No business owner would disagree that managing accounts receivable is a crucial yet often overwhelming task.
This comparative review promises to cut through the complexity by unveiling the top accounts receivable solutions available today.
You'll discover the key features to look for when evaluating accounts receivable software, learn how leading tools like YayPay, Invoice Sherpa, and Versaccount compare, and find best practices to ensure a smooth implementation process.
Introduction: Navigating the World of Accounts Receivable Software
As a business seeking to optimize cash flow and accounts receivable processes, evaluating the top accounts receivable software solutions can be an overwhelming task. However, with the right insights on critical features and key differentiators, businesses can make informed decisions to adopt the ideal platform for their unique needs and use case.
This article serves as an introductory guide to navigating the world of accounts receivable software. We will cover the key capabilities offered by leading solutions, best practices for software selection, and advice to ensure seamless integration with existing systems.
Specifically, we will explore how modern accounts receivable platforms help businesses to:
- Automate invoice creation, delivery and reminders
- Streamline credit management and collection workflows
- Maintain real-time cash flow visibility
- Integrate with popular accounting software like QuickBooks
- Provide mobile access and self-service portals for improved customer experience
While accounts receivable processes vary across companies, investing in software can lead to immense gains in efficiency, working capital, and long-term revenue growth. Let's explore the landscape further to determine the best platform fitting your firm's needs.
What software is used for accounts receivable?
Accounts receivable (AR) software helps businesses manage customer credit, invoicing, and payments. It automates administrative tasks and reporting to improve AR processes and reduce risk.
Popular AR software solutions include:
FreshBooks
Best for: All-in-one solution
FreshBooks is a robust, cloud-based solution for small business accounting and AR needs. Key features include automated invoicing and payments, financial reporting, expense tracking, time tracking, mobile apps, and integration with major payment gateways and accounting software. Its intuitive interface makes it easy for non-accounting users.
StaxBill
Best for: Subscription businesses StaxBill specializes in recurring billing and subscription management. It focuses on flexibility to support complex billing models with features like metered billing, add-ons, coupons, and usage pricing. It includes dunning management, payment processing, and robust reporting on subscriber analytics.
Quadient AR by YayPay
Best for: Reporting and analytics Quadient leverages predictive analytics and artificial intelligence for cash forecasting, collections management, dispute resolution, and other critical AR functions. Users gain a comprehensive view of AR with robust dashboards, metrics, and reporting to track performance.
Invoiced
Best for: Robust features Invoiced packs extensive AR functionality like quotes, invoicing, payment processing, recurring billing, and collections into an easy-to-use platform. It suits larger or fast-growing companies that need scalable systems to manage higher invoice volume and complex AR needs.
With the right accounts receivable software in place, companies can optimize AR workflows, accelerate cash flow, and allocate less time on administrative tasks. When evaluating solutions, it's important to choose one that matches organizational needs and scale.
What are the 5 KPIs for accounts receivable?
As a staffing agency focused on accounting and finance professionals, Vintti understands the importance of key performance indicators (KPIs) for managing accounts receivable (AR). Here are 5 essential AR KPIs that provide visibility into the health and effectiveness of a company's AR processes:
Days Sales Outstanding (DSO)
DSO measures the average number of days it takes to collect payment from customers after a sale has been made. Lower DSO is better as it indicates a company is efficiently converting sales into cash. Benchmarking DSO over time and against industry averages allows assessing operational effectiveness.
Ageing of Accounts Receivable
Reviewing how long invoices have been outstanding provides insight into potential collection issues. Segmenting receivables into age buckets (e.g. <30 days, 30-60 days, 60-90 days, etc.) highlights slow payments and can prompt action on long overdue accounts.
Collection Effectiveness Index (CEI)
The CEI shows the percentage of receivables successfully collected within the expected payment terms. A higher CEI signals efficient credit and collections processes. Tracking CEI monthly can identify problems needing attention.
Bad Debt Ratio
This metric examines uncollectible accounts as a percentage of total credit sales. A low and consistent bad debt ratio demonstrates proper account management and credit policies. Sudden increases require investigating the root causes.
