Accounts receivable (AR) automation offers a more efficient and cost-effective way to manage cash flow, reduce errors, and accelerate the collection process. Yet, many businesses still hesitate to adopt AR automation. Despite its clear benefits, some common misconceptions and concerns prevent organizations from making the switch. This article explores the most common excuses for not automating accounts receivable and provides a closer look at the reality of each.
Automated solutions streamline invoice generation, payment tracking, and collections, reducing operational costs and minimizing human errors. They also provide better visibility into outstanding debts, allowing for more effective credit control and risk assessment. By leveraging artificial intelligence (AI) and machine learning, businesses can optimize collection strategies, predict payment behaviors, and enhance financial forecasting.
Compliance with evolving regulations is another critical factor driving automation. Maintaining accurate records, securing customer financial data, and ensuring audit readiness become significantly easier with automated AR systems. Businesses that adopt these technologies improve not only their efficiency but also their ability to mitigate disputes and payment delays.
Many businesses hesitate to change their accounts receivable processes because they have relied on manual methods for years. However, traditional systems often result in late payments, high days sales outstanding (DSO), and inefficient payment tracking.
Late payments remain a major issue, with 39% of invoices in the United States paid late, impacting cash flow (Forbes). Additionally, 61% of delays are caused by invoice errors, often due to manual data entry (Forbes). When accounts receivable teams work with disconnected systems, errors become more frequent, making financial forecasting less reliable. Automation eliminates these inefficiencies by integrating invoicing, payment tracking, and collection processes. AI-driven AR systems analyze customer payment behaviors and generate reports that help businesses predict cash flow more accurately. This allows finance teams to proactively address potential payment issues before they escalate (Forrester).
Manual methods of forecasting customer payment behavior also increase the risk of inaccurate data and prevent organizations from making informed decisions. By adopting AR automation solutions powered by AI and machine learning, these concerns can be alleviated. With AR automation, businesses can generate accurate reports quickly, predict future cash flow with high precision, and reduce human error. Automated systems use algorithms to analyze payment behaviors, identifying trends and providing actionable insights that help businesses understand when payments are likely to come in and which invoices are at risk of being delayed.
Some companies avoid automation because they believe implementing new software requires extensive IT support. They worry about the complexity of integrating systems, maintaining security, and handling software updates. However, legacy accounts receivable solutions can place an even greater burden on IT teams. When using multiple systems that don't communicate with each other, IT often faces the challenge of troubleshooting, fixing errors, and creating custom reports. This consumes valuable time and resources that could be better spent on more strategic initiatives.
The implementation of AR automation doesn’t require constant oversight. Once set up, the software runs autonomously and can be easily maintained. Additionally, many accounts receivable automation providers offer user-friendly, no-code platforms that allow users to make adjustments without the need for technical expertise. This reduces the need for IT intervention and allows them to focus on more critical tasks.
A common reason businesses hesitate to adopt AR automation is the concern over high costs. Many assume that the software and implementation fees will outweigh any potential savings. However, this assumption is often inaccurate.
Late payments come with a significant cost to businesses. According to Atradius, businesses in the Americas lose 51.9% of the value of their receivables that are not paid within the first 90 days (Atradius). Furthermore, the likelihood of collecting on an invoice drops dramatically the longer it remains unpaid. After 90 days, the likelihood of payment drops to 69.6%, and after 12 months, this falls to just 22.8% (Dun & Bradstreet).
Concerns about the cost of implementing accounts receivable (AR) automation often deter businesses from adopting these solutions. However, the financial impact of late payments can far exceed the investment in automation. According to Chaser's 2022 late payments report, late payments cost the global economy over $40 billion USD annually. Additionally, 89% of business leaders believe late payments hinder their company's growth due to the strain they place on cash flow. In the UK alone, 50,000 small businesses go into liquidation every year due to late payments.
By investing in AR automation, businesses can proactively manage their receivables, reduce the incidence of late payments, and ultimately recapture revenue that might otherwise be lost.
Reason 4: Maintaining genuine customer relationships
Some businesses worry that automating AR processes will make interactions with customers feel impersonal. They fear that relying on technology for invoicing and collections will harm customer relationships. However, accounts receivable automation can actually enhance the human aspect of customer interactions. When businesses automate back-office tasks like invoice generation, delivery, and data entry, AR teams can focus more on building relationships with high-value clients and addressing potential payment issues. Rather than spending time on routine tasks, AR staff can engage in more strategic and personalized conversations with clients who need extra attention, ensuring that issues are resolved quickly and payments are collected on time.
"This is a more enjoyable experience for the customer. It doesn’t feel punitive, it feels collaborative." - Susan LaRosa, Director of Credit at WS Audiology.
Instead of replacing human interaction, automation enhances it. AR teams can spend more time engaging with customers strategically, addressing concerns, and negotiating payments in a way that strengthens long-term partnerships.
Implementing a new AR automation system can feel daunting, especially if the business already relies on legacy systems. Some worry that the transition will be too complicated or time-consuming.
While the initial setup might seem like a challenge, modern AR automation systems are designed with ease of use in mind. Many platforms offer quick integration with existing ERP and CRM systems. For example, Chaser’s integration with Sage enables businesses to seamlessly connect their accounting software and streamline accounts receivable processes. With a quick and hassle-free setup, businesses can automate invoice chasing and payment reminders without disruption, ensuring a smooth transition to AR automation. This allows companies to improve cash flow and efficiency right away.
By choosing an automation platform that aligns with existing workflows, businesses can transition smoothly with minimal disruption. With built-in training resources and user-friendly interfaces, accounts receivable automation simplifies processes rather than complicating them.
To maximize the benefits of automation, businesses should follow best practices when integrating AR solutions:
Accounts receivable automation offers significant advantages, from reducing days sales outstanding to improving compliance and optimizing debt collection strategies. By implementing automated solutions, businesses can enhance efficiency, reduce financial risks, and gain better control over cash flow. Understanding the legal landscape surrounding collections ensures that automation efforts align with regulatory requirements. As financial operations become increasingly complex, automation is no longer just a convenience — it is a strategic necessity.
Find out more about how Chaser can help you automate your receivables process here, or start a 10-day free trial.
Yes, automated accounts receivable solutions analyze payment histories and customer behavior to determine optimal settlement amounts. AI-driven insights help finance teams decide whether to negotiate, how much to offer, and the likelihood of acceptance. Some systems even automate settlement offers, streamlining the negotiation process while maintaining compliance.
AR automation does not extend or reset the statute of limitations on debt. However, it ensures that businesses track the timeline for collections, preventing attempts to recover debts that are no longer legally enforceable. Automated systems maintain documentation of payment attempts, disputes, and legal actions, helping businesses remain compliant with regulations.