AR Automation: Getting Paid Faster

Manual AR processes create delays at every step. Invoice generation takes time. Delivery confirmation is uncertain. Follow-up requires someone to remember. Payment matching is tedious. AR automation eliminates these delays.

But AR automation isn't just about speed—it's about consistency. Automated systems follow up on every invoice, every time. No invoices fall through the cracks. No customers get forgotten.

What AR Automation Does

Invoice Generation

Automatically create invoices from source data:

• From sales orders: Convert order to invoice when shipped
• From contracts: Generate recurring invoices on schedule
• From time tracking: Create invoices from billable hours
• From project milestones: Trigger invoices when milestones complete

Invoice Delivery

• Email delivery: Send invoices electronically with confirmation
• Portal posting: Make invoices available in customer portal
• EDI integration: Send directly to customer AP system
• Multi-channel: Support customer-preferred delivery method

Payment Processing

• Payment portal: Customer self-service payment
• Multiple methods: ACH, credit card, check
• Auto-pay: Set up recurring payment for repeat customers
• Payment links: One-click payment from invoice

Automated Reminders

• Pre-due reminders: Gentle nudge before due date
• Due date notice: "Your invoice is due today"
• Past-due sequence: Escalating reminders after due date
• Customizable: Adjust timing and tone per customer

Cash Application

• Auto-match: Match payments to invoices by reference
• AI matching: Match based on amount, customer, timing
• Partial payments: Apply correctly and track remaining
• Exception handling: Flag unmatched payments for review

Benefits of AR Automation

Faster Collection

• Instant invoicing: Invoice goes out same day as delivery
• Easy payment: Pay button on invoice reduces friction
• Consistent follow-up: Every invoice gets reminders
• Typical impact: 5-15 day reduction in DSO

Time Savings

• Invoice creation: Auto-generate vs. manual creation
• Follow-up: Automated reminders vs. manual tracking
• Cash application: Auto-match vs. manual reconciliation
• Typical impact: 40-60% reduction in AR staff time

Reduced Errors

• Accurate invoices: Pull from source data, no retyping
• Complete delivery: Confirmation that invoice was received
• Correct application: Payments match right invoices

Automated Dunning Sequences

Dunning is the process of communicating with customers about payment. Automation makes it consistent and persistent without being aggressive.

Sample Dunning Sequence

Customization Options

• Timing: Adjust intervals based on customer type
• Tone: Friendly vs. formal based on relationship
• Channel: Email, SMS, phone call at different stages
• Exclusions: Pause for customers with known issues or disputes

Key Principles

• Start early: Pre-due reminders are most effective
• Stay consistent: Same cadence for everyone (unless customized)
• Be helpful: Include payment link in every message
• Know when to escalate: Move to personal contact for large/old amounts

Payment Portals

A payment portal lets customers pay invoices online—anytime, without human interaction.

Portal Features

• Invoice viewing: Customer can see all invoices and status
• Payment options: ACH, credit card, sometimes check request
• Payment history: View past payments and receipts
• Statement download: Account statements on demand
• Auto-pay setup: Enroll in automatic payment

Benefits

• 24/7 availability: Customers pay when convenient for them
• Reduced inquiries: Self-service for common questions
• Faster payment: No delays from manual processing
• Payment certainty: Card/ACH payments are immediate

AR Automation Tools

Accounting Software Built-In

• QuickBooks Online: Invoicing, payment links, basic reminders
• Xero: Similar to QBO; good for smaller companies
• NetSuite: Full AR automation for larger companies

Built-in tools are a good starting point but may lack sophistication for complex needs.

Dedicated AR Tools

• Invoiced: Full AR automation platform; strong dunning
• YayPay: AI-powered AR; predicts payment behavior
• Billtrust: Enterprise AR automation; full suite
• Versapay: Collaborative AR; customer portal focus

Combined AP/AR Tools

• Bill.com: Offers AR alongside AP; invoice and collect
• Melio: Payment platform with invoicing

Selection Criteria

• Volume: Match tool capability to invoice volume
• Integration: Must work with your accounting system
• Payment processing: Fees for card/ACH processing
• Dunning sophistication: Customization and automation depth

Implementation Guide

Phase 1: Foundation

• Connect to accounting system
• Import customer data
• Set up payment processing (ACH, card)
• Configure invoice template

Phase 2: Automation

• Configure dunning sequence
• Set up automatic invoice generation (if applicable)
• Enable payment links on invoices
• Test with sample invoices

Phase 3: Optimization

• Analyze DSO trends
• Adjust dunning timing based on results
• Add payment portal if volume warrants
• Implement cash application automation

Measuring Success

Key Metrics

• DSO trend: Days sales outstanding should decrease
• Aging improvement: Less AR in older buckets
• Collection rate: % collected within terms
• Email open rates: Are reminders being seen?
• Portal adoption: % of customers paying online

Monitoring Dashboard

Track these weekly or monthly:

• DSO current vs. prior period vs. target
• Aging report (current, 30, 60, 90+)
• Invoices sent vs. invoices paid
• Average time to payment
• Bad debt write-offs