Automation: Bringing the Digital Revolution to the AR World

by Ed Jordan 0

Taking cash out of the ATM, using online banking websites and apps to pay bills, and even confirming doctor appointments or filling prescriptions using automated messages – all of these everyday tasks are now automated through technology. However, automation is much more complex when it comes to the business world. While the digital revolution has already disrupted most departments across an organization, some are slower to take the leap. Accounts receivable (AR) is one area that has yet to see as much progress towards automation as other areas, including accounts payable (AP).


 With more power in the hands of buyers, even in B2B transactions, AR is lagging behind in automation and technology. The digital revolution is here, and AR needs to catch up. For example, buyers are using technology to introduce flexibility to different parts of the accounting cycle, in particular with accounts payable teams and across payment channels. They can now pay via ACH, credit cards and even wire transfers. Virtual credit cards, also known as one-time use or emailed credit cards, are also becoming more popular. While new technologies make it easier for the buyer to pay, the rapidly changing payment landscape adds stress to suppliers and AR departments as they navigate accepting those payments and mitigating fees.


 The challenge facing these financial departments is to overcome the inefficiencies resulting from traditionally manual invoice-to-cash processes, and integrate new technology solutions that can deliver on increased revenue with more streamlined processes.


 By utilizing automated invoicing and payment solutions, those charged with driving financial success can ensure their organizations are moving away from costly, labor-intensive methods and towards innovations that reclaim valuable time while simultaneously accelerating cash flow.


 One Size Does Fit All


 Whether you manage invoice delivery, payments processing or the entire invoice-to-cash process, you might think that there is no single solution that will help meet the various financial needs of an organization. This may have been true a decade ago, but today the digital revolution has allowed us to invent payment cycle management (PCM). With an electronic approach, organizations can transform a once disorganized, disparate AR system into a single, automated, cloud-based solution.


 Taking the Leap


 Joining the digital revolution and transforming your business with automation can seem like a daunting task, but it’s not as complicated if you break it down into three steps. For most AR departments, the three crucial operational areas are invoice delivery, invoice payments and cash application. By focusing on these three areas, companies can help increase efficiency across the chain of billing and payments. Automating these key processes will also make it easier to handle other AR tasks, such as collections and reporting metrics.


 Bring on the Cash Flow


 Businesses can increase and stabilize their flow of cash through automation. When sending invoices manually, companies often mail them just once a week or even once a quarter.  They then deposit checks only after they are manually entered into the system and matched with remit statements. Automation speeds up the entire process by sending invoices daily. Customers who choose electronic invoicing options, such as email or using an online portal, may even receive invoices within 24 hours of making a purchase, without printing and postal delays.


 When you can guarantee fast invoice delivery, customers may be incentivized to pay invoices faster if they are presented with discounts. Even offering electronic payment methods, such as credit cards and ACH, puts cash back into your business faster. A paper check may take up to five days to clear, while an electronic payment can clear within 24 hours. This adds up to a significant reduction in days sales outstanding (DSO), an accelerated flow of cash into your business and happier customers, with minimal effort by your AR team.


 Optimizing Operations


 By implementing a single, end-to-end digital strategy, businesses can maximize operational efficiency and use their resources in more productive ways. Rather than manually entering data into spreadsheets, keying data and filing paperwork, AR teams can work on strategic initiatives to move the organization forward. With less manual labor and more automation, businesses can experience a reduction of human error and paper in the office, while also increasing data security. When employees have more time to focus on high-value initiatives and providing better service, both employees and customers benefit.


 Increasing Transparency 


 Any manager or executive will tell you that when you have better data, you can make smarter decisions. The beauty of a smart automation solution is that it provides you with better reporting tools and dashboards that can’t be replicated through an ERP interface or excel spreadsheets. Another benefit is that once AR processes are automated, real-time updates provide instant access to the insights and data needed to make more intelligent business decisions.


 Businesses have a lot to gain and nothing to lose by embracing the digital revolution within their AR teams and automating the invoice-to-cash process. And as AR departments establish their position in the digital revolution, PCM is the first major step in the right direction.


 About the Author

Ed Jordan is CFO at Billtrust, a payment cycle management solutions provider that helps businesses automate and accelerate the invoice-to-cash process. To learn more, visit

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