The speed of today’s business demands agility, yet legacy accounts receivable processes remain a stubborn bottleneck for many companies. The complexity and volume of invoices increasingly threaten to overwhelm manual systems, leaving companies even more vulnerable to inefficiencies and lost revenue. Given these challenges, accounts receivable automation is no longer a luxury, but a necessity. It offers a path to streamlined operations, clearer financial transparency, and sustainable growth. But for many companies concerned about complexity and disruption, the promise of accounts receivable automation depends on solutions that are both powerful and intuitive. These solutions must act as a bridge to the future without disrupting the present.

The bill avalanche: How outdated accounts receivable accounting endangers cash flow

As Silicon Valley races to create the next artificial intelligence (AI) unicorn, many companies are drowning in paper invoices. This mismatch is not only inefficient, it’s a financial risk waiting to explode.

Faced with an impending flood of digital invoices, companies are relying on outdated AR solutions.

With manual accounts receivable accounting, companies suffocate under the burden of outstanding payments.

Manual accounts receivable processes pose an existential threat to businesses in the U.S. In a recent study, half of the companies surveyed complain of excessive time wasted processing accounts receivable, and 44% struggle to collect overdue payments. An alarming 43% of companies report too many late or overdue payments, while 46% struggle to reduce days outstanding (DSO). This pattern of inefficient resource allocation and reduced productivity underscores the growing incompatibility of manual accounts receivable processes with the pace and complexity of modern business transactions. As a result, many companies are at a competitive disadvantage in an increasingly digital economy.

Manual AR processes drain cash and endanger financial health.

59 percent of U.S. companies attribute poor cash flows and forecasting to outdated manual accounts receivable methods. In addition, 57 percent cite difficulty managing credit risk. Even more troubling, 21 percent of accounts receivable teams that rely on manual processes struggle to determine basic financial metrics such as credit-to-sales to accounts receivable ratios. The inability to use critical financial data creates a ripple effect that can distort strategic decisions and severely limit business agility.

AR automation paralysis: What’s really holding companies back?

The AR automation train is leaving the station, and too many companies are still looking for their tickets. Countless companies remain on the platform, paralyzed by a mix of budget constraints, technology fears, and resistance to change. Costs are rising daily.

Due to budget constraints, companies are in a limbo phase of AR automation.

Security and technology hurdles cause difficulties for some companies.

Security concerns play an equally large role: 47% of executives at midsize companies see security as a critical obstacle, second only to cost. For larger companies, the situation is similarly difficult. In a separate study, PYMNTS Intelligence found that 80% of CFOs at companies with annual revenues over $250 million say the excessive complexity of automated AR workflows limits their ability to reduce DSO. Equally frustrating for these CFOs is the lack of on-demand consulting services, which further hampers efforts to reduce DSO. This combination of security concerns and implementation hurdles widens the gap between automation leaders and laggards.

Relieving manual AR headaches

For businesses, automated AR unlocks a wealth of insights and efficiencies. In a landscape where cash flow is paramount, AR automation isn’t just an upgrade—it’s the new prerequisite for optimized cash flow.

Interest in AR automation is driven by hard numbers.

Among users, AR automation is a real knockout against inefficiencies: 83% of AR leaders report improved process efficiency and accuracy. 75% also cite improved cash flow and increased savings, which directly impacts business growth. These benefits are not just for midsize companies. More than a third of smaller US companies report improved visibility into their cash position, while nearly a third dramatically reduce AR processing times. These metrics underscore the potential of AR automation to drive improvements across the entire finance function.

AR automation fever shows no signs of abating.

PYMNTS Intelligence research also found that 93% of AR leaders expect further improvements from greater automation. For example, more than half expect improved data availability, a key factor in strategic decision-making. And perhaps the biggest warning to those not yet embracing it: 82% of AR teams that use automation report increased overall effectiveness. This suggests that a widening gap is forming between “the automated” and “the manual” in the race to optimized AR.

No more paperwork: The 5-step guide to AR automation

Faced with mounting bills and tight cash flow, forward-thinking AR teams are finding a powerful ally in AR automation. For others, however, the path forward seems uncertain. In this reluctance lies hidden costs—measured not only in dollars and cents, but also in missed opportunities and delayed growth. The good news is that the tools to transform AR from a nuisance into a driver of efficiency and growth are within reach.

PYMNTS Intelligence prescribes the following actionable roadmap for companies struggling with manual AR.

1. Check and analyze processes. Identify your organization’s most time-consuming and error-prone AR tasks and quantify their financial impact. This data-driven approach delivers a compelling business case for AR automation and shows key stakeholders the potential return on investment (ROI).
2. Find the right solution for your needs. Discover AR automation solutions that fit your company’s size, industry, and growth goals. When evaluating potential vendor partners, consider factors such as scalability, integration capabilities, and ease of use. Prioritize solutions that offer customizable dashboards and real-time reporting to improve financial transparency.
3. Think of AI as an ally. Use AI-powered tools for tasks like matching incoming payments to invoices (cash mapping) and processing remittance information. Look for AI solutions that can predict payment behavior and provide actionable insights that not only speed up AR processing but also improve accuracy. Use these tools to free up your team to focus on higher-value, strategic tasks, like building stronger customer relationships and proactively managing credit risk.
4. Opt for a strategic launch, not a big bang. Start with a pilot implementation in a key area like billing or collections. This will allow your AR team to test the situation, refine the application, and gain internal buy-in for a wider rollout. Develop clear success metrics for the pilot and use the results to refine a full implementation strategy.
5. Look for AR partners, not just vendors. Look for AR automation partners that understand your company’s industry and business challenges. Work with those who also provide strategic advice and ongoing support to ensure your AR team’s long-term success.

In the machinery of digital enterprises, manual AR is a hand-weaving tool amidst mechanical looms. Smart companies are using AR automation to strengthen the fundamental structure of their business through optimized cash flow management and operational efficiency.