The Importance of Automating Account Receivables

Receiving payments on time is critical to your company's financial health. This is where account receivable automation plays an important role in ensuring your success.

Account receivable automation is a tool that can help accounts receivable teams work efficiently by automating repetitive tasks. This includes:

1. Remind customers of unpaid invoices manually.

2. Print thousands of transactions in hard copy.

3. Contact customers directly, when the payment due date is reached.

By addressing some of these issues, account receivable automation can speed up previously manual accounting and financial processes. This solution can help avoid invoicing errors in complex accounts receivable operations.

What is Account Receivable Automation?

Selling products and services, and getting paid on time are two important aspects of running a business. To facilitate sales, companies can provide credit to customers who will later be billed according to the specified time. By not paying for the product or service within the specified time period, the company will lose a certain amount of cash that could have been used for the company's operational costs.

Essentially, account receivable automation is a way to automate repetitive tasks to help businesses earn capital that customers owe. Receivable account automation makes processing large customer invoices easier. Additionally, companies can save a lot of time when collecting payments.

Receivable account automation software can also help businesses improve billing and collection processes. The goal is to ensure that customers pay for the services or products they use according to the specified time conditions.

Studies show that companies that switch from manual to automation experience an increase in Days Sales Outstanding (DSO) – the average number of days it takes a company to receive payment after a sale. This can have a beneficial effect on a company's revenue and profitability.

A company's net income and cash flow can also benefit from more precise billing and payment procedures. Meanwhile, from a compliance perspective, receivable account automation provides valuable data when preparing financial reporting according to regulations.

Modern Accounting and Financial Systems

Otomatisasi account receivable lebih dari sekadar software.

This software can track various payments, match invoices with sales orders, and monitor expired credit cards. Businesses can set incentives and fees for early payments to prevent late fees. It is the database of receivable accounts that allows businesses to know how invoices and payments are progressing and send automated messages to customers.

Once the process is streamlined, you'll receive immediate payments and maintain solid cash flow.

How Does Account Receivable Automation Work?

The way a business works may differ from one to another. However, automation keeps the three main parts of accounts receivable the same: sending invoices, collecting payments, and matching transactions.

Collection Management

When a company fails to collect debts from its debtors within a certain time period, it can be said to be bad debt. Though any debt you collect will be reclassified as receivables to ensure sustainable cash flow. But when receiving payments takes longer, your cash flow becomes less stable. In other words, there is a capital disturbance.

If you want to get payments from customers regularly, then your billing team must treat this consistently. Therefore, it is very important for you to adapt to a system that can provide value. This will be very useful for your company, because later your company's cash flow can circulate in a healthy manner.


The most important part of the accounts receivable process is collecting customer money owed to the business. The first step is to send an invoice to the customer. These invoices are created automatically with account receivable automation, and sent digitally in seconds. If VAT or sales tax applies, this automated system will calculate the tax rate for each transaction in order to collect the correct amount of tax.

Cash App

Automating the A/R process is useful for reducing the amount of manual data entry required. This can help your business generate more revenue. This functionality reduces the time required to use cash to open an invoice. Your company's order-to-cash cycle will also benefit from this improvement.

Benefits of Account Receivable Automation

Simplify Your Workflow

Receivable account automation can reduce the time spent by employees on each invoice and optimize workflow. Your accounts receivable team can also focus more on handling late payments and forecasting cash flow. In other words, eliminating these manual and repetitive tasks allows employees to concentrate more on other important work that can ensure business success.


Serving global clients can be daunting, due to the many local laws to comply with. In this situation, an A/R automation solution can help you adjust these rules. This solution provides a Single Point of Contact (SPoC) which will provide valid information for global billing, and allow you to pay in different markets.

Improving Service to Customers

If you consistently send accurate invoices, your clients will have more confidence in your business. On the other hand, companies that frequently send incorrect documents appear unprofessional and create additional work for everyone. Regardless of the customer's digital medium of choice, helping your customers effectively will be very easy with the help of account receivable automation.

Facilitates Cash Flow

When you save time in your workflow, you can send invoices faster. A 2021 survey showed that 62% of businesses that automated their receivable accounts experienced a decrease in DSO. This results in faster payments and healthy cash flow turnover. This better revenue inflow and outflow allows the company to minimize Days-Sales-Outstanding (DSO).

Improve Reporting

Receivable account automation reports customer payment status in real-time and helps track aging receivable accounts. Account receivable aging is a method for categorizing unpaid customer receivables based on the time they are due. With account receivable automation, you can monitor this accurately.

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