Accounts Receivable Automation Benefits

If you’re tired of manually producing and tracking invoices, generating endless spreadsheets and experiencing late payments, then it may be time to automate your accounts receivable (AR) processes.

Accounts receivable automation helps finance teams reduce errors, improve cash flow, and gain time to focus on more strategic tasks like financial planning.

This guide explores the top accounts receivable automation benefits for UK businesses and discusses factors to consider when choosing the right AR automation software.

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What is accounts receivable automation?

Accounts receivable automation uses technology to execute tasks related to collecting money owed to the business by customers and partners. It replaces manual tasks and boosts AR efficiency by handling everything from issuing invoices to reconciling payments and producing detailed reports.

In fact, according to Gartner, automation software can help finance teams save up to 25,000 hours by preventing them from having to redo work due to human errors.¹

So you'll have an idea of how it works, let's look at the benefits of accounts receivable automation in practice:

Imagine the business sells 20 items to a recurring customer. Now, you have to draft an invoice. Without automation, you'd manually draft and send the invoice, search for local bank details, set payment reminders and track the invoice.

Now, imagine you automate the entire process. This way, you can:

• Draft invoices automatically
• Send invoices with a payment link
• Track the status of invoices and other data through a dashboard
• Set up automatic reminders and follow-ups
• Automatically send payment receipts to customers

With AR automation, you can save hours on administrative tasks, collect payments on time and provide a positive customer experience.

Manual processing vs AR automation - key differences

Manual processing and AR automation impact financial operations in different ways.

Here are some of the key differences between AR automation and manual AR processing:

Manual AR processing	AR automation
Requires significant time and human effort to execute tasks	Tasks are automated with minimal human input
Involves creating invoices manually with spreadsheets or other tools	Generates invoices automatically with only a few clicks
Tracks payments by manually updating spreadsheets	Tracks payments in real-time from a dashboard
High likelihood of errors in tasks like data entry, invoicing and payment reconciliation	Reduces errors by automating repetitive tasks
Reduced accuracy and slower responses, which can lead to payment delays and customer disputes	Improved accuracy and speed, which can lead to improved cash flow and better customer experience
May require additional personnel as the volume of transactions increase	Can handle increasing transaction volumes without additional effort
Reports are manually compiled, basic, and prone to errors	Automatically generates accurate and detailed reports to help businesses with planning

Main challenges when processing AR manually

Manual processing of accounts receivables requires you to manage AR processes from start to finish with minimal technology input. Doing this promptly and accurately while focusing on strategic responsibilities can be challenging.

Here's a deeper look at the challenges of manual AR processing:

Time-consuming: Manually handling AR processes is time-consuming and hectic. There are often dozens of invoices to issue, payment reminders to send, and payments that need to be reconciled. Due to this, you may spend more time performing routine tasks rather than more strategic ones like financial planning and risk management.

Prone to errors: Humans aren't 100% accurate, and despite how careful you are, you could make mistakes when entering data, miscommunicate with customers, and forget to follow up. These errors can lead to customer disputes and loss of funds.

Difficulty standardising collections: Standardising payment collections while relying on manual processes is difficult. Team members may handle tasks differently, leading to inconsistencies that could result in payment delays.

Lack of real-time insights: AR teams often rely on isolated and outdated systems when tracking accounts receivables manually. Because of this, you may struggle to get up-to-date information about cash flow and outstanding receivables.

Delayed payments and disrupted cash flow: Invoicing errors and inadequate follow-ups, which are characteristic of manual processing, can delay payments and disrupt cash flow.

Difficulty accepting electronic payments: Without automation, electronic payments require significant manual effort to share bank details, track payments and reconcile them with invoices. This could reduce efficiency and harm customer experience.

Complex payment reconciliation: Finance teams that handle accounts receivables manually tend to rely on multiple payment processors, which can create challenges when reconciling finance statements.

Higher payroll costs: Manual AR processes are labour-intensive, making them difficult and more expensive to scale. An increase in the volume of transactions could require additional staff, increasing payroll costs.

Poor customer experience: Common challenges in manual processing, such as invoicing errors, limited payment options and inefficient communication, can negatively impact customer experience.

Accounts receivable automation benefits

Here are the top benefits of implementing accounts receivable automation software:

Faster invoicing and payments

Automating invoicing speeds up the process by allowing you to send a larger number of invoices quickly. Additionally, with AR automation, you could customise invoices with information such as purchase order data and delivery information to enable customers to verify payments easily.

Other benefits of AR automation for invoicing and payments include consolidating invoices, sending reminders at predefined intervals, and providing multiple payment options to customers. This not only reduces manual tasks but also improves payment collection and customer experience.

Improves cash flow

Accounts receivable automation benefits like streamlined invoicing, faster payment collections and cash application naturally improve cash flow. In addition, AR automation software standardises processes and forecasts cash inflows. With this data, you can make informed decisions and effectively plan for future expenses.

Reduces errors

Using AR automation tools ensures a more accurate AR process. By eliminating manual data entry, ensuring standardised processes and compliance checks, automated systems eliminate common errors related to invoicing, payment tracking, communication, record keeping, and compliance.

Saves time and reduces costs

One of the most important benefits of AR automation is that it saves time and reduces costs. When you automate processes, you no longer need to spend long hours drafting invoices, reconciling payments, or creating reports — the software replaces most of the repetitive tasks AR teams do. This not only saves time but reduces costs by ensuring a much leaner team can handle AR processes.

