Common AR Automation Questions

Accounts receivable automation is transforming how finance teams manage cash flow, but many organizations have questions about implementation, capabilities, and expected outcomes. Here are the most frequently asked questions about AR automation, along with detailed answers to help you make informed decisions for your business, plus details about how Cashbook can help.

Q: What exactly is AR automation and how does it work?

A: AR automation streamlines the entire accounts receivable process through intelligent software that integrates with your banking systems and ERP platform. The system automatically processes bank statements, lockbox files, customer remittances, and various payment formats. It uses sophisticated matching algorithms to automatically match payments against open invoices, handles deductions, and posts transactions to your general ledger. This eliminates manual data entry and significantly reduces processing time while improving accuracy.

Q: What types of businesses benefit most from AR automation?

A: AR automation is particularly beneficial for companies with high-volume transactions across industries such as manufacturing, food & beverage, automotive, retail, and distribution. Any business that processes multiple payment formats, deals with complex customer remittances, or spends significant time on manual cash application will see substantial benefits. The solution is flexible enough to handle various industry-specific financial processes and can scale with business growth.

Q: How much time can AR automation actually save?

A: Organizations typically see processing time reductions of 40-50% with AR automation. Some clients report even greater improvements, with one case study showing a 45% reduction in time spent on cash management processes. The exact time savings depend on your current manual processes, transaction volumes, and the complexity of your payment formats. The automation eliminates repetitive manual matching and data entry tasks, allowing your finance team to focus on strategic activities.

Q: How long does AR automation implementation typically take?

A: Most AR automation implementations take approximately 3 months on average, though this can vary based on complexity. Simple implementations may take as little as 6 weeks, while global roll-outs can extend to 6 months. The implementation team typically spends 15-30 man-days on each project. The timeline includes system installation, configuration, algorithm development, testing, training, and go-live support.

Q: What ERPs can AR automation integrate with?

A: Modern AR automation solutions integrate with many different ERP systems, including deep expertise in Infor ERP integrations (XA/MAPICS, BPCS/LX, TIMS, M3), JD Edwards, and many others. The integration creates a seamless flow of data between your banking systems and ERP platform, eliminating the need for manual data transfer and ensuring all transactions are properly recorded and reconciled.

Q: Do we need to change our banking relationships for AR automation?

A: No, AR automation solutions are designed to work with your existing banking relationships. The systems can adapt to various banking formats including ACH, SEPA, BACS, and multiple lockbox providers. The software integrates with your current banking infrastructure rather than requiring you to change providers or processes.

Q: What if we have unique file formats or special requirements?

A: AR automation systems are flexible enough to handle multiple remittance file types including Excel files, EDI files, credit card files, PDFs, web portal files, image-based files, and even text information in email bodies. The systems have extensive libraries of configurable algorithms and can develop custom solutions for unique customer requirements. Most financial challenges have been solved and automated previously by experienced providers.

Q: How secure is AR automation software?

A: AR automation solutions implement comprehensive security measures across multiple locations and touchpoints, including databases, data transmission, system access, and customer security protocols. All processed data is stored safely and securely with complete audit trails, including date and time stamps for each transaction and user action. This provides peace of mind during company audits and ensures compliance with financial regulations.

Q: Can the system handle our specific remittance formats?

A: Yes, modern AR automation systems like Cashbook can process virtually any remittance format including Excel spreadsheets, EDI files, PDF documents, image-based files, customer portal exports, and even text within email bodies. The system uses optical character recognition (OCR) functionality and intelligent matching algorithms to extract invoice data and automatically match payments to open invoices.

Q: What happens if the system can’t match a payment automatically?

A: When automatic matching isn’t possible, the system flags transactions for manual review. Users can easily create custom matching rules, adjust algorithms, and handle exceptions through an intuitive interface. The system learns from these manual interventions and can often automate similar transactions in the future. Exception handling is designed to be quick and efficient, maintaining overall productivity gains.

Q: How does AR automation handle customer deductions?

A: AR automation includes sophisticated deduction management capabilities that adapt to any bank file or remittance format. The system can automatically assign deduction types, create reason codes directly from remittance data, and route deductions through your organization for speedy review and approval. Users can set up auto-write-off tolerances and bundle deductions to speed up investigation and approval processes, significantly reducing “unknown” deduction items.

Q: Can the system help with collections automation?

A: Yes, AR automation solutions include collections management features that provide enhanced visibility into outstanding receivables and customer payment patterns. The system can automatically identify overdue accounts, generate collection reports, and integrate with your existing collections processes. This helps reduce Days Sales Outstanding (DSO) and improves overall cash flow management.

