flow and less working capital. Companies with a higher percentage of open invoices have fewer funds to reinvest in hiring, employee compensation, updated training, infrastructure and marketing.
Traditional paper-based methods delay prompt issuing of customer invoices and slow down tracking payments. Lack of visibility and control leaves your company vulnerable to these risks:
- Difficulty identifying and reporting on outstanding payments.
- Inadequate follow-up on overdue payments.
- Invoice, billing, and incorrect credit terms.
- Miscalculations in cash payment allocations.
- Lost or misfiled invoices and related documents.
Digital processes address these issues and improve your company’s bottom line.
| 2023 US Payment Practices Barometer Survey for B2B |
| 35% of invoices are paid on time. |
| 55% are overdue. |
| 48% are paid on credit. |
| 9% of credit-based sales are written off as bad debt. |
| 35-days is the average of when payment is received after invoicing. |
| Expected changes in invoice to payment duration |
| 57% of respondents said it was likely to be longer |
| 37% anticipated no change |
| 6% project shorter invoice to payment cycles |
Key benefits of automating AR workflows
Your company can eliminate uncertainty from your accounts receivable process by using a DMS. It integrates relevant documents and data directly into the order workflow, enabling quicker invoicing, instant responses to customer queries and precise tracking of individual payment plans and special discounts.
Automating AR workflows enables your company to enhance customer relationships, ensure on-time payments and increase liquidity through more efficient management of receivables.
Because of more predictable cash flow, your finance team can make quicker and more informed decisions. The time and energy saved gives employees the opportunity to focus on learning new skills and taking on more responsibilities that lead to their professional and personal growth.
Your AR team can:
- Spend less time tracking down overdue payments.
- Prioritize making more early and on-time payments to suppliers. Your finance team can allocate these funds to pay rent or bills or reinvest in the business.
- Generate accurate reports on your Days Sales Outstanding (DSO). DSO is defined as the average time between invoicing and receiving payment. Reducing your DSO is a key indicator of the efficiency of your AR processes.
- Look up information by keyword, customer, date or fulltext. So, they can verify transactions, answer customer questions and identify inconsistencies immediately.
- Maintain compliance and simplify audits by securely archiving AR-related documents in a tamper-proof archive.
- Access comprehensive audit trails to make sure your business rules are followed and be well-prepared for internal reviews and external audits.
- Place digital annotations on your copy of invoices ensuring that everyone on the AR team has the information they need to resolve an issue, improving the customer experience.
- Keep pace with your competitors by using AI-powered technologies like DocuWare Intelligent Document Processing.
- Find that accuracy provided by automation results in fewer escalations.
How it works: Automating AR workflows with a DMS
- Customer invoices are created in your company’s ERP or accounting software.
- These invoices are uploaded into the DMS. Then they are automatically indexed, linked to related documents including order documentation, securely stored and routed for approval.
- With accurate information at their fingertips, department managers approve the invoice, and it is sent to the customer for payment.
- Automatic reminders are sent to customers and action lists for unpaid invoices are generated for AR staff.
- If it is requested by the customer, AR staff can create an electronic packet of backup information to include with the invoice.
The chart below offers examples of the contrast between using manual processes and automated workflows.
| Processing Task | Manual Approach | With DocuWare |
| Keeping track of overdue payments | Reliance on entering data manually leads to errors and inaccurate reporting. | An automated process generates a complete, correct action list. |
| Sharing data with an ERP or accounting software. | Data entered onto a spreadsheet. | Data is shared digitally without human involvement. |
| Audit-readiness | AR staff collects scattered documentation for auditors. | Robust search capabilities deliver information auditors request instantly. |
| Discount approvals | Disorganized files are delivered by hand or sent via email. | Routed via a structured workflow that eliminates errors and sends reminders if approval is delayed. |
| Document retrieval | Documents are distributed on paper, emailed or accessed from a shared folder. Finding related documents requires a time-consuming search. | Instant access for authorized staff through a central database. Related documents can be found with a single search. |
| Filing delivery notes | Scanned, classified and filed by AR staff. | Auto-captured, classified and stored electronically |
Implementation: How to get started now
Evaluate your current workflows: Where are AR documents stored today? How is data shared with your ERP or accounting software? Who approves invoices before they are sent to the customer?
