Managing accounts receivable effectively is critical for any business that offers payment terms to customers. However, tracking outstanding invoices and payments across multiple customers can quickly become an administrative nightmare without the right systems and processes in place. That‘s where accounts receivable (AR) software comes in – these platforms help businesses properly monitor their receivables and ensure timely payments.
But with so many options on the market, it can be challenging to determine what the best accounts receivable software is for your needs. To help, we‘ve created the ultimate beginner‘s guide to accounts receivable technology, covering everything you need to select and implement the ideal solution.
What is Accounts Receivable Software?
Accounts receivable (AR) software is a specialized type of accounting platform used for tracking outstanding payments owed to a business by its customers. The software monitors all issued invoices and outstanding balances across multiple customer accounts. Features typically include:
- Invoice creation and delivery
- Payment reminders and collections
- Cash flow reporting
- AR analytics
- Customer account management
- Integrations with accounting systems like QuickBooks
Top accounts receivable systems provide complete visibility into outstanding payments, automate AR processes, and use data insights to help accelerate collections. This enables credit and finance teams to be far more effective at ensuring timely customer payments.
Who Needs Accounts Receivable Software?
Any business that does not require customers to pay in full at the time of purchase should be leveraging accounts receivable technology. This includes:
- B2B companies that invoice business clients
- Organizations with lengthy or complex payment terms
- Firms with large numbers of outstanding invoices
- Businesses struggling with late customer payments and cash flow issues
Adopting AR software is particularly critical for scaling companies managing payments from a growing roster of accounts. Manual tracking across Excel sheets or basic accounting systems does not cut it for monitoring potentially thousands of unpaid invoices.
Benefits of Accounts Receivable Software
When the right accounts receivable solution is adopted, organizations can achieve the following advantages:
1. Increased Visibility Into Receivables Data
AR tools provide real-time reporting and analytics on all outstanding payments across both individual and aggregate customer accounts. Rather than blindly waiting for payments, credit teams gain clear visibility and can take proactive actions.
2. Improved Collections and Cash Flow
Detailed visibility, automated reminders across channels like email/text, and predictive analytics combine to significantly decrease days sales outstanding (DSO). This greatly accelerates cash flow for any business heavily relying on customer invoices.
3. Lower Administrative Workload
Manual receivables tracking across basic spreadsheets requires an immense internal workload. Quality AR software automates invoicing, reminders, reporting, and more to reduce this burden.
4. Enhanced Customer Satisfaction
Proactive, customized collection workflows increase on-time customer payments. This strengthens relationships and prevents any ill-will over aggressive measures taken on severely late accounts.
5. Dynamic Scaling With Business Growth
Highly configurable accounts receivable platforms easily scale to support increasing customer bases and transaction volumes that come with business growth. This is very difficult to manage across manual processes.
Key Features to Look For
With a crowded marketplace, accounts receivable tools differentiate themselves across various capabilities. Here are some of the most important features businesses should look for when researching options:
Core AR Management – At their foundation, AR systems need to provide complete invoice tracking, reminders, dispute resolution, and reporting around outstanding payments. This should synchronize directly with your accounting system.
Predictive Analytics – Look for machine learning capabilities that analyze historical customer payment patterns and current data to predict the likelihood of on-time/late payments. This facilitates the best collection strategy per account.
Process Automation – Excellent AR apps minimize manual work around invoicing, reminders, reporting, and more through automation. Things like setting payment terms, credit limits, and follow-up actions per customer should be system-driven.
Cash Application – Capabilities to match incoming customer payments to specific outstanding invoices are essential. This cash application removes significant administrative work while providing detail around paid/unpaid invoices.
Customer Self-Service Portal – Some advanced platforms provide customer logins for directly viewing statements, initiating payments, and more. This further eliminates internal admin work for your AR team.
Customizable Workflows – An effective accounts receivable solution allows users to tailor workflows around management strategies, account segmentation, pre-determined follow-up actions when customers go past due, dispute scenarios, and more.
Accounting Integrations – Two-way synchronization between the AR software and small business accounting platforms like QuickBooks is vital for keeping financial data in sync. Data flowing between the two systems should be automated.