Credit Risk Metrics
Assessing customer creditworthiness and setting appropriate credit limits is key for quality accounts receivable. Common credit risk metrics include payment history, credit score, financial ratios, and macroeconomic conditions. Regular credit monitoring minimizes likelihood of delinquencies.
Routinely measuring these vital AR performance metrics is crucial for cash flow management and reducing revenue losses from unpaid invoices. Vintti can assist with leveraging accounts receivable KPIs through expert finance talent.
What's the most important feature you want to see in your accounts receivable software?
Your accounts receivable software should seamlessly integrate with your existing accounting software. An API integration that automatically updates your financial records upon payment receipt is crucial for streamlining workflows.
This automation eliminates manual data entry and reconciliation - saving your team significant time while minimizing human error. With real-time cash application and ledger updates, you gain instant visibility into customer balances and overall financial health.
Prioritizing this integration enables the following key benefits:
- Automated posting of cash receipts to improve accuracy
- Real-time updating of customer balances
- Faster financial reporting and decision making
- Leaner operations through reduced manual tasks
While other features like customizable invoices, reminders, and reporting are useful, integration with accounting software like QuickBooks is truly the most vital capability. This connectivity empowers your business with timely financial insights and a scalable system as you grow.
When evaluating accounts receivable platforms, ensure API integration is available for your accounting solution. Leverage this automation to streamline processes, unlock efficiencies, and better allocate staff to strategic initiatives. Your bottom line will thank you.
What is an effective tool for analyzing accounts receivable?
Analyzing accounts receivable is crucial for businesses to maintain healthy cash flow. One effective analysis tool is aging reports. Aging reports categorize outstanding accounts into buckets like 0-30 days, 31-60 days, 61-90 days, and over 90 days past due.
Reviewing aging reports helps identify collection issues and customers consistently paying late. For example, if a large number of customers have invoices over 90 days outstanding, it may indicate problems getting paid on time.
Another useful analysis tool is trend line analysis. Here you plot the accounts receivable balance at month-end over the past year. The trend line shows whether accounts receivable is growing or declining. An increasing trend could reflect difficulties collecting from customers.
In addition to quantitative tools, have candid discussions with sales representatives about problem accounts and obstacles to timely payment. Sales reps often have qualitative insights from working directly with customers.
Understanding the reasons behind accounts receivable trends is key. Whether it's macroeconomic factors, customer-specific issues, or problems with internal processes, identifying the root cause enables businesses to take corrective actions and more effectively manage accounts receivable.
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Decoding Accounts Receivable Software: A Primer
Accounts receivable (AR) software is designed to optimize and automate the accounts receivable process for businesses. As cash flow is the lifeblood of any company, having visibility over outstanding customer invoices and payments is critical. Modern AR solutions provide tools to streamline invoicing, consolidate customer data, and even predict future cash inflows.
Streamlining Invoicing: The Path to Faster Payments
Automating the creation and delivery of invoices is a key capability of accounts receivable systems. Rather than manually drafting invoices for each customer, AR software can instantly generate customized invoices based on pre-configured templates. This saves accounting teams significant time while reducing human error.
Key features like scheduled recurring invoices and batch invoicing further boost productivity. Payment terms, discounts, taxes, shipping, etc. can all be set to automatically populate invoices with the right information. Electronic delivery of invoices via email and portals also accelerates the payment process over traditional snail mail.
By establishing workflow automation around invoicing, payments are initiated faster. This brings better control and predictability over cash inflows for optimal working capital management. Streamlined invoicing also provides a higher quality customer experience.
Consolidating Customer Data for Enhanced Relations
Managing disparate piles of paperwork for customer accounts is tremendously inefficient. Modern AR tools consolidate all customer details, contacts, transaction history, communications, documents, and more into a centralized database.
Having a single source of truth about customers and their accounts payable activities is invaluable. Accounts receivable teams can quickly view past invoices, payments, credits, refunds, and outstanding balances. Key customer details like preferred payment methods and terms are also available at a glance.
Consolidated AR data enables better customer service and relationship building. Account reps can reference the entire history of a customer account when communicating about invoices or resolving issues. Targeted AR analytics and reporting around customer behaviors also guides more strategic sales, marketing and credit decisions.
