Even the most dedicated finance teams face challenges when it comes to managing receivables. Delayed payments, growing volumes of overdue invoices and time-consuming follow-ups place increasing pressure on resources, while directly impacting cash flow and forecasting accuracy.
Many mid-market organisations still rely on manual AR processes, limiting their ability to scale and respond efficiently to today's financial demands.
Accounts receivable automation offers a smarter, more sustainable way forward. In this article, you'll discover how AR automation works, where it creates the greatest impact, and how it helps finance teams collect payments faster – without adding headcount.
Table of contents
- What is accounts receivable automation?
- Why should finance teams care?
- Key benefits: From lower DSO to happier customers
- How it works: The end-to-end accounts receivable automation process
- How to implement accounts receivable automation
- How to choose an accounts receivable solution that fits
- Real-life example: The Owens Group
- Start your receivables automation journey today
What is accounts receivable automation?
Accounts receivable process automation uses technology to automate repetitive steps in the receivables process, such as generating invoices, sending reminders, tracking payments, reconciling transactions and reporting on AR performance. For finance teams, it transforms traditionally manual, time-intensive tasks into efficient digital workflows.
AR automation goes beyond sending invoices electronically. It's a connected process that brings structure, insight and scalability to your entire collections operation.
Before investing in AR software, it's important to understand the distinction between accounts payable (AP) automation and accounts receivable (AR) automation:
- AR automation focuses on outgoing invoices and incoming payments, helping your team collect cash faster from customers
- AP automation handles incoming invoices and outgoing payments to suppliers
While both are valuable for financial efficiency, AR automation directly impacts your cash flow by accelerating the money coming into your business.
Why should finance teams care?
Finance leaders face mounting pressure from multiple directions. Rising Days Sales Outstanding (DSO) threatens cash flow stability. Limited visibility into payment patterns makes forecasting a guessing game. Manual processes consume valuable hours that could be spent on strategic analysis.
These challenges compound when businesses grow. What worked fine for managing 100 invoices per month starts to break down at 1,000 invoices per month. Teams find themselves drowning in spreadsheets, chasing payments through endless email threads, and struggling to provide accurate cash flow projections.
AR automation addresses these pain points by:
- Improving cash flow through faster collections
- Eliminating repetitive tasks that drain productivity
- Reducing error rates and operational costs
- Shortening payment cycles significantly
Accounts receivable process automation can dramatically impact your bottom line when you consider the cost of manual, error-prone processes compared to automated, streamlined workflows:
- The average AP organisation takes 9.2 days to process a single invoice
- Half (47%) of companies still mostly or always manually match payments and remittance data
- It costs £4-25 on average to process one invoice
- 41% of companies say speed of payment affects their cashflow visibility and management
Sources: SSON, Hackett/Gartner, GEP
Key benefits: From lower DSO to happier customers
The impact of AR automation reaches every corner of your finance operation. Teams using it report significant improvements, including:
Faster invoice-to-cash-cycle
Automated systems substantially reduce DSO, directly improving your working capital. When invoices reach customers instantly and payment reminders trigger automatically, the entire invoice-to-cash cycle accelerates.
Reduction in overdue payments
Proactive reminder sequences and workflow automation ensure no invoice falls through the cracks. Many businesses see overdue balances drop significantly.
Lower operational costs
By eliminating manual data entry, reducing errors and streamlining workflows, you can achieve major reductions in AR processing costs.
Higher visibility and forecasting accuracy
Real-time dashboards provide instant insights into payment trends, customer behaviour and cash flow projections. Finance leaders can finally answer strategic questions with confidence.
More consistent customer communication
Automated yet personalised reminder sequences ensure every customer receives timely, professional communications about their account status.
Improved team productivity and morale
When your staff spend less time on repetitive tasks, they can focus on exception handling, relationship building and strategic initiatives that genuinely add value.
How it works: The end-to-end accounts receivable automation process
Understanding the mechanics of AR automation helps illustrate why it's so effective. Here's how a typical automated workflow operates:
1. Invoice generation based on triggers from ERP or CRMThe moment a sale is completed or service delivered, the system automatically creates and formats the invoice using predefined templates.
2. Email/SMS delivery with branded templates
Invoices reach customers instantly through their preferred communication channel, complete with your branding and payment options.
