Accounts Receivable Automation
A Complete Guide
ScienceSoft applies 16 years of experience in corporate financial software development to introduce seamless automation of accounts receivable processes.
Accounts Receivable Automation: the Essence
Accounts receivable (A/R) automation is a way for companies to eliminate manual efforts across all A/R-associated workflows, from bookkeeping to cash inflow forecasting to debt recovery. Accounts receivable automation software helps companies effectively manage customer invoicing, receivables tracking, and collection procedures.
A/R automation solutions integrate with CRM, general ledger software, cash management software, and payment gateways. The implementation of accounts receivable automation may take 8–12+ months. Average costs for building accounts receivable automation software range from $140,000 to $400,000, depending on the solution complexity.
ROI for accounts receivable automation can reach up to 390%.
Main Use Cases of Accounts Receivable Automation
Automate 90%+ of enterprise-wide A/R transaction capture, processing, and recording tasks and achieve 3x+ increase in the A/R team productivity.
Get automated invoice creation and submission to customers to drive 2–3x faster invoicing cycle and eliminate manual billing errors.
Provide customers with seamless digital payment experience and rely on automated payment processing to benefit from 30% improvement in timely cash inflow and get 100% visibility of paid invoices.
Accounts Receivable Automation Software: Key Features
Below, ScienceSoft shares a sample feature set that forms the core of A/R automation system.
Trade credit management
- Assigning and reassigning trade credit terms based on a customer credit history.
- Pre-built standard (net 30, 45, 90, etc.) and custom trade credit terms.
- Defining customer discount percentages for early payments / customer penalty amounts for late payments.
- Multi-department trade credit approval.
- Creating custom formulas for customer credit rating assessment.
- Trade credit risk monitoring based on the up-to-date customer credit ratings.
- Generating credit memos with customizable templates.
- Automated invoice generation based on the data imported from ERP, CRM, customer portal, or order management system.
- Customizable invoice templates.
- Multi-currency invoices.
- Multi-language invoices.
- Automated calculation and application of taxes, discounts (including those on early payments), additional charges (e.g., interest on late payments, carriage, insurance), and billable expenses.
- Embedding a payment link into an invoice to enable direct payment via a pre-defined payment gateway.
- AI-powered invoice validation based on SLA/billing guidelines.
- Pre-defined triggers (invalid account, tax location, or invoice date) to identify suspicious invoices that require a manual check.
- Signing invoices using an e-signature.
- Multi-department invoice approval.
- Automated invoice submission to customers via email, messaging apps, or a connected customer portal.
- Incorporating a “Pay now” button into emails to enable direct payment via a pre-defined payment gateway.
- Sending invoices:
- in advance/on delivery
- by schedule/on the spot
- on a single/recurring basis
- Real-time payment processing via the connected payment gateways (e.g., PayPal, Stripe, Authorize.Net, or a custom payment gateway).
- Support of multiple payment methods, including bank transfers, wire transfers, ACH, credit cards, cheques.
- Multi-currency payments.
- Partial payments, including deposit payment.
- Split payments.
- Automated payment collection by direct debit.
- Automated allocation of received payments.
- Cash refund/chargeback to the customer’s original payment method.
- Recording invoice data in the A/R ledger.
- Real-time invoice tracking by status (sent, received, partially paid, paid, due, overdue, etc.).
- In-app/email user notifications on due invoices (on due dates), received payments, invoices written-off to bad debts, etc.
- Automated customer notifications about upcoming payment card expiries.
- Automated payment retry in case of payment failure based on pre-set retry rules.
- Automated scheduled notifications on a payment method failure if a customer failed to complete payment.
- Automatically aggregating data on the amounts received from the company bank accounts.
- Automatically matching the aggregated payment data with open invoices.
- Recording full/partial payments against outstanding invoices.
- Reconciliation of the A/R ledger end balance (against monthly bank statements).
- Deduction validation based on automatically matching deduction claims with the existing customer commitments.
- Automatically assigning deduction processing to the staff members performing deduction resolution.
- Multi-department deduction approval.
- Automatically sending customer notifications on denied and approved deductions (via email, messaging apps, customer portal).
- Assigning credit memos to customers upon valid deductions.
- Applying changes to invoices / invoice records based on approved deductions.
A/R collection planning
- Creating collection queues by priority based on invoice aging and customer credit profile.
- Automated creation of collection schedules.
- Collections tasks assignment/reassignment.
A/R collection communications
- Personalized collection notifications to customers (via email, messaging apps, a customer portal), tailored by language, frequency, tone, etc.
- Scheduled collection phone/VOIP calls.
- Single view/record of all collection-related interactions with customers.
Customer self-service portal
- Portal customization to match changes in corporate branding.
- Setting up location-based portal content and ads.
- Adding, saving, and updating personal info, billing details, including tax IDs, and payment methods, including payment card details.
- Managing subscriptions (update, cancel, pause, etc.).
- Paying bills, making advance and automated recurring payments.
- Tracking paid and outstanding invoices.
- Creating disputes and attaching supporting documents to claim deductions/chargeback.
- Live chat, submitting support tickets via a portal.
Analytics and reporting
- Real-time analytical dashboards and configurable ad hoc reports on revenue, received, due and overdue amounts, DSO, debtors, aging balance, etc. (by customer, date, and more).
- Scheduled monthly reports on A/R totals, A/R turnover ratio, etc.
- On-demand customer statements by time period.
Security and compliance
- Multi-factor authentication.
- Role-based access control.
- Payment data encryption.
- Invoice timestamping.