Q: How does the system handle partial payments and discrepancies?A: The system is designed to handle various payment scenarios including partial payments, overpayments, and discrepancies. It can automatically apply partial payments to specific invoices, handle early payment discounts, and flag discrepancies for review. The intelligent algorithms can be configured to handle your specific business rules for payment applications.

Q: What kind of ROI can we expect from AR automation?

A: Organizations typically see rapid ROI from AR automation through reduced processing time, improved accuracy, faster cash collection, and decreased DSO. The elimination of manual processes translates directly into cost savings, while improved cash visibility enables better financial decision-making. Many clients see payback within the first year of implementation, with continued benefits as transaction volumes grow.

Q: How does AR automation improve cash visibility?

A: AR automation provides real-time visibility into cash positions, payment statuses, and outstanding receivables through comprehensive reporting and dashboards. You can see exactly where payments stand in the process, track processing metrics, and identify trends in customer payment behavior. This enhanced visibility enables proactive cash flow management and more informed business decisions.

Q: Will AR automation help reduce our DSO?

A: Yes, AR automation typically leads to significant DSO improvements by accelerating payment processing and improving cash application accuracy. Faster processing means payments are applied to accounts more quickly, reducing the time between payment receipt and recording. The system also helps identify and resolve payment discrepancies faster, preventing delays in cash application.

Q: How much training is required for AR automation?

A: AR automation systems are designed to be user-friendly and typically require minimal training. Most implementations include 1-2 days of comprehensive training using your actual data and processes, so your team is ready to go on the live date. The training covers system navigation, exception handling, algorithm adjustments, and reporting capabilities.

Q: What ongoing support is available after implementation?

A: Quality AR automation providers offer comprehensive ongoing support including regular check-ins, system optimization, algorithm refinement, and access to product updates. Many providers schedule follow-up visits one month after go-live to ensure optimal performance and often identify additional 10-15% productivity improvements through fine-tuning.

Q: Can we modify the system ourselves after implementation?

A: Most AR automation systems are designed to allow users to make certain adjustments and modifications themselves, particularly around matching rules and algorithm parameters. During training, you’ll learn how to tweak your own algorithms and adjust system parameters to meet changing business requirements. More complex modifications may require support from the team at Cashbook.

Q: How does AR automation scale with business growth?

A: AR automation solutions are designed to scale seamlessly with business growth. The systems can handle increased transaction volumes without proportional increases in processing time or staffing requirements. As your business expands, the automation capabilities grow with you, making it easier to manage larger volumes of payments and more complex customer relationships.

Q: What are the typical costs associated with AR automation?

A: AR automation costs vary based on factors such as transaction volumes, complexity of requirements, number of users, and specific features needed. However, the cost is typically offset quickly by the savings from reduced manual processing, improved accuracy, and faster cash collection. Most organizations see positive ROI within the first year of implementation.

Q: Can we implement AR automation in phases?

A: Yes, many organizations choose to implement AR automation in phases, starting with high-volume or problematic areas and gradually expanding to other processes. This phased approach allows you to realize benefits quickly while minimizing disruption to ongoing operations. You can begin with basic cash application automation and add features like deduction management and collections automation over time.

Q: How do we know if we’re ready for AR automation?

A: You’re ready for AR automation if you’re spending significant time on manual cash application processes, struggling with payment matching accuracy, dealing with complex deduction management, or lacking visibility into your cash position. Companies with high transaction volumes, multiple payment formats, or growing businesses particularly benefit from automation.

Q: What’s the first step in implementing AR automation?

A: The first step is conducting a comprehensive assessment of your current AR processes, including transaction volumes, payment formats, ERP systems, and banking relationships. This assessment helps identify specific pain points and opportunities for automation. From there, you can evaluate solution providers and develop an implementation plan tailored to your specific requirements.

Q: Should we clean up our processes before implementing automation?

A: While some process optimization is beneficial, don’t let the desire for perfect processes delay your automation initiative. Modern AR automation solutions like Cashbook are flexible enough to handle various process variations and can often improve process efficiency as part of the implementation. The key is working with experienced providers who can guide you through process optimization as part of the automation journey.

Ready to transform your AR processes with automation? The benefits of streamlined cash application, improved accuracy, and enhanced cash visibility are within reach. Contact the AR automation specialists at Cashbook to discuss your specific requirements and develop a customized solution for your organization.