Harnessing Predictive Insights for Cash Flow Forecasting
Advanced accounts receivable platforms apply data analytics and artificial intelligence to historical invoicing and payments data. The goal is to deliver accurate forecasts of future cash inflows. Factors like seasonal trends, one-time events, and deviations are considered by algorithms.
Cash flow projections empower better planning around working capital needs, investments, payroll, etc. When integrated with accounting software, predictive insights enable real-time cash flow visibility rather than backward-looking reports.
Proactively managing cash flow hinges on the quality of AR data and analysis. It allows businesses to anticipate changes, spot issues earlier, and model different scenarios. Forecasting confidence grows over time as more customer invoicing and payment data is accumulated.
Optimizing QuickBooks with Advanced AR Solutions
QuickBooks is the leading small business accounting software, providing invoicing, payments, and financial reporting. However many small and medium businesses (SMBs) need additional accounts receivable (AR) features to optimize cash flow. Specialized AR software seamlessly integrates with QuickBooks to offer advanced functionality.
YayPay: Leading with AI for AR Precision
YayPay utilizes artificial intelligence and machine learning to transform accounts receivable. Key features include:
- Cash flow forecasting powered by predictive analytics to estimate future payments
- Automated collections through customized email and text reminders when invoices are past due
- Robust reporting and analytics identifying highest risk invoices
This enables businesses to stay on top of outstanding payments, provide visibility into future cash flow, and quickly resolve late invoices. YayPay also offers flexible implementation options catered to SMBs.
Efficiency in the Cloud: Exploring Invoice Sherpa
Invoice Sherpa focuses on easy-to-use online invoicing integrated with QuickBooks. Businesses can:
- Create professional customizable invoices and automatically sync with QuickBooks
- Accept credit card and ACH payments through a secure payment portal
- Track payments in real-time with notification alerts
- Access unlimited invoicing and payment processing for one monthly price
This delivers significant time savings by eliminating manual data entry in QuickBooks while providing robust payment tracking. Invoice Sherpa is designed for service businesses that need to simplify billing and get paid faster.
Versaccount: Bridging ERP and Accounts Receivable
Versaccount provides the missing link between enterprise resource planning (ERP) systems and AR. Offering:
- End-to-end accounting including invoicing, inventory management, purchasing, and financial reporting
- Configurable workflows to match existing business processes
- Rules-based credit risk analysis identifying concerning customer trends
This enables consolidated AR management natively connected with the full accounting suite for contextual insights. Ideal for product companies needing advanced AR paired with manufacturing and distribution capabilities.
The above solutions showcase leading options to optimize QuickBooks for modern accounts receivable. Leveraging the right software unlocks efficiency, cash acceleration, and data-driven collections. SMBs can now affordably access enterprise-grade AR previously out of reach. With innovation in the cloud, accounts receivable is transformed from a cost center into a profit driver.
Critical Aspects of Choosing Accounts Receivable Tools
Choosing the right accounts receivable (AR) software is crucial for streamlining invoice management and cash flow. As businesses evaluate potential solutions, three critical aspects rise above the rest:
Seamless System Integration: The Key to AR Efficiency
Seamless integration with accounting platforms like QuickBooks and major CRMs is essential for efficient AR operations. Choosing tools that connect directly to these systems eliminates manual data entry, reduces errors from duplicate data, and provides real-time visibility into AR aging. This gives staff the comprehensive view needed to prioritize collections and accelerate cash flow.
When evaluating accounts receivable solutions, businesses should ensure offered integrations align with their tech stack. Having out-of-the-box connectivity to the specific accounting and CRM platforms used internally delivers huge time savings and consistency.
Custom AR Workflows: The Path to Personalization
Every company has unique needs, workflows, and processes around AR management. The best accounts receivable software provides customization to match these variable requirements.
Configurable features like automated invoice delivery rules, tailored payment reminders, customizable dashboards, and flexible reporting empower businesses to personalize AR management. This level of flexibility is invaluable for companies needing to mold platforms around their environment and objectives.
