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How to Choose Accounts Receivable Automation Software

What you’ll learn


  • Accounts receivable automation software improves efficiency, reduces errors and DSO, and streamlines operations.
  • Tips to choose AR software – Research solutions and take demos
  • Know Autonomous Receivables – AI-based AR software

Of the different variables affecting your cash flow, accounts receivables is crucial. AR metrics such as invoice aging, days sales outstanding, and bad debt have a direct impact on your cash inflows.

24% of SMBs' revenues are held up in AR

Accounts receivable software streamlines AR operations and reduces the time and effort it takes to mitigate credit risk, deliver invoices, collect payments, and match records.

It can be overwhelming when you have to choose AR software that matches your business, given the multiple options available. In this article, we discuss tips to select the best accounts receivable software for your business.

AR Automation Software will grow at 12.1% CAGR

What is accounts receivable software and why do businesses need it?

Accounts receivable is the money owed to a business by its debtors (including clients who avail products or services on credit) in the short term (less than one year). Accounts receivable management includes several functions such as invoicing, payment processing, receivables collection, cash reconciliation, credit risk management, deductions management, and dispute resolution.

Accounts receivable software is a solution that helps automate the steps involved in receivables management. AR software integrates with ERP and accounting systems to pull purchase order details, generate invoices using pre-defined templates, and deliver and track invoices.

It also helps prioritize accounts for collections, generate aging analysis reports, match remittances with bank and invoice details, and identify deductions or short payments early on.

Accounts receivable automation software helps ease the life of your finance executives and collectors. It also ensures error-free processes, higher efficiency, and more time for your executives to focus on higher-value tasks such as credit and collections strategies.

Benefits of investing in an accounts receivable software

Here’s a quick look at the benefits of accounts receivable software.

Benefits of accounts receivable software

5 steps to choose the best accounts receivable software

Choosing the right software can be a challenge. You want to ensure it meets all your needs while also offering a quick return on investment (ROI).

You need to be thorough and compare AR solutions and vendors to select  the right software.

Here we discuss the steps to help you choose the best accounts receivable software for your business.

1. Huddle up internally

Connect 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:

  • What are the bottlenecks in your AR process?
    • Is the DSO consistently high?
    • Are more clients turning bankrupt?
    • Is the error rate high in reconciliation?
    • How much time do you spend on invoicing?
    • What is the process you follow to make collection calls?
  • How much are you losing because of these bottlenecks?
    • $$$ in bad debt and unpaid invoices per month
    • Cost of additional FTE needed for completing tasks
    • Delay in closing the books
  • Do we have any resources currently that can help work-around it?
    • Tech tools
    • Expert professionals
    • Outsourcing agencies

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.

Our AR assessment automation template can help you with this.

Download our AR Scoring Tool to assess your AR Automation Efficiency 

2. Do your research: Compare AR solutions

Once you assess your needs and the gaps in your system, you need to look for solution vendors that can help plug the gaps. Software solutions help automate the AR workflows and also allow customization options.

A random search on Google can help you identify scores of AR automation software providers. Check their websites and study 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.

Below we discuss some of the main factors to consider when researching AR automation software.

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.

Integrations

Most AR solutions work within the ERP or accounting software ecosystem. Hence, before you shortlist AR solutions, check if they can easily integrate with your ERP, accounting, or customer relationship management software systems.

Check for plug-and-play integrators to help you reduce the implementation timelines and avoid any additional costs that vendors may charge for integrations. Out-of-the-box integrators help you quickly navigate through the implementation process without much IT support.

Check with the vendor to see if they offer customized integration support as well 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.

Pricing

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.

3. Score and shortlist vendors

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:

  • Application uptime: This metric helps you gauge whether your application will be available 24×7. It will also give an idea about which party will be responsible if the service gets disrupted by planned downtime or unplanned outages. The common industry standard is to support 99.9% uptime.
  • Response levels: This metric promises how much time it will take your AR SaaS vendor to recover from a cybersecurity incident from the time it has been detected. Other business continuity and disaster recovery metrics such as recovery time objective (RTO) and recovery point objective (RPO) help you know how much time it will take for you to get your data in case of an incident and how much of the data you’ll be able to recover, respectively. The shorter the RTO, RPO, and incident response time, the better is the vendor’s service.
  • Security measures: Since financial and client info is one of the most confidential data, it is pertinent that your AR solution adheres to the highest security standards. This also helps from a regulatory standpoint. If you are using SaaS AR software, check for the multi-tenant security measures, location of data centers, data retention, data encryption, and access privileges.
  • Grievance TAT: Check the customer service turn-around-time (TAT) of the vendor. Does the vendor promise to reply or initiate action on your grievance within four hours? How long does the vendor say they take to resolve issues – less than 48 hours or more? To provide your customers excellent customer service, your AR application and payment portal must be available at all times without any hiccups.

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.

Use our Software Evaluation Template to compare and score AR solutions and vendors.

4. Take demos of the software

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:

  • Can you show me how to use this <feature name> function?
  • Is there an alternative way of doing this <task>?
  • I have this <problem>, how can the solution help me?
  • What features are available on the mobile app?
  • Do you service other clients within my industry?
  • Can you provide customer testimonials?
Schedule a demo to learn more about HighRadius’ AR solutions for mid-market businesses

5. Get stakeholder buyer-in

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.

Ask for quotes and proposals and these and other details with your IT and legal teams for approval.

Autonomous Receivables: AI-based AR suite solution

HighRadius’ Autonomous Receivables is a suite of solutions that automate all aspects of your accounts receivables process.

The key modules that Autonomous Receivables offers include:

  • EIPP Cloud: This Electronic presentation and Invoice Processing app offers features such as auto-invoice delivery and tracking, self-service payment portals, and payment links embedded in invoices and emails. It also supports parent-child hierarchies for invoicing and payment processing via 150+ methods including ACH, SEPA, and credit cards.
  • Collections Cloud: Powered by AI, the Collections Cloud supports automated dunning, collections worklist prioritization, payment predictions, cash projections, and tracking of collections metrics such as DSO, CEI, and bad debt.
  • Credit Cloud: This app provides credit reports of companies from 40+ credit risk agencies. It also offers real-time credit risk alerts, AI-driven order release or block recommendations, and pre-filled credit applications in multiple languages to onboard customers faster.
  • Deductions Cloud: This app uses AI and RPA based tools to aggregate data from multiple sources such as bill of lading and proof of deliveries available via email or customer portals. It then auto-links this to their respective deductions for faster resolution.
  • Cash Application Software: This app leverages AI to match payments against invoices even in case of deductions, partial payments, or parent-child payments. It supports remittance data extraction from emails, checks, and various other file formats.

HighRadius accounts receivable software

HighRadius offers cloud-based Autonomous Software for the Office of the CFO.  Autonomous Software is data-driven software that continuously morphs its behavior to the ever-changing underlying domain transactional data. It 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.

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.

Schedule a demo to understand how the solutions work.

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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.