Accounts receivable automation: Meaning + top tools

Sending out invoices, waiting for customer payments, reconciling those payments—all of these tedious accounts receivable tasks take time. In fact, according to a recent survey by QuickBooks, small businesses spend an average of 25 hours a week on manual data entry tasks like these.

In business, time is money. With accounts receivable (AR) automation, your business can eliminate repetitive tasks, expedite invoice delivery to your customers, and reduce late payments. You can then dedicate the time (and money) saved to accomplish your bigger-picture business goals.

This article will explore how automation works, discuss the steps you can take to implement it, and review some of the top AR automation software options available.

What is accounts receivable automation?

Accounts receivable automation is the process of automating the repetitive and often tedious tasks necessary for collecting customer payments. With automation tools and resources, like custom workflows, automatic invoicing, and real-time analytics, businesses can simplify and accelerate their accounts receivable cycles.

Automation does not mean removing the human element. Instead, AR automation does the heavy lifting, resulting in a speedier process with fewer errors and improved cash flow. This frees up time and money that can be spent on other crucial areas like customer relationships and business growth.

Key benefits of accounts receivable automation

From automatically generating and sending invoices to shortening the invoice cycle, there are numerous benefits to having an automated accounts receivable system. Here are some of the key ways automation can help your business:

• Get paid faster: Payment automation can help you accept payments into your business account sooner.
• Simplified reconciliation: Invoices and payments are automatically matched, removing the need for manual processing.
• Fewer errors and disputes: Automation limits the window for human error, resulting in fewer invoicing disputes.
• Fewer delinquencies: Automatic payment reminders can reduce the number of late payments you receive.
• Improved customer relationships: Fewer invoice errors and timely payment reminders keep customers happy.
• Reduced costs: Automation means fewer employee hours spent on repetitive tasks. It can also reduce other costs like write-downs, paperwork storage, and postage.
• Informed credit risk assessment: In-depth AR reports can help you assess which customers to extend credit lines to.
• Improved cash flow: Faster payments, fewer delinquencies, and reduced costs can all help improve overall cash flow.

In addition to helping you accept payments faster and easier, automation can free up the resources you need to focus on scaling your business.

How accounts receivable automation works

There are four basic steps in the accounts receivable process: invoicing, payment collection, reconciliation, and reporting. Individual workflows and automation tools vary within these steps, but the basic process will remain the same.

1. Invoicing: Once a sale is complete, the payment automation software system sends an invoice to the customer.
2. Payment collection: Customers have the opportunity to pay. Automated reminders are sent for payments due or overdue.
3. Reconciliation: When payment is received, it is automatically matched to the appropriate invoice and recorded in real time.
4. Reporting: The system updates dashboards and generates reports to provide insight into the AR process and customer payment behavior.

Top accounts receivable automation tools

There is no shortage of AR automation tools out there. To make finding a provider that offers automated payments easier, we compiled five standout options below. The key automation features are listed for each, along with their price points, so you can quickly find the right fit for your business.

Stripe

Bluevine’s payment links are powered by Stripe, allowing you to seamlessly accept payments into your Bluevine Business Checking account.^BVSUP-00180 As a payment gateway and merchant account, Stripe offers AR automation features that can streamline invoicing, payment collection, and reconciliation.

With Stripe, every part of the accounts receivable process can be automated, from generating and sending invoices to payment processing and reconciliation. Plus, business owners can accept payments in over 135 currencies using 40+ payment methods. Thanks to these features, 87% of Stripe invoices are paid within 24 hours.

Did you know?

You can easily connect your Stripe account to Bluevine Business Checking to accept payments seamlessly and manage all your business finances from one intuitive dashboard.

Key features:

• Accept payments faster: Most payments are processed within one to three days, minimizing disruptions to your cash flow.
• Global payment support: Issue invoices in 25+ languages and receive payments in 135 currencies.
• Access comprehensive reports: Instantly identify overdue invoices and delinquent accounts, and craft custom reports to gain useful insights.
• Streamline invoicing: Create custom templates for quicker invoicing and have customer payments automatically matched to invoices.
• Automate collections: Reduce late payments with automated payment reminders and AI-powered payment retries.
• Customer control: With the online portal, customers can quickly view and download their invoices and make payments as needed.
• Easy to set up: You can get started quickly with no-code setup options.

Pricing:

Stripe’s AR automation features are part of Stripe Billing, which offers two payment options:

• Pay as you go: 0.7% of your billing volume
• Subscription-based: ranging from $620/year to $5,750+/year, depending on transaction volume

Custom plans are also available.

