7 Ways to Boost Accounts Receivable Management with Automation
MHC Team 
Last Updated: April 29th, 2025
This is an tumultuous era for many areas of business. Global trade is in the middle of an upheaval, supply chains are still struggling to return to pre-pandemic stability, and markets are in a state of flux. All of those factors have made things all the more unpredictable for accounts receivable (AR) professionals. With more than 80% of businesses reporting an increase in overdue payments in recent years, accounts receivable management services play a bigger role than ever.
What is Accounts Receivable Management?
Accounts receivable (AR) management is the practice of obtaining customer payment within a given period of time. Organizations that sell products and services use AR management to ensure the proper tracking of every step involved in collecting payment after the customer places an order. It’s a vital component of building liquidity and profitability and avoiding bad debts—and it involves much more than simply receiving payment on a bill.
An efficient accounts receivable management strategy enables a business to monitor and exercise control over the money customers owe on purchases made with credit. By establishing effective AR management policies and practices, an organization can ensure timely payments and reduce the risk of taking on bad debt.
Why Does Accounts Receivable Management Matter?
Robust AR management can make a major difference in boosting customer loyalty, while also streamlining your day-to-day functions and business operations. Accounts receivable management automation makes your business more efficient by:
- Maintaining a healthy cash flow and avoiding shortages.
- Strengthening customer relationships with consistent communication.
- Simplifying and speeding up account reconciliation.
- Improving vendor relationships with easier transactions.
- Eliminating repetitive manual tasks for a better employee experience.
The bottom line is that accounts receivable management matters because it impacts so many areas of your business. Late payments are an issue for nearly every business — in fact, in some industries a full 100% of payments are late — and that can have a ripple effect that damages relationships across your operations. Fortunately, 91% of businesses that upgrade to accounts receivable management software see improvements in cash flow and cost savings.
What Are the Best Practices for Managing Accounts Receivable Processes?
While the specific accounts receivable management process will vary depending on your industry and location, these steps and important documents are at the core of nearly AR transaction cycle.
1. Receive an order from a customer, including all required information about the items or services being ordered, terms of payment, payment due dates, and the number of items being delivered.
- Key documents: Order form, service request form
2. Assess the customer’s credit based on their credit application to determine whether or not they are able to pay for your goods or services. Depending on their credit limit, you may wish to extend a line of credit or request payment upfront.
- Key documents: Credit application, credit approval form
3. Send the customer a sales order and a numbered invoice including an itemized list of the products or services being provided, prices, terms of payment, and payment due dates.
- Key documents: Sales order, invoice
4. Enter a record in your accounts receivable ledger including all required invoice data. Log debits and credits as an accounting journal entry.
- Key documents: AR ledger, Accounting journal entries
5. Collect payments using the agreed-upon method and verifying the transaction’s authenticity and accuracy. Send customer statements detailing any outstanding balances and track payment remittance.
- Key documents: Receipts, customer statement
6. Process payments and match each payment to the corresponding invoice. Investigate and resolve any discrepancies or exceptions, such as underpayment or overpayment.
- Key documents: Deposit slip, allocation sheet
7. Generate reports and reconcile your AR and general ledgers. Make sure the two match, track any outstanding invoices, and include all pertinent data in your financial statement.
- Key documents: Reconciliation report, financial statement
What Are Some Common Challenges of Accounts Receivable Management?
Maintaining an efficient AR management process is often a difficult task. Relying on manual processes and outdated systems only makes it harder. Without the proper tools to back up the process, companies may face some of these common AR management challenges:
Delayed or Late Billing
An automated accounts receivable management solution eliminates many of the most common causes for invoicing delays. Manual processes and systems without centralized controls leave too much room for human errors. That leads to slowdowns that can hurt your business’s cash flow and liquidity.
Slow Collections
If your method for tracking purchases, invoices, and payments isn’t automatically updated in real time, you may have a harder time collecting what you’re owed. Nearly half of all businesses rely on some form of manual AR processes. That jeopardizes their order-to-cash (O2C) cycle and risks delays in collection that make payroll, acquisitions, accounts payable, and liquidity more complex.
Human Errors
Studies suggest that more than 60% of late payments are due to incorrect invoicing. Manual processes involve multiple human touch points, each of which creates more chance of human errors. Billing mistakes, duplicate payments and other errors put a strain on customer and vendor relationships while costing you time and money.
High Volume of Invoices
Typically, the more customers you have, the more successful your business. But that’s not the case if you’re struggling to keep up with timely invoicing and payment. If you don’t have tools to efficiently and effectively manage various customers and their respective invoices, your team is likely to drop the ball—resulting in poor customer relationships, workflow visibility, and cash flow.
Communication Gaps
We all need a little memory jog now and then. Without automated notifications and reminders, it can be too easy for customers to overlook invoices and payment due dates. That creates avoidable delays in payment processing and can further damage important customer relationships.
Accessibility Concerns
Providing an accessible customer experience for people of all abilities becomes much more difficult if your AR team is relying on manual processes or outdated technology. Ensuring consistent compliance with regulations such as the European Union’s WCAG 2.1 requires an automated solution.
Automation: The Key to Efficient Accounts Receivable Management
Accounts receivable management software is your organization’s most reliable path to robust AR management. AR automation replaces slow, error-prone manual processes with efficient tools that integrate seamlessly with your existing systems. Automation improves the end-to-end invoicing process and ensures hands-off, accurate completion of mundane, repetitive tasks.
