When businesses seek to improve their cash flow, they often turn to traditional strategies: offering discounts for early payments, loosening credit risk thresholds to take on more business, or implementing payment plans to collect past-due invoices.
Accounts receivable (AR) is often treated as an area for small improvements and optimizations when, in reality, it’s ripe for a more transformative approach—automation.
With automated systems, AR teams can start their work from a position where the data collection, account targeting, and customer outreach have already been performed, enabling them to focus entirely on the impactful decisions that drive greater cash flow and shorter sales cycles, achieving more in less time.
To unlock that potential, we need to rethink what automation in AR actually looks like. It’s not about rigid systems, job displacement, or impersonal customer interactions. Today’s automation is flexible, data-driven, and designed to support human work rather than replace it.
This article will explore the aspects of accounts receivable that can be automated and how to implement those efficiencies without damaging customer relationships.
Automation Does Not Need to Be Rigid
Automation is often seen as a cheap and uniform solution, a cost-saving measure to replace skilled workers with repetitive pathways and task execution, just like physical machines in warehouses and factory floors—but an AR department is not a factory floor.
There is no machine that can replace the judgment of a skilled AR professional—but too often, their expertise is wasted performing repetitive tasks and manual follow-ups that drain their time and energy.
This is where automated systems provide the greatest value, not just for businesses that rely on fast AR operations and collections, but for the departments themselves.
Automating Messaging: What to Send and When
The most powerful use of automation isn’t behind the scenes, but in how you connect with customers.
The key is knowing when it adds value—where speed, consistency, and reach enhance the message, not where nuance, human insight, or a personal touch is required.
For example:
- Dunning for low-value, high-frequency accounts, allowing collections officers to prioritize strategic high-risk customers.
- Account Statement messages are sent at regular intervals to keep customers apprised of their status.
- Claim Settlements, to inform customers immediately when a claim has been settled or a refund granted.
- Notice of Failed Payment, for immediate transparency into a customer’s paid and unpaid invoices, helping to avoid unintended late payments.
When applied strategically, automated messaging frees your team to focus on complex accounts and higher-value interactions while giving every customer the attention they need, exactly when they need it.
Automated messages, whether sent by email or SMS, are a cornerstone of modern AR and collections. And among them, dunning carries the most weight. When done right, it can significantly accelerate cash flow. When done poorly, it can erode customer trust.
That’s why timing and context matter. Knowing when to trigger dunning sequences and how to tailor them can mean the difference between driving efficiency and damaging relationships.
Automated Dunning
Consider two primary avenues in which collections can become unprofitable.
The first: Refusing to let go of an overdue invoice—repeatedly attempting to collect, long past the point when it should be written off, ultimately wasting time and resources.
The second: Writing off small, seemingly insignificant invoices as bad debt, slowly eating away at revenue streams because the time and effort required to collect them is too great in comparison with the reward.
Automated Dunning can Solve Both—at Scale.
In the first scenario, automated dunning can keep up the pressure without diverting costs for an unlikely payment. For the second, the small-time late payer, it can be utilized to provide consistent touchpoints, something that is difficult in departments that handle payments from hundreds or thousands of accounts.
Now let’s be specific when we discuss automated dunning: These are not robotic messages spelling out, down to the minute, how late a customer’s invoice is; those messages would certainly damage relationships.
What we really mean are pre-built, contextualized messages that can pre-fill customer details. Dunning that doesn’t sound robotic because each template was written by a human who knows where and in what circumstances it will be sent and seen.
Example: 10 Days Past Due
.png?width=790&height=444&name=Automating%20AR%20Blog%20image%20(2).png)
Example: 30 Days Past Due
.png?width=790&height=444&name=Automating%20AR%20Blog%20image%20(3).png)
How Automated AR Impacts Your Customer
Messaging isn’t the only aspect of the accounts receivable process that can be automated, though it is the most customer-facing. Other elements significantly influence a customer’s relationship with your business, like how often they are targeted for collections, how promptly account holds are released, and how fast their payments are processed.
Task and Account Prioritization
Direct human interaction remains essential to the success of collections efforts. While this aspect of an AR team’s work should never be completely automated, the surfacing and prioritizing of that work can be optimized in such a way as to drive greater results.
When workstations are tied together into a unified system, automated processes can analyze and sift through enormous amounts of customer data to single out accounts that require human touch while automating those that do not.
In many AR departments, prioritization is done by reviewing accounts and payment terms manually to determine when and to what extent collections need to be initiated on a given account. Depending on a business’s industry, approach, and policies, the intensity of collections and the extent to which the customer relationship can be risked in pursuit of payment might vary dramatically.
Dispelling Common Concerns
For AR teams hesitant to automate, the hesitation often stems from imagined worst-case scenarios.
For example:
- A customer is suddenly targeted for collections by an automated system at the exact moment their invoice goes past due, despite a long history of timely payments.
- A customer operating in a seasonal industry is treated as delinquent during their off-season, where an AR manager would know to expect delayed payments.
In reality, automation in these processes follows a more nuanced track, where AR departments set guidelines and time buffers that give their customers grace periods to correct oversights and manage context-specific exceptions. This way, touchpoints and notices can be timed to offer leniency when required, contributing to a well-defined customer retention strategy.
Account Hold Release
Manually releasing account holds can lead to costly delays and customer frustrations—especially when holds remain in place after a payment is made, or a dispute is resolved. These lapses test customer patience, and worse, erode their trust.
Automated account hold systems address this with real-time monitoring, so holds can be lifted at the exact moment payments are made or underlying risk data changes. This prevents responsible customers from being penalized due to processing delays, internal bottlenecks, or outdated information.
When paired with automated messaging in their preferred channels, these systems keep customers informed effortlessly, eliminating confusion and reducing the need for manual inquiries and responses.
Cash Application
Applying payments to invoices has a less direct impact on customer relationships; however, automation in this field can deliver important benefits for both customers and AR departments.
Cash application is one of the most repetitive processes within an AR department’s area of responsibility—and is therefore one of the most effectively automated.
When done through traditional methods, cash application requires AR teams to manually sift through remittance data, inbound payments, and open invoices. Not only does this require a significant amount of time and effort from the AR team, but it also drags out resolution times for customers, potentially preventing them from making new purchases or taking on new opportunities.
This process, when automated and combined with automated messages and account releases, reduces the missteps, confusion, and errors that can damage relationships the most. Faster cash assignment and posting removes the possibility of dunning notices being sent for invoices already paid and allows account holds to be released without unnecessary delay.
Automation That Puts Customers First
Knowing where to start can be challenging; there are many AR automation platforms to choose from, but those that integrate seamlessly with current processes and can conform to existing credit policies are few and far between.
To gain a better understanding of your needs and requirements in an automated AR platform, reach out to a Bectran AR specialist for a chat.
