Should You Invest In Accounts Receivable Automation?

Effective accounts receivable management is critical to the success of any business, as it helps to improve cash flow, reduce bad debt, and increase customer satisfaction. As businesses grow, effective management of accounts receivable becomes imperative. And there comes a point where thousands of invoices are generated by the organisation, and the manual process of accounts receivable becomes counterproductive for the businesses.

According to a report by Markets and Markets, the accounts receivable automation market is expected to reach USD 3.0 billion by 2024, growing at a CAGR of 12.1% from 2019 to 2024.

The increasing adoption of cloud-based solutions, the need for cost reduction and efficiency improvement, and the growing demand for better customer relationship management are some of the factors driving the growth of this market.

The reason for such an increased adoption is since as businesses grow and the volume of accounts receivable increases, managing invoices, tracking payments, and collecting outstanding balances becomes increasingly complex. Traditionally, businesses have relied on manual processes, such as spreadsheets, to manage their accounts receivable. However, with the advent of automation tools, businesses now have the option to streamline their accounts receivable management.

While a lot of businesses have already welcomed the automation of AR management processes, may are still trying to evaluate the benefits, with costs being one of the deterrents. To invest in a new automation tool, the organisations need to understand the value that they get out of it. And many a times, it is pitted against zero additional cost of existing manpower.

The biggest fallacy is around understanding the real cost of manual AR processes. The costs associated with manual Excel-based processes not only includes the cost of labour, it also includes the cost of errors, and the cost of lost productivity. The labour cost includes the salaries and benefits of the employees responsible for managing the accounts receivable process, such as data entry, invoice creation, and collections as well as employees responsible for data analytics. The cost of errors includes the potential for mistakes in data entry, invoicing, and collections, which can result in lost revenue, chargebacks, and customer dissatisfaction. The cost of lost productivity includes the time spent on manual processes that could be better spent on other business activities.

50% disputes happen due to wrong or missing information on invoice

The costs associated with an AR automation tool include the cost of the software, the cost of implementation, and the cost of training. The cost of the software includes the initial purchase or subscription fee for the AR automation tool. The cost of implementation includes the time and resources required to set up the software and integrate it with existing systems. The cost of training includes the time and resources required to train employees on how to use the software effectively.

When comparing the costs and benefits of using an AR automation tool versus manual Excel-based processes, the benefits of automation outweigh the costs.

AR automation helps is reducing the DSO by an average of 34%

Although the initial cost of purchasing an AR automation tool and implementing it may be an additional investment, the improved efficiency and accuracy of the accounts receivable process ultimately result in cost savings. The reduced labour costs, fewer errors, and increased productivity, scalability, accuracy, and efficiency associated with AR automation tools can improve cash flow, reduce bad debt, and increase customer satisfaction, ultimately contributing to the long-term success of the business. Just think when you have interactive dashboards, predictive analytics, and the system talks to the user through emails, Whatsapp, notifications and strategic workflows, the user just has to do what he is supposed to do which is to manage the collections with the customers without having to ruffle through excel sheets, calendar reminders or their likes.


Sudarshan Banerjee

Inebura , Head of Product

Sudarshan Banerjee is a Product, Process and Automation professional. His areas of interest include Sales Force Automation Tools, Sales Process Construction, Data Science, Data Analytics, Statutory Audit and Compliance, Project Management and Change Management.

He has over 19+ years of experience in Business Development, Sales, Process Planning, Business Strategy and Product Development spanning across various domains namely ITeS, FMCG,Financial Services, Travel& E-com.