87% of Firms Say AR Automation Speeds Processing, PYMNTS Data Show

Although much progress has been made, the fact remains that many businesses still rely on manual accounts receivable (AR) processes. But new data that reflect a growing list of benefits companies say they experience from automating AR show far-reaching positive impacts on firms’ collections processes.

In fact, the B2B Payments Innovation Readiness Playbook found that firms surveyed said they had realized seven different benefits from digitizing their AR. Topping the list was faster processing speed, with 87% of the firms reporting they had realized this benefit.

In addition, several other steps of the AR process can be automated including cash application, collections, payment acceptance, invoice delivery and customer credit check.

A Growing List of AR Benefits 

Among the firms surveyed by PYMNTS that had adopted automated AR processes, 80% cited improved team efficiency and three-quarters of respondents said their overall customer experience improved.

Firms also reported saving money on operational costs (72%), with about 60% of businesses flagging an improvement in their days sales outstanding (DSO) and headcount reduction, while half said they saw their overall collections improve.

Sector Insights 

The AR insights came from over 500 US companies representing five different industries, including advertising, technology, construction, energy and healthcare.

Respondents from the energy sector, for example, were most likely to report speed gains from automation, where 95% saw that benefit.

At the same time, energy and advertising firms were more likely than those in other sectors to say they’d seen DSO improvement with AR automation. While 61.8 % of all firms reported that as a benefit, 87.9 % of energy firms and 87.1 % of advertising firms did so. Both ranked this as their No. 2 benefit of AR automation.

Operational Strains 

There are a multitude of reasons for firms to prioritize AR automation.

Healthcare firms, for example, have faced particularly onerous operational strains during the pandemic as they hustled to offer remote services and reconcile traditionally manual payment processes while many of their employees began to work from home. Healthcare firms must also meet numerous vendor payment obligations while managing these payment flows.

The B2B Payments Innovation Readiness Playbook provides a checklist of how finance leaders must approach AR automation to improve their firms’ collection processes.

First, The C-Suite Checklist suggests that they assess AR pain points. Businesses must gauge which key receivables pain points are affecting their collections cycles. This allows for a modular solution approach.

Then, reduce DSO. Minimizing DSO cycles can help businesses get paid sooner and improve their overall cash flows. This requires firms to embrace technological solutions to facilitate payment acceptance and optimize their collections process.

Third, prioritize automation. Firms that rely on manual processes struggle with high costs and challenges with their collections, but automation can help address those issues.

With automated AR technologies in operation, firms are able to save time, reduce redundancies, improve their cash flows, lower delinquencies, offer better experiences for customers and improve business relationships.