Alternatively, you can opt for Stripe Invoicing, which has a similar but more simplified set of features, charged as a per-invoice fee of 0.4% to 0.5%.

QuickBooks

A well-known accounting and tax tool, QuickBooks Online^BVSUP-00056 provides affordable monthly subscription plans with a range of features designed for small businesses. In addition to tax prep, money management, and newer payroll features, QuickBooks has several tools for automating payment processes.

With custom categorization, you can set rules for categorizing transactions, which QuickBooks will automatically apply to future transactions. You can also track invoices, and any payments made through the platform will be automatically matched to the invoice.

However, features are capped at a certain number of users. This makes the software ideal for small to medium-sized businesses, but not a great fit for larger businesses.

Key features:

• App integration: Use the tools you already have with integration support for more than 800 apps, including Bluevine, Expensify, and Bill.
• Customize your package: QuickBooks offers several tools for accounting, taxes, banking, payroll, and more, allowing businesses to piece together a custom package.
• Create custom invoices: Save time with QuickBooks invoice templates or use its AI-powered invoice generator.
• Accept recurring payments: Avoid repetitive tasks by generating invoices on a recurring schedule.
• Invoice matching: Have payments automatically matched to invoices, eliminating the need to manually mark invoices as paid.

Pricing:

• Simple Start: $38/month
• Essentials: $75/month
• Plus: $115/month
• Advanced: $275/month

If you’re a larger business looking for a more robust solution, QuickBooks offers a separate Intuit Enterprise Suite.

Bluevine Tip

Already using QuickBooks for your business accounting needs? Bluevine offers a reliable two-way sync with QuickBooks Online, allowing for seamless transaction syncing and streamlined accounting processes.

Zoho Books

Zoho Books, an accounting software company, offers a suite of services that enable businesses to automate various processes, including accounts receivable. With invoice validation, recurring invoices, and automated payment reminders, companies can speed up their payment processes without sacrificing accuracy or security.

Zoho Books offers a free plan, making it a great option for small businesses looking for basic accounting help. However, access to many of its top-tier features, including AR automation, multi-currency invoicing, and report generation, requires a higher-level subscription.

Key features:

• Robust accounting tools: Track expenses, automate bill payments, and generate custom cash flow reports.
• Recurring invoices: Create recurring invoices for easy payment collection from regular customers.
• Multi-currency invoicing: Add as many currencies as you need to your account.
• Invoice validation and security: Verify transactions before sending invoices to ensure accuracy, and sign invoices digitally to avoid fraud and forgery.
• Automated workflows: Create custom workflows for automating your invoicing tasks, like sending out payment reminders and adding late fees.

Pricing:

• Free plan: Includes many payment features like invoicing and automated payment reminders
• Standard: $15/month billed annually
• Professional: $40/month billed annually
• Premium: $60/month billed annually

NetSuite

As an enterprise resource planning (ERP) system, NetSuite gives business owners the tools they need to run their businesses efficiently. From inventory tracking and managing customer relationships to performing accounts receivable tasks and viewing real-time analytics, NetSuite is a comprehensive all-in-one solution.

When it comes to automating accounts receivable processes, NetSuite automatically converts sales orders into invoices, accurately calculating tax charges and auto-posting transactions to the general ledger. While this ERP system has a hefty price tag, it offers a wealth of features, making it a good solution for larger businesses.

Key features:

• Invoice grouping: Consolidate multiple invoices in a set period into one invoice for customer convenience.
• Payment matching: Save time by automatically matching customer payments to open invoices.
• Automate collections: Send automated payment reminders to customers.
• Create custom AR reports: Quickly track payment history, view unpaid balances, and more to gain insight into payment trends.
• Full business features: Manage all business aspects with features for ordering, accounting, inventory management, reporting, payroll, CRM, and more.

Pricing:

Custom

Upflow

A dedicated accounts receivable automation platform, Upflow provides businesses with all the tools they need to automate and streamline their AR processes.

Designed with a focus on collection, Upflow offers personalized automated payment reminders, custom workflows for different customer segments, and the ability to set up recurring payments. While Upflow does not offer any features beyond payment automation, it does integrate with many other popular tools, including QuickBooks and NetSuite.

Key features:

• In-depth analytics: Use real-time AR data and alerts to make informed business decisions. 
• Personalized payment reminders: Create your own or use an Upflow template and set a delivery schedule.
• Easier communication: Communicate with customers and team members all in one place.

• Progress invoicing: Get paid as soon as possible by invoicing for different project stages.

