How to Choose Accounts Receivable Automation Software
Researching accounts receivable automation software?
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Choosing the right accounts receivable automation software can transform how you handle your invoicing and collections. Not only does it save time, boost accuracy, and ensure compliance—it also results in a better return on investment. But what if you pick the wrong tool? What happens then? And how exactly do you find the right tool?
This guide is for anyone looking to streamline their accounts receivable management processes, whether you're a small business owner or part of a larger finance team. In it, I'll help you navigate the options and avoid common pitfalls so you can make an informed decision.
9 Things to Look for When Choosing Accounts Receivable Automation Software
When evaluating accounts receivable automation software, focus on the factors that will directly impact your team’s efficiency and accuracy. Here are a few of the top considerations to guide your decision:
1. Plan Flexibility
Plan flexibility lets you easily adjust your software usage as your needs change. Over time, your business may grow or shift, requiring more or fewer key features—but with some vendors, these changes may incur additional costs.
Make sure to look for vendors that offer scalable plans. During a demo, ask about the process for upgrading or downgrading and if there’s an additional charge for removing or adding features.
2. Data Access and Reporting
Real-time data access and reporting give you insights into your accounts receivable processes and inform strategic decision-making. As a result, it’s important to ensure your chosen software provides customizable reporting options and easy access to financial metrics/data. You can often test these features during a trial period.
3. Integration with Your Tech Stack
As with any software, it’s vital your accounts receivable software connects with your existing tech stack. With proper integration, you can ensure a seamless flow of information and reduce manual entry and errors in cash processes.
When trialling solutions, check if the software integrates with your accounting software, credit card solutions, CRM, ERP systems, and other AI-powered tools. Also, make sure to ask for a list of existing integrations to verify compatibility with your systems.
4. Onboarding and Support
Good onboarding and support ensure a smooth transition and continued assistance. Without it, your team might struggle to utilize the software fully.
As such, look for vendors that offer advanced training and 24/7 support to optimize adoption rates. Contact their support team during a trial to gauge responsiveness and overall customer experience.
5. Role-Based Permissions
Role-based permissions let you control who accesses what within the software. This enhances security and streamlines operations by ensuring users only see relevant information.
Make sure the AR automation solution allows for customizable user roles. Test this feature by setting up different roles during a demo.
6. Industry-Specific Compliance
Compliance features ensure your AR processes meet industry standards and regulations. This is key to avoiding fines and maintaining credibility.
Verify that the AR management solution supports compliance with regulations specific to your industry. From there, ask for documentation or case studies that demonstrate compliance.
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7. Customization Options
Customization options let you tailor the software to your unique business needs, ultimately improving efficiency and user satisfaction.
Look for platforms that allow for interface, template, and workflow customization for your AR teams. Then, in your demo, try customizing a workflow to see how intuitive the process is.
8. Automation Features
Automation features reduce manual work, lower bottlenecks, and minimize human error, significantly streamlining your accounts receivable and accounts payable tasks.
It’s best to ensure the software offers detailed automation capabilities, like automated reminders, cash flow forecasting, payment reminders for faster customer payments, collections processes, and invoice generation. That way, you can be sure it’ll help increase productivity, rather than hinder it.
9. Mobile or Multi-Location Support
Mobile and multi-location support allow your team to access the software from anywhere. This is essential for businesses with remote teams or multiple branches.
Check if the software offers mobile apps or cloud-based access. In a trial or demo, try accessing it from different devices to ensure it works smoothly.
How to Choose Accounts Receivable Automation Software: A 5-Step Framework
Selecting the right accounts receivable automation software can make your reports more accurate and your team more efficient. Here’s five steps on how to find the best solution for your business:
Step 1: Identify Your Needs
Start by understanding what your team requires from accounts receivable automation software. Most will likely need a blend of days sales outstanding, overdue invoices management, collections management, and invoice creation.
