Managing accounts receivables is critical for maintaining a healthy cash flow for any business. Metrics such as invoice aging, days sales outstanding, and bad debt can directly impact cash inflows.
To streamline AR operations and reduce the time and effort it takes to mitigate credit risk, deliver invoices, collect payments, and match records, accounts receivable software is crucial.
However, with numerous options available, choosing the best software can be overwhelming. In this article, we’ll provide you with tips to select the best accounts receivable software for your business.
Accounts receivable software is a crucial tool for businesses looking to streamline their receivables management process. With AR software, businesses can automate many of the time-consuming tasks involved in managing accounts receivable, including invoicing, payment processing, and collections.
But why do businesses need accounts receivable automation software? For starters, it helps ensure accurate and timely invoicing, which is critical for maintaining positive relationships with customers. By automating the invoicing process, businesses can reduce errors and ensure that invoices are delivered to customers in a timely manner.
In addition, software used for accounts receivable can help businesses prioritize collections efforts and identify potential issues early on. With features like aging analysis reports and deduction management, businesses can quickly identify which accounts require attention and take action to resolve any issues.
Investing in an accounts receivable software can also lead to increased efficiency and productivity. By automating many of the manual tasks involved in receivables management, businesses can free up their finance executives and collectors to focus on higher-value tasks like credit and collections strategies.
Overall, accounts receivable software is a powerful tool for businesses looking to improve their receivables management process. With features like automated invoicing, collections prioritization, and deduction management, businesses can streamline their operations and improve their bottom line.
Here’s a quick look at the accounts receivable automation benefits:
When it comes to choosing the best ar management software for your business, there are several steps you can take to ensure you make the right decision.
Start by connecting with your team members who work on accounts receivable workflows to understand their challenges and requirements. This will help you set clear objectives about what you want to achieve with AR automation software.
Some questions to ask your team include:
It's important to assess how well you've automated the different steps in your AR process to identify gaps and understand which processes need to be automated on priority to improve efficiency.
Once you assess your needs and the gaps in your system, you need to look for solution vendors that can help plug the gaps. Research various AR solutions and compare their features, pricing, regulatory compliance levels, and integrations. Opting for cloud-based solutions can save you CAPEX costs and improve scalability while on-premise hosted solutions give you better control over your data and processes.
Key accounts receivable software features:
Feature |
Description |
Billing and invoicing |
Auto-generate invoices and deliver them via emails or directly to customers’ accounting or AP systems. |
Payment processing |
Process multiple payments including ACH, checks, and wire transfers. Allow customers to schedule payments, pay in installments or partially. |
Aging reports |
Keep track of aging receivables and categorize them based on the number of days outstanding (< 30 days, etc.). |
Worklist prioritization |
Automatically rank outstanding accounts based on the amount and days overdue. |
Customer self-service portals |
Allow customers to identify their amounts due and pay anytime using their preferred channels. |
Credit risk scoring |
Check credit scores of customers using predefined models and data from multiple sources. |
Automated dunning |
Automatically send reminder emails to customers about their payment due dates and amounts. |
Other good-to-have features include automated cash reconciliation, in-app calling for collectors, and deductions management.
When selecting an AR solution, ensure it can integrate with your ERP, accounting, or CRM software. Look for plug-and-play integrators to speed up implementation and avoid extra costs. Out-of-the-box integrators can help you navigate the process without much IT support. HighRadius offers customized integration support to meet any specific requirements that you may have. HighRadius’ solutions are built-for all popular ERP systems including NetSuite, Sage Intacct, Microsoft Dynamics, SAP, and Oracle.
This is one of the key deciding factors in your software purchase journey. AR software solutions may be priced on a per-user basis or the number of invoices sent. Check if your company policies allow you to subscribe to the vendors’ pricing model. Study if they fall within your budget limits and can help you achieve target ROIs within the specified timelines.
Along with evaluating the software solutions, also check the vendors' credibility, clientele, and service levels. You wouldn't want to be stuck with an unresponsive vendor post software implementation.
Some key parameters to evaluate the vendor on include:
Ensure that the metrics discussed above are covered in the service level agreement that you sign with the AR software vendor. Add any other conditions or service that is crucial to meet your business goals. Track whether the AR software vendor upholds all the promises mentioned in the SLA.
Once you’ve shortlisted a few vendors, the next steps would be to touch base with them via email, chatbot, or social media to understand their offerings better and start a conversation. Take demos of the solutions to get a feel of their interface and features. Chat with the solution experts to understand the limitations of the product and any additional costs due to customization or other requirements.
Questions to ask during a demo session:
Share your solution comparison and vendor analysis with all stakeholders involved such as the CFO, finance director, AR manager, and other executives. Include the stakeholders in the demo calls and other high-level discussions. Based on your interactions with the vendors and the scores you've allotted to their solutions and service, shortlist 1-2 vendors to proceed with.
By following these five steps, you can choose the best accounts receivable collection tools for your business. And if you're looking for an AR software solution that can help streamline your AR processes, HighRadius can help. In the next section, we'll discuss how HighRadius can help streamline your AR processes.
If you're looking to streamline your accounts receivable processes, HighRadius'Autonomous Receivables suite of solutions can help. This suite of solutions automates all aspects of your accounts receivables process, including EIPP Cloud, Collections Cloud, Credit Cloud, Deductions Cloud, and Cash Application Software.
With HighRadius, you can automate your entire ar process, from invoice delivery and tracking to collections worklist prioritization, payment predictions, and cash projections. Powered by AI and RPA-based tools, HighRadius' solutions can help you reduce manual efforts and errors, improve efficiency, and increase cash flow.
More than 700 of the world’s leading companies have transformed their order to cash, receivables, and treasury processes with HighRadius. Our customers include PepsiCo, Anheuser-Busch InBev, Sanofi, Kellogg Company, Sysmex, and many more.
HighRadius offers cloud-based Autonomous Software for the Office of the CFO, which brings modern digital transformation capabilities like artificial intelligence, robotic process automation, natural language processing, and connected workspaces as out-of-the-box features for the finance & accounting domain.
So if you're ready to streamline your AR processes and improve your cash flow, schedule a demo with HighRadius today to understand how our solutions work and how we can help your business.
Five KPIs for accounts receivable are: 1) Days Sales Outstanding (DSO), 2) Accounts Receivable Turnover Ratio, 3) Collection Effectiveness Index (CEI), 4) Percentage of Receivables Over 90 Days, & 5) Bad Debt to Sales Ratio. These metrics assess efficiency and effectiveness in managing receivables.
To automate accounts receivable, implement software that manages invoicing, payment tracking, and communication with customers. This includes automatic invoice generation, electronic payment processing, reminders for due payments, and real-time reporting for better cash flow management.
AP automation involves streamlining the process of managing outgoing payments to vendors, including invoice processing and payment execution. AR automation focuses on optimizing incoming payments by automating invoicing, payment tracking, and customer communication.
Gain 360-degree visibility of your global A/R processes with HighRadius' A/R Management Software