Accounts Receivable Software

What is accounts receivable software?

Accounts receivable (AR) software helps businesses record how much external parties, including clients and customers, owe to them. AR automation software automates the recording of payments on outstanding invoices and assists users in managing their cash flow by generating reports on pending collections and monthly statements against customer invoices. This solution typically includes features such as invoicing, billing, and payment tracking, which can help businesses efficiently and accurately manage the accounts of their customers who have been granted credit.

What does accounts receivable manage?

The accounts receivable department within a business manages the accounts of customers who have been granted credit by the business, including tracking the amount owed, issuing invoices, and following up on overdue payments. Businesses often use accounts receivable automation software to automate invoicing and collection processes and ensure an accurate cash flow cycle. Here are the key features of AR automation software:

• Billing and invoicing: Create and manage bills and invoices exchanged between parties. This includes generating a document that outlines the items purchased, the total amount due, the payment terms, and recording and tracking the issuance of invoices.

• Customer statements: Allow customers to view their invoices, payments, and the balance on their accounts. Customer statements include a list of all transactions (purchases, payments, and credit or debit adjustments), the current balance on the account, and outstanding dues. These statements are typically sent out on a monthly or quarterly basis.

• Receivables ledger: Maintain a list of customers and their due payments, updated monthly. This ledger typically includes details about each customer, such as their name, contact information, and the amount they owe.

What is the difference between accounts receivable software and accounts payable software?

Both accounts receivable (AR) and accounts payable (AP) software assist businesses in managing their finances effectively and gaining a better understanding of their financial position while also helping them make informed financial decisions. However, the two have different functionalities:

• AR software helps manage and track the money owed to a business by its customers or clients, while AP software helps manage and track the money a business owes to its vendors and suppliers. Accounts receivable software manages incoming payments, while accounts payable software manages outgoing payments.

• AR software helps businesses track and manage customer invoices, process incoming payments, and generate reports on accounts receivable. The tool prevents overdue amounts and ensures timely payments.

• AP software provides features that assist in managing expenses, tracking invoices, identifying invoice errors, and generating cash flow reports—all of which improve general fund management and reduce manual efforts. These solutions are designed to work with general ledger and accounting applications. They are mostly used for spend management by finance and operations teams and can be bundled with core accounting solutions.

What is the best accounts receivable software?

Considering the wide variety of accounting software tools available on the market, it can be difficult to select the right accounts receivable software solution for your business. To make this choice less challenging and find the best solution based on user reviews, you can look at GetApp’s Category Leaders report for accounts receivable software. This report features top-ranking accounts receivable software having the highest ease of use, functionality, customer support, value for money, and the likelihood of a recommendation.

How does accounts receivable software help SMBs?

• Automates payment processing: Using an accounts receivable system, businesses can automate their dues collection process and prevent delayed payments. The software automatically generates recurring invoices and sends them to customers, saving time and reducing errors. This can make it easier for SMBs to stay on top of their accounts receivable, allowing them to quickly and easily see which invoices have been paid and the ones that are still outstanding. 

• Prevents manual errors: With AR automation, businesses can store all financial data digitally. This reduces the reliance on manual invoice tracking and management, which can be time-consuming and error-prone. Therefore, accounts receivable management software can also help a small business save time and reduce the risk of mistakes.

• Provides detailed insights on financial position: Improved visibility into accounts receivable can help a small business streamline billing and payments processes, improve its cash flow, and manage finances more effectively. The software solution provides users with information such as post-sales data and documents related to certain deals. With accounts receivable automation software, SMBs can easily generate reports and analytics to help them better understand their financial performance and make informed business decisions.