3. Automated payment reminders based on due dates: The system tracks payment terms and sends personalised reminders at optimal intervals. For example, you can send a friendly heads-up seven days before the invoice due date, followed by increasingly urgent messages if payment is delayed.
4. Real-time tracking of invoice status: Every invoice is monitored. You can see when invoices are viewed, partially paid, disputed or settled in full.
5. Intelligent prioritisation of follow-ups: AI-powered systems can identify which accounts need immediate attention based on payment history, invoice value and customer relationship factors.
6. Payment reconciliation and dashboard updates: As payments arrive, the system automatically matches them to invoices, updates your records and refreshes performance metrics.
This seamless integration of receivables automation with popular ERP and accounting systems ensures data flows smoothly across your business. Whether you use SAP, Microsoft Dynamics, QuickBooks, or other platforms, modern AR automation solutions connect directly to your existing infrastructure.
The transformation from manual to automated AR processes is striking:
|
Step |
Manual AR process |
Automated AR process |
|---|---|---|
|
Invoice creation |
Manual in Excel |
Triggered by ERP |
|
Reminder scheduling |
Calendar-based follow-ups |
Automatic, based on due dates |
|
Payment tracking |
Spreadsheet-based |
Real-time dashboard |
|
Reconciliation |
Manual matching |
Automated reconciliation rules |
How to implement accounts receivable automation
Implementing AR automation doesn't have to mean a complete system overhaul. Many organisations start with a phased approach that builds on your existing infrastructure. Here's a practical implementation roadmap for your business to follow:
1. Assess your current AR processes
Identify bottlenecks, manual tasks and inefficiencies in your existing invoicing and collections workflows.
2. Define your goals and KPIs
Set measurable objectives like reducing DSO by a specific percentage, increasing on-time payments, or saving a number of hours per week in manual work.
3. Select a scalable solution
Choose an AR automation platform that integrates with your ERP or accounting system and supports your invoicing logic, communication flows and compliance needs.
4. Start with one automation layer
Begin by automating payment reminders or invoice delivery, then gradually expand to include workflows like escalation logic and payment reconciliation.
5. Train your team
Ensure users understand how to operate the system and how it improves, not replaces, their work. Provide templates, rules and clear responsibilities.
6. Monitor, measure, refine
Use real-time dashboards to track performance, address exceptions and adjust workflows based on results.
How to choose an accounts receivable solution that fits
Choosing the right AR automation solution means finding software that integrates smoothly with your systems, supports your team's workflow, and delivers measurable impact.
Key receivables automation features to look for include:
- End-to-end automation for invoice delivery, reminders and reconciliation
- Integration with ERP and accounting systems such as SAP or Microsoft Dynamics 365
- Real-time dashboards to monitor DSO, payment status and overdue accounts
- Configurable automation rules to fit your collection processes
- Built-in compliance and auditability, including UK GDPR readiness
- Scalable architecture that grows with your invoice volume and team needs
Real-life example: The Owens Group
The Owens Group, a renowned UK courier and transport service, faced growing challenges when managing their finance processes as the business expanded. With increasing volumes of invoices and orders to process, their paper-based systems were becoming a bottleneck, limiting efficiency and visibility across their operations.
The company's digital transformation using the DocuWare platform demonstrates the transformative power of automating finance workflows, with benefits that extend directly into accounts receivable processes. The Owens Group:
- Eliminated paper-based processes, enabling employees to access documents from any device, anywhere
- Automated invoice processing with direct integration to SAGE 200, completely eliminating manual data entry
- Accelerated approval workflows through cloud-based document management, with requests immediately forwarded to approval offices
- Improved transparency and control across all order documentation and financial processes
- Created customised digital workflows that drastically increased speed in both procurement and finance departments
Start your receivables automation journey today
When implemented effectively, AR automation creates a ripple effect across your entire organisation. Your finance team gains hours back in their week. Your customers receive a more professional, consistent payment experience. And your leadership team gains real-time visibility into cash position to make decisions based on accurate data.
Whether you're processing hundreds or thousands of invoices each month, the right AR automation solution can take control of your receivables process. You'll know every invoice is tracked, every payment is chased, and nothing has fallen through the cracks.
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