This is how you can pinpoint what's essential to your team and business:
Gather Input from Stakeholders
Before purchasing an AR automation software, always speak with key stakeholders like finance, IT, and leadership to gather real-time insights. Each department might have different requirements, which can help inform and guide your decision-making process.
For example, finance may need detailed reporting and invoice processing, while IT focuses on security. Create a list of needs from these discussions to ensure all voices are heard.
List and Prioritize Pain Points
Next, identify the current system's pain points by asking your team about their daily challenges. Are manual processes slowing them down? Are they able to gather financial data quickly and efficiently? Do they need better visibility through dashboards and customer portals, or better overall functionality?
List these issues and prioritize them based on their impact, making sure to address high-impact blockers first.
Align with Policies and Goals
Once you have everyone’s need requirements, it’s important to ensure the software solution also aligns with internal policies and regulatory requirements. Consider security protocols and vendor preferences.
For example, if you work in healthcare, you’ll likely need an AR solution that meets HIPPA, as well as GAAP and IFRS. This type of alignment helps avoid conflicts with regulators and ensures a smooth implementation process.
Must-Have vs. Nice-to-Have Features
During this step, it’s also necessary to differentiate between essential and optional features. Must-have features are those that solve your biggest pain points, like automated invoicing, payment collection options, reduced manual data entry, and increased transaction volumes.
Nice-to-have features, such as payment tracking, machine learning, and a self-service portal, might enhance convenience but aren’t entirely necessary. Clearly define these in advance to simplify decision-making.
Ask These Questions:
- What complaints or blockers come up most often?
- What needs aren’t being met today?
- What features would solve your top 3 pain points?
- What ROI are you expecting from this investment?
- How will this software support our compliance needs?
Step 2: Research Accounts Receivable Automation Software Vendors
Next, dive into researching and comparing accounts receivable automation software providers to find the best fit for your needs:
Conduct Vendor Scans
Start by scanning vendors using review sites, rankings, and case studies. Look for software that consistently receives positive feedback, and make sure to pay attention to user satisfaction, customer relationships, and success stories. This helps you shortlist vendors that align with your needs.
Compare Based on Needs
Every business is different. Always compare tools based on your business size, required integrations, or whether you want to outsource or build in-house.
For example, small businesses might prioritize ease of use and customer support, while larger companies may need more seamless integration capabilities or faster payment options. Decide what aligns best with your current setup to avoid costly changes in the future.
Identify Key Differentiators
Another way to narrow down solutions is to identify what sets each vendor apart. Look for unique features like implementation support, self-service, user experience, or flexibility for niche use cases.
For example, if you need custom reporting, choose a vendor known for that feature, like Xero, QuickBooks, or FreshBooks. These types of differentiators can help you find a tool that offers added value.
Document Your Findings
Throughout your software buying journey, make sure to keep track of your research by documenting key points. A good starting point is to create a comparison chart that includes features, pricing, and user feedback.
This makes it easier to evaluate and discuss options with your team, while also not ensuring you don’t overlook specific requirements, such as online payment portals or automated payment reminders.
Ask These Questions:
- What does each tool do best?
- Does it fit your team size, budget, and stack?
- What support and documentation are available?
- How does the user experience compare?
- What are the unique features offered?
Top Accounts Receivable Automation Software to Consider
Still stuck? Or looking for a quick option? Here’s my list of the best accounts receivable automation software options available, to help you get started in your search:
Step 3: Make an Accounts Receivable Automation Software Shortlist and Reach Out
Now it’s time to narrow down your options and start conversations with potential vendors. Here are a few of my tips and tricks:
Shortlist 2-4 Vendors
Based on your research, select 2-4 vendors that best meet your needs. Consider factors like features, integrations, and user feedback. In the end, this shortlist should reflect those who align most closely with your business requirements.