Pricing:

Upflow offers four service packages based on your annual recurring revenue (ARR):

• Discover: Free; includes access to basic AR analytics 

• Grow, Scale, and Strategic: Custom pricing; all plans include AR automation tools 

Common accounts receivable automation challenges

While AR automation offers significant benefits, there are a handful of challenges you may encounter when adopting automation tools. Below, we break down some of the most common roadblocks and explore tips for tackling them.

Implementation costs 

The costs for AR automation tools can range from a few dollars per month to thousands upfront. Balancing this new cost can be difficult, especially for small businesses. Other costs to consider include training, implementation, and ongoing maintenance and support.

Consider opting for a subscription-based service to decrease upfront costs. And remember, money paid now is an investment in your future, as 91% of businesses saw improved cash flow, increased savings, and measurable business growth after automating AR processes.

Integration with existing systems 

Adopting new software for AR automation can be challenging if you already use dedicated tools for small business accounting, payment processing, banking, etc. The goal of automation is to save you time and money, and having to import or copy data from one system to another or pay for custom coding solutions takes time (and costs money). 

When looking at accounts receivable automation software, try to find a system that integrates with the tools you already use. Alternatively, you can opt for an all-in-one solution, such as an ERP, which can replace your existing systems.

Employee training

New tools often come with a steep learning curve. It may take time and considerable training for your employees to become adept at using the software and implementing new processes. If the new system is particularly difficult to learn or use, you may even receive pushback from your team.

Bluevine Tip

Look for a user-friendly system that provides reliable customer support. The initial time investment now will save you considerable time down the road.

Customer experience 

Automation can lead to less human interaction with customers. This lack of personal attention can aggravate some customers and lead to a breakdown in communication.

Use the customization tools in the AR automation software to give your customer communication a personalized feel. You might also consider establishing new customer relationship management practices to ensure customers remain happy.

Privacy and security 

While most AR tools have robust privacy and security features, their access to financial data can make them a target for cyberattacks. There is also compliance to worry about, as well as complacency. Relying exclusively on automation without human oversight can result in minor errors becoming major issues.

Bluevine Tip

Ensure the AR automation partner you choose adheres to all regulatory requirements. You should also continually review data and processes to spot potential problems early.

How to get started with AR automation

Switching from a manual AR process to an automated one requires careful planning. Here are five steps to take when making the switch.

1. Assess your current AR process: Review your current AR processes and pinpoint where the issues start, like a time delay in sending out invoices or a bottleneck in reconciliation. The goal is to identify the areas where automation can benefit your business the most.
2. Choose the right AR solutions: With the pain points you identified in mind, start looking for AR tools that would be a good fit. Things to consider include your budget, needs, and future plans for growth. Research, ask questions, and try demos or free trials if available. 
3. Integrate with your existing systems: If you already use other tools and apps to manage business processes like shipping, accounting, or customer relationships, you will want to integrate them into your new AR automation system. This will allow for seamless data sharing and syncing between applications.
4. Train your team: Once you have your AR system set up, it is time to train your team. Consider keeping your old system up and running until everyone has become familiar with the new processes. Also, see if your AR automation provider offers any kind of training resources. 
5. Monitor and optimize: Do not just set it up and forget about it. Continuously revisit your AR automation processes to analyze the results and refine your strategy as needed.

Streamline your AR automation process with business checking

Unlike traditional AR automation tools that can be pricey, complex, and tied to separate accounting systems, Bluevine keeps things simple by bundling invoicing, payment acceptance, and your checking account in one place. 

You can bill clients, get paid via card, ACH, or wallet, and earn interest on deposits immediately—without juggling extra software or paying for features you’ll never use. It’s streamlined AR for businesses that want speed and cash flow, not spreadsheets and steep learning curves.

Accounts receivable automation FAQs

How does AR automation improve a business’s cash flow? 

There are three main ways AR automation improves cash flow: speed, accuracy, and reduced costs. Automation speeds up the invoicing and payment process while also reducing the number of human-based errors. This can result in fewer disputes and quicker access to cash. Additionally, automation reduces costs by decreasing labor hours.

How can AR automation streamline invoice and reconciliation processes?

Automation can automatically generate and send out invoices. Most AR automation tools will also take care of reconciliation by automatically matching payments to invoices.

What are some ways AR automation solutions can analyze customer payment behaviors?

With real-time data and reporting, a business can view recent trends and changes in customer payment behaviors. Instead of just viewing current delinquencies, being able to view long-term payment histories can provide insights into seasonal slowdowns, industry-specific issues, and a customer’s creditworthiness.