- Comprehensive audit trail.
- AI-based fraud detection.
- Customer data retention and deletion policies.
- Compliance with global regulatory standards, including GAAP (specifically ASC 606 and IFRS 15), SOC1 and SOC2, PCI DSS, SOX, GDPR (for the EU), ZATCA (for Saudi Arabia), and more.
Key Integrations for Accounts Receivable Automation Software
To ensure timely and accurate A/R data collection and eliminate double data entry across disparate systems, ScienceSoft recommends integrating A/R automation solution with the following systems:
- To upload automatically sales orders and quotes from CRM to A/R automation software and enable input of relevant data when generating invoices.
- To upload automatically real-time data on paid/open invoices from A/R automation software to CRM to match payments received/dunning or payment delay details to the appropriate CRM records.
General ledger software
To upload automatically data on invoices paid/due/overdue from A/R automation software into the general ledger application to provide relevant data for financial close and financial reporting.
Cash management software
To upload automatically data on the amounts received across a company’s multiple bank accounts from cash management software into A/R automation software for faster invoice reconciliation.
- To upload automatically up-to-date customer personal info, billing address, payment methods, subscription details from a customer portal to A/R automation software for accurate and timely invoicing.
- To upload automatically invoices from the A/R automation solution to the customer portal to enable customers to pay invoices via the portal and view their invoice and transaction history.
To upload automatically data on the amounts received, due and overdue, and customer interactions on debt collection from A/R automation software to the BI tool to create reports on the forecasted A/R performance.
Success Factors for Accounts Receivable Automation
ScienceSoft’s consultants have defined important factors that help bring the customer additional value across A/R management workflows.
Real-time A/R data collection
To enable high visibility into the current status of the money owed to an organization (paid/partially paid/due, etc.) and ensure timely actions on debt collection.
Fully automated invoice generation
To eliminate manual errors in invoices and ensure rapid invoice creation for timely submission to customers.
ML-powered A/R forecasting
To predict accurately various A/R parameters (e.g., expected payment dates on invoices, or total accumulated customer debt at a specific date in the future) based on historical customer behavior and payment data analysis.
AI-enabled digital assistant
To automatically capture customer promises to pay from emails, messages, recorded calls, provide automated A/R reconciliation, and recommend optimal actions, time and communication channels for proactive debt collection.
A Featured A/R Automation Success Story by ScienceSoft
StreamServe invoice management software for a mobile operator with 5 mln clients
- Template-based generation of customer invoices.
- Designing custom invoice templates and adding marketing materials to invoices.
- Invoice e-signing.
- Automated invoice submission to clients via email.
Customer’s benefit: Faster invoice generation and processing, reduced DSO.
Steps to Automate Accounts Receivable
Below, ScienceSoft shares a sample roadmap to accounts receivable automation:
Business needs analysis and eliciting requirements for A/R digitalization.
Designing the feature set, architecture, and tech stack for the A/R automation system.
Project planning: deliverables, KPIs, duration, budget, team, etc.
Custom A/R automation software development.
Quality assurance in parallel with coding.
A/R data migration (from spreadsheets or a previously used accounting tool).
Establishing integrations with the required internal and third-party systems.
Continuous support and evolution of the automated A/R solution (optional).
ScienceSoft’s Tech Stack for Accounts Receivable Automation
A/R Automation Costs and Financial Outcomes
Accounts receivable automation costs vary from $140,000 to $400,000, depending on the automation solution complexity and the scope of integrations.
Want to know the cost of your A/R automation solution?
With accounts receivable automation software, you can reach up to 390% ROI, based on Total Economic Impact™ Study.
Financial benefits of A/R automation
Up to 80%
cost savings from automated invoicing
Up to 70%
reduction in debtor coverage costs
Up to 50%
decrease in DSO
cut in write-offs
When Custom Accounts Receivable Automation Software is the Right Choice
We recommend opting for custom development in the following cases:
You need accounts receivable management software providing specific features, for example, creating priority rules for payment and collection queues based on your specific trade credit and collection policies.
You need specific integrations with your existing corporate software, which ready-made accounts receivable automation solutions can provide only via costly and time-consuming customization.
You need a highly scalable accounts receivable automation solution that allows continuous evolution and functionality extension when needed.
Accounts Receivable Automation with ScienceSoft
In financial software development since 2007, ScienceSoft helps businesses implement effective A/R automation to improve their invoicing and collection processes.
Accounts receivable automation consulting
- Accounts receivable automation needs analysis.
- Assessment of the existing invoicing and payment processing tools and their integration points (if any).
- Suggesting the optimal A/R automation software features, architecture, tech stack, and integrations.
- Creating a business case, including cost and time estimates.
- Delivering an implementation roadmap and risk management plan.
Accounts receivable automation implementation
- Accounts receivable automation needs analysis.
- Accounts receivable solution conceptualization.
- Architecture design.
- Accounts receivable automation software development.
- Integrating the automation solution with the required systems.
- Quality assurance.
- User training.
- After-launch support and evolution.
Our Customers Say
The invoicing system created by ScienceSoft automates data integration from different sources, invoice generation, and provides visibility into the invoicing process. We have already engaged ScienceSoft in supporting the solution and would definitely consider ScienceSoft as an IT vendor in the future.
Heather Owen Nigl, Chief Financial Officer, Alta Resources
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2007, we design and develop effective accounts receivable automation software tailored to each client's unique credit and cash collection strategies. Being ISO 9001 and ISO 27001 certified, we apply a mature quality management system and guarantee that cooperation does not pose any risks to our customers' data security.