Reporting & Analytics – Robust dashboards, financial reports, and analytics around collections metrics prove invaluable for credit management teams in monitoring receivables. Tracking key performance indicators (KPIs) ensures success of the overall system.
Comparing Top Accounts Receivable Software
With so many options on the market, we‘ve evaluated the 10 best accounts receivable solutions across key selection criteria to assist in your buying decision.
| Software | Starting Price | Best For | Key Features |
|---|---|---|---|
| Bill.com | $39/month | Small businesses needing end-to-end AR plus payments | Invoicing, collections, approvals, payments |
| Versapay | Custom pricing | B2B firms with complex AR needs | Predictive analytics, self-service portal, accounting integrations |
| Float | $49/month | Streamlined credit management workflows | Process automation, cash flow reporting, analytics |
| Aerocas | Custom pricing | High volume transaction processing | Performance at scale, rules configuration, cash matching |
| YayPay | $40/month | Mid-market organizations | Collections scoring, dispute workflow, QuickBooks sync |
| Slickpie | $18/month | Micro businesses and startups | Invoicing, reports, quotes, estimates |
| Stampli | $19/user/month | Growing SMBs needing AP/AR automation | Invoice management, approvals, analytics |
| Accountek | $39/month | General usability, mobile access | Dashboard, reminders, customer portal |
| Tradeshift | Custom pricing | Global B2B payments management | Invoicing, supplier network, marketplaces |
| Zarviral | Custom pricing | Heavy email volume | Email collector, automation rules, analytics |
This comparison just brushes the service of the in-depth analysis required across solutions to find the best fit for your organizational needs. Take time to properly evaluate capabilities, vertical market experience, total cost, ease of use, customer success stories, and other elements across providers.
Most vendors offer free trials to experience applications first-hand. Leverage these to see platforms up and running with your real invoice data.
Implementing Accounts Receivable Software
Once selected, proper implementation of your new accounts receivable system is vital for driving adoption and impact across the credit organization. Follow these best practices:
Clean Customer & Invoice Data – Extract all active customer details and outstanding invoices from your current systems prior to onboarding. Resolve duplicates, errors, outdated records and other issues for a smooth transition.
Map & Configure Workflows – Take the time to strategically map how AR processes should flow and configure associated rules in the new software based on your collection priorities, account segmentation, disputed invoices, credit actions when past due, and more.
Integrate Accounting System – Ensure proper linking between the AR application to your small business accounting platform like QuickBooks. Fully test transaction syncing from software changes on either end.
Train Employees with Role Precision – Provide tailored training across collector groups focused specifically on the AR workflows and features applicable to their responsibilities. Don‘t waste time with universal sessions covering non-essential functionality.
Incentivize Software Adoption – Create goals and incentives around utilization of the new system – whether reminders automated, reporting accessed, predictive scores leveraged etc. Drive engagement through workplace motivation and competition.
Continuously Optimize – Persistently evaluate usage patterns and collection metrics pre/post implementation. Make incremental enhancements to workflows, account scoring models, integration data, and other elements to maximize ongoing value.
Driving Impact from Your Investment
Like any technology investment, real bottom-line impact requires upfront planning and consistent oversight after deployment. But for accounts receivable software, driving value also mandates broader changes for how your collections team operates day-to-day.
Specifically, your credit organization needs to become data-driven. This means leveraging predictive indicators and actionable analytics from your AR system – rather than intuition – to guide whatever outreach, settlement offers, payment plans, disputes assistance, or other servicing provided per customer.
In turn, this allows your firm to transition from reactive collections that kick in once payments already grow delinquent to proactive servicing focused on preventing late payments in the first place. Get ahead of potential issues through early interventions driven by software insights. The enhancements here to cash flow and the customer experience can prove tremendous.
Conclusion
Accounts receivable management is a multifaceted challenge centralized around tracking and converting outstanding customer invoices into tangible revenue. Manual approaches relying on spreadsheets quickly break as transaction volumes and unpaid balances mount.
By leveraging purpose-built AR automation software, however, both early stage and enterprise organizations can effectively control this critical business process through greater visibility, analytics, and scalable workflows. The improvements for collections efficiency, cash acceleration, and even customer satisfaction make accounts receivable solutions one of the smartest investments around.