Send an RFI or RFP
Consider sending a Request for Information (RFI) or accounts receivable automation software RFP to gather detailed insights. An RFP can reveal specifics like pricing, support, and customization options, and is a formal way to collect consistent data. Using this strategy can help you understand each vendor’s offerings and how they fit with your needs.
Book Demos and Ask Questions
Schedule demos with shortlisted vendors to see the AR automation tools in action. Prepare focused questions to ask during these sessions, like how the software handles specific pain points and whether or not they provide tailored training programs.
During your demo or trial period, don’t hesitate to ask for a walkthrough of features relevant to your team. That way, you can shortlist options that most align with your team’s needs.
Use Consistent Evaluation Criteria
Make sure to apply the same criteria across all vendors for a fair comparison. This might include ease of use, support options, and feature sets. With this type of consistency, you can objectively assess each option to make your overall decision easier.
Ask These Questions:
- Can you walk me through a real customer story like ours?
- What support or onboarding resources do you offer?
- What features require an upgrade?
- How do you handle data security?
- What’s your average implementation time?
Step 4: Build the Business Case
Once you have all the information you need, it’s time to turn your vendor research into a compelling business case for your leadership team:
Summarize Pain Points and Outcomes
Clearly outline the pain points your team faces and the expected outcomes from implementing the software. Use specific examples like reducing invoice errors or speeding up payment processing cycles, and highlight how these changes will benefit the company. This makes the value proposition clear and relatable, while tying back to the overall goals of the business.
Present Cost Estimates and Timelines
Gather basic cost estimates and implementation timelines from your vendor research, including initial costs, ongoing fees, and any potential hidden charges. It’s always best to present this information alongside a realistic timeline for deployment to provide a comprehensive overview.
Articulate ROI and Risks
Explain the return on investment, efficiency gains, and risks of doing nothing. Also quantify potential savings in time and money—for instance, you could show how automation could reduce labor costs or improve cash flow management and cash applications.
During this portion, it’s important to discuss the operational risks of maintaining the status quo, like increased manual error rates or compliance issues, so leadership can fully understand the benefits and drawbacks from an operational standpoint.
Ask These Questions:
- What business problem will this solve?
- What are the risks of doing nothing?
- What are the financial and operational upsides?
- How will this impact our current processes?
- What’s the expected payback period?
Step 5: Implement Your Accounts Receivable Automation Software and Onboard Your Users
Finally, you need to ensure a smooth onboarding process for your new accounts receivable automation software. Here’s how:
Communicate the Rollout Plan
Make sure to clearly communicate the rollout plan to all users. Share timelines, key milestones, and what each team member needs to do, and use meetings or emails to ensure everyone understands their role. Clear communication from the start prevents confusion and sets expectations going forward.
Assign Internal Owners
Assign internal owners and points of contact for the project. These individuals will manage the implementation and act as liaisons with the vendor. It’s ideal to choose people who are knowledgeable and can handle questions in order to further streamline the process.
Ensure Training and Adoption
Ensure your team completes training and adopts the tool consistently. Organize training sessions, make use of vendor-provided resources, track attendance, and follow up with those who need additional support. The stronger your onboarding process is, the easier it will be for your team to adopt the solution.
Create Feedback Loops
Create feedback loops during the rollout to gather input from users. Encourage team members to share their experiences and challenges and use vendor resources to address issues quickly.
Was it easy to complete standard financial operations? Could they tailor payment options and late payment reminders as needed? Did it integrate well with other accounting systems? With regular feedback, you can help improve adoption and resolve any issues early.
Ask These Questions:
- What’s the change management plan?
- Who’s responsible for roll-out?
- How will you track early success?
- What training resources are needed?
- How will feedback be collected and used?
What’s Next:
If you're in the process of researching accounts receivable automation software, connect with a SoftwareSelect advisor for free recommendations.
You fill out a form and have a quick chat where they get into the specifics of your needs. Then you'll get a shortlist of software to review. They'll even support you through the entire buying process, including price negotiations.