Additionally, because of their accuracy, AR Automation tools eliminate the extra time and costs spent fixing errors and reconciling payments.

By automating AR processes, you can free up time to focus on other tasks, such as financial planning and risk management.

Simplifies international payments

With AR automation software, you can get local bank details instantly and send invoices in multiple currencies, allowing customers to pay in their local currency.

Additionally, AR software integrates seamlessly with international payment tools. This enables customers to pay the business with their preferred payment method, including credit cards, bank transfers and digital wallets. Automated systems also reduce exchange rate errors and ensure transactions comply with local regulations.

Real-time insights

When you automate accounts receivable processes, you get access to AR dashboards and detailed reports. Think of AR dashboards as a fitness tracker that enables you to track and measure the health of your accounts receivable processes. Here's some of the data you can get from an AR dashboard:

• Ageing reports: let you know how long invoices are overdue
• Outstanding invoices: total value of invoices yet to be paid
• Days Sales Outstanding (DSO): the number of days that pass between selling an item and receiving payments
• Payment status: lets you know whether or not a customer has paid
• Customer insights: provides data on top paying customers and even habitual late payers

With this data available with a few clicks, you can track performance in one place and identify issues before they escalate. You can also access data on team efficiency, such as collection rates and resolution times. Additionally, automation tools provide real-time alerts on overdue payments or disputes to help you step in quickly and ensure smooth operations.

Regulatory compliance

Complying with sales tax, e-billing, and data protection regulations is a major concern for businesses. Accounts receivable automation helps businesses to comply with these regulations by providing up-to-date taxation rates, audit trails, and thorough compliance checks.

AR software also ensures that all transactions are recorded in a format that complies with local regulations. For businesses in the UK, this includes value-added tax (VAT), His Majesty's Revenue & Customs (HMRC), Making Tax Digital (MTD), and other relevant UK regulations.

Data security

AR automation software collects and stores data securely, which simplifies the auditing process. For example, they eliminate the need to store data in emails or manual files, which could compromise its security and make it harder to track financial records.

Additionally, most AR automation software offer two-factor authentication and other security measures to reduce data breaches.

Improves customer experience

Accounts receivable automation benefits businesses by ensuring a smooth customer experience. Customers receive invoices on time, get notifications when invoices are due, have access to multiple payment options, and get disputes resolved quickly, naturally leading to a positive customer experience.

In addition, accounts receivable automation tools integrate with customer relationship management software. This combines finance data with customer profiles so you can better understand customer behaviour, speed up dispute resolution, and meet their needs.

What to consider when choosing an accounts receivable automation software

With the benefits of accounts receivable automation, it's no surprise you may want to automate your AR processes. Here's what to consider when choosing an accounts receivable automation software:

• Automated invoicing: You need AR automation that can automatically generate and send invoices to save time
• Multi-currency invoicing: AR software that supports sending invoices in multiple currencies will enable the business to easily receive international payments and improve customer experience
• Automated reminders & follow-ups: AR software with features like automated reminders and follow-ups can improve cash flow and prevent loss of funds
• Data reporting: The best AR tools provide up-to-date insights so you can stay on top of AR processes and refine operations when needed
• Security and compliance: You need automation software that ensures the safety of business and customer data, as data breaches can have disastrous effects
• Integration with business tools: Consider choosing AR automation software that integrates with payment solutions, accounting software, enterprise resource planning (ERP), and customer relationship management systems (CRM). This will help streamline your entire accounting process
• Ease of use: Automated systems that are easy to use will improve the experience for both your team and customers
• Payment processing: Consider whether the AR automation tool supports multiple payment methods, can be integrated with popular payment tools, or provides local bank details to streamline invoicing
• Customer management: The best AR software has features to help you effectively communicate with customers, resolve disputes and provide a positive experience

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FAQs - accounts receivable automation benefits

Here are some commonly asked questions about accounts receivable automation benefits:

Why is it better to automate your AR process?

Automating your AR process can save you plenty of time and improve efficiency and customer satisfaction. Here’s how AR automation simplifies and solves common accounts receivable challenges:

• Saves time by drafting and sending invoices automatically
• Ensures reminders/follow-ups are sent on time so customers are never billed late
• Multiple check-ins to ensure all information is accurate
• Simplifies payments by allowing customers to pay directly with payment links
• Automatically match incoming payments with invoices
• Eliminates errors caused by manual data entry and mismatched invoices
• Leads to faster payment collections and reduces uncollected payments

How can accounts receivable automation improve cash flow?

Accounts receivable automation improves cash flow by ensuring that payments owed to the business are collected on time. It does this by automating invoicing so that you can send a large number of invoices quickly. It also sends automatic reminders and follow-ups so customers can stay updated on their payment responsibilities. Additionally, AR software simplifies the payment process for businesses by supplying local bank account details and for customers by allowing them to choose their preferred payment options. This not only improves cash flow but also provides a positive customer experience.

Does AR automation integrate with existing accounting software?

Yes, most AR automation tools integrate seamlessly with popular accounting software. You can easily integrate AR software with accounting software by connecting your accounts when signing up and syncing your data. This way, you can ensure any payments you receive or changes you make to invoices automatically reflect in your accounting software.

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Sources used:

1. Gartner - Report on RPA

Sources last checked on date: 23-Jun-2025