Accounts receivable (AR) automation is just what it sounds like: using data from a business’s financial systems to automatically generate and send digital invoices to customers, and then matching the resulting payments automatically to invoices and remittance data. Most automated AR solutions also send payment reminders to customers and include reporting tools to help track the status of receivables. Real-time analytics produce insights on customers’ payment behavior and patterns, anomalous activity and more.

The Benefits

Automating AR offers numerous benefits and advantages — some obvious, and some less so.

Faster payments

First and foremost, payments come in faster. Automated creation and delivery of digital invoices put them into customers’ hands sooner, and automatic reminders prompt timely payments. Moreover, automated remittance-matching reduces the errors common to manual processes, which often cause payment delays. Research firm PYMNTS, in its “B2B Payments Innovation Readiness Playbook,” reports that firms with automated AR processes have an average DSO of 40 days, while the average DSO of companies that have not automated is 47 days. The same report says that 87% of firms with automated AR claim their overall process speed has improved.

Lower costs, greater efficiency

Remittance processes are expensive; according to the World Bank, the average remittance costs 6.49% of the total amount paid. Automated AR saves these costs in multiple ways: It reduces labor, expedites workflow and decreases overhead expenses. Time-consuming business processes like sending customer emails, conducting credit checks and making collection calls can be automated in part or in full. As AR staff spend less time on processing data, their productivity increases, and they can focus on higher-value activities like investigating and resolving exceptions.

Fewer errors

Manual processing is prone to errors, which not only delay payment but also cause customer frustration and require extra work. Automation reduces or eliminates human errors, and as automation rates gradually improve, exceptions requiring human intervention become rarer. Labor is reduced, negative customer interactions are avoided, and payments come in faster.

More consistent and predictable cash flow

With AR automation, companies can collect more cash in less time, increasing cash flow. Cash flows are easier to forecast thanks to more reliable and consistent collection, which can be monitored with dashboards and real-time data. The rate of uncollectible accounts decreases too, since invoices are more accurate and can be sent to customers faster.

Automated AR also allows for multiple billing cycles per month, which encourages faster payment — especially from customers who want on-demand products or services — and makes cash flow more consistent.

More satisfied customers

The accuracy, timeliness and convenience of AR automation build customers’ trust in a business. Automated AR solutions make it easier for customers to pay — they can click a link provided on the invoice, set up automatic payments and choose the method they want to pay with. Greater accuracy and fewer mistakes prevent potential damage to customer relationships and enhance the overall customer experience. As evidence, PYMNTS’ B2B payments innovation report reveals that 75% of firms with automated AR functions have significantly improved their customer experience.

Stronger security and fraud prevention

Curbing the risk of human error reinforces the security of accounting systems. Automated AR solutions process sensitive payment details more consistently and create a clear audit trail, making unauthorized changes or suspicious activities easier to detect and prevent. Using real-time access and reporting tools, businesses can better monitor and manage customers’ accounts and the AR process. Eliminating manual processes that are susceptible to compromise — like email and handling paper — further prevents security breaches and fraud.

More and better information

AR dashboards provide easily digestible data that can be customized to facilitate daily tasks and decision-making. Customer data can be accessed at summary or detailed levels, and dashboards can show key performance indicators, activity in the AR department, and AR data like open and closed invoices, payment history and unbilled orders.

Easier compliance

Compliance with local regulations — such as sales taxes and regulations pertaining to e-billing and data protection — is easier with AR automation. Automated AR systems are standardized, and data is automatically archived, securely stored and organized for auditability — whether a company operates in one area or in multiple jurisdictions with different regulations.

Getting Started

Companies of any size and any industry can adopt AR automation — comprehensively or incrementally. Barbara Carpenter, a leader in invoice-to-cash operations, has extensive experience in AR automation projects. In a session at the 2025 AFP Treasury Connect, she shared insights on how to get started in automating AR.

Adopting AR automation can be costly. For businesses that are daunted by the expense, Michelle Murdock, Credit and Accounts Receivable Manager for Mitutoyo America, recommends “starting small” by automating simple, repetitive tasks or conducting pilot projects. Companies can even make a small change that costs nothing, such as moving a typically email-intensive activity to SharePoint. If this change is successful, a bigger automation project might become more palatable.

Another approach is to begin by automating just one piece of the AR process, like credit applications. For one company, automating credit applications resulted in faster customer payments and shorter DSO, Murdock said. The company’s paper applications did not request detailed customer contact information; on the newly digitized application, customers must enter that information along with contact names. Now the company’s collections team no longer has to spend time searching for contact information to collect a payment, and having the information sooner prevents them from mistakenly calling customers about balances marked past-due that have already been paid. They can focus on “true collections issues,” Murdock noted, and value-added activities.

Winning employee buy-in

Any major change in processes or systems can make employees apprehensive — especially when they believe their jobs might be at stake — and AR automation is no exception. But AR automation actually makes AR employees’ jobs easier and can empower them rather than replacing them. To win staff support, companies can communicate AR automation’s advantages to employees: They can learn new skills, spend more time on valuable activities like strategy and problem-solving and do their work faster.

Employees can rest assured that the “human element” is still an essential part of the automated process, Murdock pointed out. Automation tools can assist with customer service, but people are still needed “to handle emotional connections and complex issues,” she noted. Moreover, employees involved in customer-facing processes often know customers and their data intimately, so their expertise is still needed to solve problems and configure processes.

Preparing for the Future

“While automation might change the way we work, it doesn’t have to mean losing jobs. It means adapting and growing with the changing work landscape,” Murdock concluded. “We're preparing ourselves for a future where technology and human creativity work together and direct innovation and success.” Automation is here to stay; it’s time to embrace it.