Seeking out adaptable accounts receivable systems capable of aligning to existing processes prevents businesses from having to overhaul operations to fit rigid software limitations. The path of least resistance is finding tools that can be molded around current workflows.
Future-Proofing with Scalable AR Solutions
As companies grow and take on more customers, accounts receivable volume expands dramatically. Scalability is imperative for guaranteeing adopted solutions can handle doubling, tripling or even 10x-ing of invoice and payment transaction volume.
Evaluating the expandability of AR tools’ capacity, accessibility, storage, user roles, and automation capabilities is wise for future-proofing operations. Growing businesses should determine if functionality, storage, and performance can scale in-step with sales projections.
Seeking feature-rich solutions built on cloud infrastructure, like YayPay, helps ensure seamless expansion as sales ramps. This prevents needing to rip-and-replace incapable systems down the road.
When it comes to accounts receivable software, integration, customization, and scalability should top the priority list. Keeping these aspects in focus when comparing solutions leads to informed decisions and optimized AR management. Evaluating platforms on these facets helps growing businesses select infrastructure capable of accelerating cash flow now and in the future.
Best Practices for Accounts Receivable Management Software Implementation
As businesses seek to optimize their accounts receivable (AR) processes, implementing a dedicated AR management solution can drive significant efficiency gains. However, without thoughtful planning and preparation, the rollout of new software can also create disruptions.
To ensure a smooth transition when adopting an AR management platform, organizations should focus on three core areas:
Charting Existing AR Workflows for Transition Success
Before selecting and deploying an AR solution, businesses should invest time in comprehensively documenting their current workflows. Mapping out key processes related to AR tasks—like creating and delivering invoices, applying payments, issuing reminders, and reconciling accounts—provides insights into potential areas for improvement.
This exercise also makes it easier to configure the new software in a way that aligns with existing operations. Setting up automated alerts, approval chains, and other custom rules relies on a clear understanding of cross-functional AR procedures. Failing to capture these details can lengthen implementation timelines.
Defining Success with Measurable AR Objectives
In addition to analyzing present-day AR activities, users should also clearly define their objectives for the new platform. Quantifiable metrics like days sales outstanding (DSO), invoice accuracy, dispute rates, and collection costs focus implementation efforts and help measure success post-launch.
Setting targets for key performance indicators allows the configuration of AR software to directly address specified business needs—rather than taking a one-size-fits-all approach. It also informs decisions about which features and integrations to prioritize during rollout based on their impact on strategic goals.
Empowering Teams through Targeted AR Training
While IT, finance, and other central teams play an essential role in deploying new AR technology, frontline personnel are equally critical to driving adoption. Employees creating and collecting from customer invoices must understand how to leverage the enhanced capabilities.
Targeted training across affected business units ensures personnel can maximize the platform from day one. Hands-on support easing teams through new workflows is ideal during the transition period. The training should align closely with the metrics defined for AR software success to guarantee personnel understand how their activities contribute towards strategic targets.
With careful planning through these best practices—documenting existing workflows, setting measurable objectives, and empowering personnel through training—businesses can implement AR management software to elevate operational performance. Defining responsibilities across implementation and post-go-live stages ensures a smooth transition that delivers rapid returns on investment.
Conclusion: Embracing the Future of Accounts Receivable
As businesses increasingly adopt digital solutions, the accounts receivable process is being transformed through automation and data-driven insights. For SMBs seeking to optimize cash flow while delivering exceptional customer experiences, embracing modern accounts receivable software is key.
With user-friendly tools to automate invoicing and collections workflows, SMBs can significantly reduce manual tasks and free up resources to focus on more strategic initiatives. Automated reporting also provides real-time visibility into customer accounts and behaviors to better inform credit decisions and tailor engagement.
As this software continues advancing through AI and machine learning, users gain access to predictive analytics empowering them to make proactive decisions that minimize risk and maximize profits. While adopting new technology involves some growing pains, the long-term benefits for SMB growth and sustainability are immense.
By taking advantage of these innovative platforms, forward-thinking SMBs position themselves for the future of accounts receivable. With efficient operations, healthy cash flow, and rich customer insights, these businesses can confidently pursue their expansion goals while building resilient and profitable organizations.