Define your priorities: For example, is it most important to:
- Reduce approval times.
- Eliminate manual data entry.
- Improve audit readiness.
- Speed up customer service.
Select which processes to automate first
Start with high-impact workflows like invoice approvals, escalation requests or tracking of overdue invoices.
Design your solution
In this phase, decide which processes will be automated first; the features that will be included; and whether you want to implement a cloud or on-premises solution.
Raise awareness
Make sure department heads and end users understand the overall purpose for automating accounts receivable. For example, create a video that offers an overview of the solution. The aim is to show how AR automation simplifies routine activities and supports employees in reaching their job-related business goals.
Deploy your AR automation solution
Start by developing a test system or rolling out your office automation solution in multiple stages. Test thoroughly and frequently as this step is often overlooked.
Train stakeholders
Before deploying the solution widely, train IT administrators and power users. Then schedule hands-on training for end users to ensure the finance, sales, order management and customer service teams understand how to use the DMS and appreciate that the new solution makes their work lives easier.
Measure impact: Track time saved, the number of invoices sent each month and the reduction of days sales outstanding (DSO) to calculate your ROI.
How to choose the right solution for AR automation
Your solution should:
- Capture, organize and safeguard scanned paper documents and those that arrive electronically.
- Take advantage of cloud features like fast deployment, predictable monthly cost, reliable backups, automatic updates and built-in cybersecurity.
- Seamlessly integrate with your accounting software or ERP.
- Provide out-of-the-box connectors to SAP, Sage, QuickBooks, Dynamics 365, Oracle/JD Edwards and other financial software.
- Be flexible enough to incorporate AI innovations like intelligent document processing.
- Ensure compliance with data protection and privacy regulations by incorporating security measures such as encryption and access controls to shield customer and corporate data.
- Have earned System and Organizational Controls (SOC2) certification. This accreditation is achieved by meeting standards developed by the American Institute of Certified Public Accountants (AICPA). It shows a solution provider’s ability to protect your company’s confidential data from unauthorized access and cyberthreats.
Case Study: How Mercury Air Group streamlined accounts receivable and payable workflows thanks to automation
Mercury Air Group’s Los Angeles-based MercFuel division provides jet fuel, air cargo services, transportation and support services for international and US commercial airlines, general aviation and the US government. The decision to move to a digital system stemmed from their need for more efficient business processes. MercFuel purchases and resells over 400 million gallons of jet fuel for planes and airport gas stations annually. With a network of over 1,000 third-party fuel suppliers, the company processes upward of 12,000 payable and receivable invoices per month.
Their accounting transactions are often complex. For example, one fuel ticket can generate payable and receivable invoices issued by multiple vendors. The AR department has to wait to get invoices from all its vendors before it can bill its customers. DocuWare classifies and stores all document types received during the billing cycle and integrates seamlessly with MercFuel's MAS 500 accounting software and Solar, their in-house fuel sales processing software.
MercFuel uses DocuWare in both its accounts receivable and accounts payable departments. By managing payables and receivables with the same solution, the company preserves data integrity across transactions. It also saves time and resources associated with IT support and training staff for two systems.
With DocuWare’s secure storage, comprehensive search and retrieval capabilities, and automated workflows, the company reduced billing time by six days. This led to significantly improved cash flow. In addition, because of increased productivity, MercFuel completes more transactions per day without adding staff.
Want to write your own success story?
Find out how AR automation can accelerate the payment cycle by decreasing the time from invoicing to collection.
Get started now!
Conclusion
Even the most dedicated finance teams in small and medium-sized businesses face challenges when it comes to managing receivables. Delayed payments, growing volumes of overdue invoices and time-consuming follow-up place increasing pressure on resources, while directly affecting cash flow and forecasting accuracy.
If your company still relies on manual processes, it limits your ability to respond effectively to economic fluctuations and new market trends. DocuWare offers a smarter, more sustainable way forward.
