Accounts Receivable Software Buyers Guide
Last updated: June 07, 2023
For any business to be functioning optimally processes must be put in place. Keeping track of accounts receivable is the cornerstone of your accounting activities. Maintaining healthy cash flow and good customer relations are the result of efficient accounts payable processes.
Accounts receivable software takes the headache out of running an airtight operation. The intelligence in this software ensures your company’s collection and invoicing processes are automated. Implementing this software solution will increase the accuracy and speed of managing your accounts receivable.
In this article, we will expound on the functions of a decent accounts receivable system as well as the market trends to be aware of. We'll also unpack some considerations you should reflect on before purchasing and share guidelines to successfully implement a system.
What Are The Basic Functions Of An Accounts Receivable System?
Any accounts receivable system should be able to provide the following solutions:
- Payments: Your system should accept payments in different forms such as credit cards, electronic funds transfers, cash and even checks. Some advanced software solutions include assimilation with other payment services and merchants such as Paypal.
- Customization: If your business expands rapidly and you decide to venture internationally you need software that includes multi-currency invoicing. The system should allow for customized invoice templates that include your logo and payment terms.
- Invoices: The system must generate invoices and send it to your customers for payment. Some software solutions can automatically send out recurring invoices. If you're using an online invoicing system you'll be able to see if a customer opens the invoice. You'll also be able to send out a reminder if invoices are reaching a due date or becoming late.
- Customer management: Your software solution needs to be able to track all your paid invoices and alert you of any outstanding invoices.
- Analytics: You’ll be able to view AR data via dashboards, graphs and detailed reports. You’ll also gain valuable insights into deferred revenue and your customer aging data.
- Mobile apps: Working remotely from any location is the ultimate convenience. You’ll be able to access your AR data via any mobile app that’s compatible with Android, Windows or iOS phones. You can conveniently send out payment reminders, invoices or other communication via your mobile device.
Some Market Trends To Take Note Off
If you’re in the market to purchase an accounts receivable software you should take note of the market trends on whether to opt for a cloud-based solution or an on-premise one.
The rise of cloud-based accounting solutions is growing year on year. Research shows that in 2014 only 16% of small to medium-size businesses were using cloud-based solutions. The numbers almost doubled in 2015 with 30% of SMBs using cloud-based solutions.
Historically the accounting fraternity has been wary to move to the cloud and has mostly used on-premise solutions. They're now warming up to cloud-based solutions and closing the gap between usage of the two options.
The top benefits cited in a survey by users of cloud-based solutions are:
- It’s easy to access
- It's user-friendly
- It offers sufficient security and safety
The perspective around on-premise accounting solutions has always been that it’s a safer and more secure option. Because it's in-house there is a level of control and privacy. Having an on-premise solution is not always budget-friendly or practical for especially small to medium size businesses. It’s important to weigh the pros and cons of investing in this type of solution.
Successful Implementation Guidelines
Following these easy steps will assist you in effortlessly setting up your accounts receivable system:
- There are various AR software options available so depending on whether you're a small business or large enterprise will determine what you opt for
- Once you’ve decided what AR software you’ll purchase you can start putting processes in place
- The software will keep track of money owed to the business and allow you to follow up on overdue payments
- Instead of chasing after late payments, be proactive and remind customers payment is coming up
- Set up the system to reduce payment times to ensure a faster cash turnover
- Do a test run to ensure the system is running smoothly and evaluate if extra features need to be included in your package
The Cost Of AR Software
Before we look at how much AR software can cost you, let’s talk about how much you’re likely to save when using AR software. Traditionally sending out invoices can cost you about $11.50 for every invoice sent. That includes the cost of envelopes, paper and shipping it. The cost of paper also rises year on year.
If you consider investing in an AR software solution your average monthly cost can be as low as $0.71 per invoice. Automation and a paperless system remove a large chunk of the cost.
Prices for a decent AR software package depend on the number of users and the different features you want to be included. It can begin with as little as $10 per user monthly from Payorcrm Accounting. Alternatively, you can pay up to $799 from Numberz Accounting per month. There are also free versions available that can function optimally if you're looking for an entry-level option.
Not getting paid on time can affect your business negatively. Keeping track of invoices and payments due can be chaotic if you don’t have a proper system in place. You need a robust cash flow system in your business to keep everything running smoothly.
Investing in an AR software solution ensures you have a watertight account receivable system in place. It automates mundane tasks and acts proactively to communicate to customers about payments due.
Let us know what your thoughts are regarding a paper-based or automated accounts receivable system.