THE MORE YOU KNOW

What is AR Automation?

Accounting and Finance

AR Automation Helps Companies Get Paid Faster

Most B2B companies lose hours per week chasing payments. To save time, increase profitability and cash flow as well as nurture excellent customer experiences, businesses need to improve their accounts receivable (AR) process. Whether it be for products sold or services rendered, those sales transactions result in invoices that are tracked as ARfunds owed to your business.

Continue below to learn more about accounts receivable automation and what it means for B2B companies

What is Accounts Receivable and AR Automation?

AR stands for accounts receivable and means cash flow due to your business. Accounts receivable is an important part of any business's financial records. It represents the money owed to the company by its customers for goods and services provided.

AR automation might sound like a futuristic or highly technical term, but it’s simple. AR automation is an essential part of streamlining the billing and collection processes, enabling faster payment turnarounds for businesses. It allows businesses to save time, increase profits, and creates an opportunity for employees to have time to focus on more strategic tasks. Automation can help reduce Days Sales Outstanding (DSO) by reducing manual work associated with accounts receivable.

What is DSO? 

Days Sales Outstanding (DSO)—the average number of days it takes to receive payment for a sale. DSO is a measure of how quickly a company collects its accounts receivable (i.e. how quickly customers pay their bills). Companies want to reduce their DSO to strengthen their cash flow. The faster your business gets paid, the stronger your financials.  

The Relationship Between DSO and AR Automation 

The goal of AR automation is to reduce Days Sales Outstanding (DSO). Bill360 helps customers achieve this with smart invoices that are instantly payable, collaboration tools, automated payment reminders, flexible payment scheduling, and AutoPay, making it the best payment experience to maximize cash flow.

Simply put, Bill360’s AR automation platform will help you get paid faster.

Additional Terms to Know

Accounts receivable aging is a way of categorizing unpaid receivables according to the length of time the debt is past due, such as 1-30 days, 31-60 days, etc. This provides valuable insight into how effectively a company collects its invoices and monitors their cash flow.

Account reconciliation is the process of comparing two sets of records to ensure that all transaction information is accurate and up-to-date. It is used to ensure the accuracy of financial statements, verify vendor payments, check for fraud, and identify any discrepancies. By reconciling accounts regularly, organizations can reduce risk and increase transparency in their financial processes.

Automated Clearing House (ACH) transactions are electronic payments that allow customers to transfer funds quickly and securely from one bank account to another. ACH transactions reduce processing costs, increase accuracy, improve efficiency, and are significantly faster than traditional paper methods of payment.

Cash flow is the cycle of money coming in and going out of your business. It’s an essential part of any company’s financial health, as it affects everything from budgeting to hiring and expansion. A key metric for cash flow management is Days Sales Outstanding (DSO), which measures how long it takes customers to pay their invoices.

Order-to-cash is a business process that begins with an order from a customer, and ends with the collection of payment from this same customer. It covers all activities in between such as invoicing, goods receipt, and accounts receivable confirmation.

Why AR Automation Matters to B2B Companies

AR automation has a direct impact on your bottom line by freeing up cash, saving money, and increasing efficiency.

Save Valuable Time

When your organization is paid on time, you’ll spend less time chasing past-due payments and have more energy to spend on product innovation, business strategy, and growing your sales.

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Increase Your Profitability

The average business spends 14 hours per week chasing late payments. AR automation will take care of this for you, so you can focus on driving profitable new products and services to market. 

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Improve Cash Flow

64% of payments to businesses arrive late each month. AR automation will strengthen cash flow by making invoices instantly payable, automating payment reminders, and offering AutoPay.

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Improve Relationships

Over one-third of financial leaders say poor communication hinders collection processes. With built-in collaboration tools, an AR automation will help you better collaborate with customers.

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How AR Automation Improves Cash Flow for B2B Companies

Bill360's AR automation combines invoicing, seamless payments, automated workflows, and account reconciliation to help businesses accelerate their cash flow.

Smart Invoices

Easily create and send digital invoices that are instantly payable with embedded payment processing.

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Collaboration

Don't let a customer's question hold up their payment. Resolve issues quickly with built-in collaboration tools.

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Reminders

Customize and set automated payment reminder for your clients, so your invoices stay top-of-mind with clients.

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AutoPay

Allow customers to set up AutoPay, so invoices don’t go unpaid when they’re busy or traveling.

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The AR Evolution—from Handwritten to Digital

  • 1600s

    Colonialists in the new world use AR to sell goods and services to Europe

  • 1800s

    Industrial revolution introduced AR financing 

  • 1940s

    Post WW2, AR factoring was introduced to drive mass production

  • 1990s

    Enterprise resource planning (ERP) and electronic data exchange (EDI) take off for large companies

  • 2000

    Cloud-based accounting systems introduced 

  • 2013

    E-invoicing for SMBs emerges

  • 2015

    Sterling Payment Technologies launches portal-based embedded payment link for B2B invoicing 

  • 2022

    Former B2B payments pioneers from Sterling launch Bill360—AR automation with embedded payments 

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