What Are the Systems You Need for AR Management?
In order to successfully manage your accounts receivable process, you’ll need an automated software solution that provides these essential functions:
Credit Acceptance
Automating your credit acceptance process makes it quick and easy to determine if your company will extend credit to a customer or not. Your solution should be easily configurable to reflect the criteria that’s uniquely important to your specific business.
Document Automation
A deep library of document templates and reusable content fragments speeds up the creation of invoices, credit approval forms, customer statements, receipts, and other key AR documents. Automated document generation keeps branding consistent across all communications.
Monitoring and Reporting
An automated monitoring and reporting system keeps track of metrics tied to each of your customers (e.g. on-time payment, accuracy of invoicing, etc.). This delivers better insights into customer relationships so you can make informed business decisions moving forward.
Invoicing
Your invoicing system should automatically send out invoices—and reminders about sent invoices, due dates, etc.—to customers after they place orders. Automation eliminates the risk of billing errors, invoicing delays, and poor communication with customers.
Bookkeeping
Managing cash flow and financial liabilities is streamlined with accurate, up-to-date bookkeeping automation that makes it easy to track orders, balances, and other key order details. Real-time bookkeeping data provides deeper visibility into your processes and helps identify issues early.
Customer Communications Management (CCM)
An automated CCM system makes it simple to track customer info like contact details, contracts, and customer feedback and complaints, particularly those related to AR. Omnichannel communications tools allow each customer to connect via the channel or channels they prefer.
“Automation – The Unified Solution for ARM
Upgrading to automated AR management technology means less time spent pivoting from one platform to another and more time spent on essential tasks that affect your bottom line. By using automation to manage accounts receivable, you’ll reap a number of key benefits, including:
Fewer Errors
Invoicing errors account for more than 60% of late payments. That makes removing manual data entry from the equation essential. The right automation system can help to both avoid and detect errors for more reliable data and limited invoice disputes.
Faster Billing
Automating your AR process can eliminate the bottlenecks that occur with manual processes. From credit review, to manual print-and-post, to emailing and uploading documents to customer portals, human delay often holds up manual AR processes. Automation ensures that customers receive invoices without these obstacles.
Better Communication
Personalized communications keep customers engaged and provide a better experience throughout their entire customer journey. Automating CCM helps with customer retention, as happy, informed customers will keep coming back for more. Earning new customers is five times more costly than retaining a current one, making communication a factor you can’t afford to ignore.
Better Vendor Relationships
Automation enables you to offer faster, error-free, and accurate billing. That goes a long way toward facilitating better relationships with vendors. Vendors can have immediate access to quickly generated invoices using a centralized, up-to-date portal.
Time Savings
An automated solution handles your tasks the exact same way from end-to-end, every time. That helps your entire AR process run smoothly with fewer deviations, saving time on burdensome, manual tasks and giving employees a chance to focus on more engaging work.
Cost Savings
By automating redundant tasks, your team has more time to focus on innovative tasks that improve your overall business. That kind of extra time can mean a world of difference for your bottom line. E-invoicing can reduce processing costs by 30 to 90% by eliminating wasteful and resource-intensive processes.
End-to-End Document Automation
An automated, rules-driven system makes it easy to generate personalized documents and content that meet your customers’ needs. Even for businesses that generate high volumes of complex AR documents, automation streamlines processes for invoices, statements, and payment reminders.
Improved Accessibility
The new European Accessibility Act (EAA) requires digital communications tied to the customer experience to be fully accessible. Automation eliminates accessibility errors and ensures that invoices, statements, contracts, and other key documents are compliant and accessible to all.
Improved Accessibility
The new European Accessibility Act (EAA) requires digital communications tied to the customer experience to be fully accessible. Automation eliminates accessibility errors and ensures that invoices, statements, contracts, and other key documents are compliant and accessible to all.
Easy Access to Document History
An automated AR system gives you access to a digital archive of exact copies of all of your accounts receivable documents. That makes it easy to store and retrieve documents as needed. A digital record of all communications offers at-a-glance invoice tracking.
“ By leveraging machines and automation to handle many of the manual or repetitive tasks required to generate customer communications, challenges are overcome, and employees can focus on the areas where they excel. ”
Transform Your Process with Accounts Receivable Management Automation
Efficient accounts receivable management processes are critical to businesses across every industry. Relying on manual processes costs your organization time, money, and relationships. Automating AR with MHC software solutions puts your business in position to complete AR processes faster, more accurately, and at much less expense.
Find out more about MHC’s automated solutions for accounts receivable. Ready to see the difference for yourself? Contact us today for a demonstration. Our in-house experts will tailor a solution to your organization’s specific AR needs.
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Team MHC
Team MHC consists of a multitude of roles, functions, and expertise within MHC. With extensive combined experience in accounts payable and customer communication management, Team MHC has a unique insight into how to empower people using solutions that streamline processes while enhancing customer communication. Working alongside field experts in various industries and company sizes, Team MHC has garnered impressive thought leadership knowledge that we are excited to share with our readers. Including Aragon’s 2022 Women in Tech winner Gina Armada, CTO Dan Ward, VPs of Finance and Customer Service, and other talent that runs the spectrum of technology ability, Team MHC offers a mastery of skills to benefit our customers and prospects alike.
