Managing an AR (accounts receivable) department can feel like a never-ending cycle of chasing late payments and avoiding uncollectible debts. 55% of all B2B invoiced sales are overdue, while bad debts affect an average 9% of all credit-based B2B sales. And an account that is 90 days past due has a 69.6% chance of being paid; after one year of delinquency the chance of collecting payment falls to 22.8%!
You don’t have to take our word for it – we found an interesting Reddit thread where AR professionals shared their biggest challenges. Here’s an example of the comments:
This is the reality of AR professionals everywhere. But thankfully, automated invoice follow-up technology is transforming the way AR teams tackle these issues with 70% of companies reporting that AR technology makes collections faster, easier, and more efficient.
In this blog post, we’ll explain why automated AR solutions make such a big impact and explore some options for businesses looking to make a change.
The pain points of manual invoice management
Here’s what a typical invoice follow-up process looks like without the benefits of automation:
- An invoice is sent out and manually tracked on a spreadsheet. An AR Team member adds manual reminders to chase payments to their calendar.
- An AR Team member sends out manual payment reminders, usually more than once, chasing payments as their requests go unnoticed. These repetitive follow-ups often cause frayed vendor relationships.
- As payments continue to remain outstanding, the risk of uncollectible debts rises and more and more damage is done to the businesses’ overall cash flow and financial health.
As you can clearly see, a manual AR workflow is time-consuming, prone to errors, and often leads to strained or damaged vendor relationships. The most common manual processing pain points are:
- Late payments: Consistently missed payments lead to inconsistent cash flow and delayed revenue recognition.
- High risk of bad debt: The longer an invoice remains unpaid, the more difficult it becomes to collect, resulting in potential write-offs.
- Time-intensive follow-ups: AR Teams waste countless hours sending emails or making calls to chase payments — time that could be better spent on strategic tasks.
- Human errors: Invoices that are forgotten or that slip through the cracks lead to further delays.
- Lack of oversight or ability to predict payment patterns: Manual processes lead to a lack of visibility into payment patterns, making it challenging to prioritize collection efforts and predict payment risks.
- Damaged vendor relationships: Constant follow-ups are frustrating for everyone involved and can lead to damaged or terminated relationships.
These challenges highlight the need for an automated approach — one that ensures invoices aren’t missed, follow-ups are timely, and AR Teams are freed up to focus on strategic activities.
The ROI of automated invoice follow-up
A robust AR automation tool solves all the pain points noted above, and more! Featuring automated and customized invoice tracking, follow-ups, and collections workflows, an automated AR solution will optimize your invoice collection process from end-to-end:
- Improved cash flow forecasting: Get real-time insights into outstanding balances and expected payment timelines. Customized dashboards provide a clear view of what’s outstanding, overdue, or at risk of becoming bad debt, making it easier to predict cash flow and plan for future investments or expenses.
- Reduced bad debt risk: Ensure prompt follow-ups — keeping vendors accountable and reducing the likelihood that debts go uncollected. Advanced AR automation solutions can analyze payment patterns and even flag high-risk accounts, enabling preemptive action.
- Automatic reminders and escalations: Send personalized reminders at specified intervals, based on predefined rules. Automatically trigger escalations if payments are still overdue after reminders.
- Faster dispute resolution: Centralize communication, making it easier to track disputes and resolve them quickly. Teams can log disputes and manage communication directly in the platform, cutting down on back-and-forth emails.
- Freeing up AR Teams for strategic tasks: Eliminate the tedium of manual processing and focus on higher-value activities like relationship management, credit risk analysis, and financial reporting. With less time spent chasing payments, AR teams are empowered to focus on strategies that improve working capital and customer experience.
Given that 62% of companies are planning to upgrade their approach to AR technology to take advantage of these benefits, which solutions are they considering?
5 leading AR automation tools
There are a lot of solutions available – it can be overwhelming to pick the one that’s right for you. To make things easier, we’ve done the research so you don’t have to: Here’s our suggestion of 5 leading AR automation solutions:
Quadient AR: Quadient AR focuses on making AR automation simple and scalable for small to mid-sized businesses. Their predictive analytics and automation enhances AR efficiency by reducing DSO (Days Sales Outstanding) and improving customer relationships.
HighRadius: Highradius leverages artificial intelligence (AI) to streamline AR processes. Their cloud-based platform for mid-market to enterprise businesses covers everything from cash application and collections to deductions and credit management.
Billtrust: Billtrust’s cloud-based solution for mid-market to enterprise businesses offers a highly customizable order-to-cash solution. Their comprehensive tool spans credit decisioning and monitoring, online ordering, invoice delivery, payments and remittance capture, cash application and collections.
VersaPay: Versapay prioritizes collaboration between AR teams and customers, focusing on collaborative payment solutions that improve visibility and streamline collections processes. Their platform integrates communication features directly into the AR workflow, helping resolve disputes faster and increasing payment visibility for customers.
FIS GetPaid: FIS GetPaid is a fully-integrated AR automation platform designed for large or extra-large organizations who handle more than 100K invoices per year. They are known for their integration of predictive analytics with dispute management.
If you’re ready to explore one solution in more detail, why not check out Quadient AR?
How Quadient’s AR automation solution can help
Unpaid invoices and uncollectible debts aren’t going away — but your AR Team and processes don't have to suffer. Investing in an automated AR solution like Quadient AR will not only provide convenience and cost savings, it will empower your AR Team to collect payments faster, minimize uncollectible debt risk, and improve cash flow, all while maintaining great client relationships.
Book a demo with us today to see how we can take the stress out of your AR collections process!
Jill brings over 15 years of industry experience in financial services marketing. She is a passionate and motivated digital marketing professional with extensive experience in multi-channel marketing with a proven record of driving results for growing and established financial services brands like American Express, Billtrust, Heartland Payments Systems, and CAN Capital. Jill is experienced in planning and executing integrated marketing campaigns across channels: web, content, paid media, email, influencer marketing, social, SEO, and events.