Accounts receivable (AR) software is a cornerstone tool in your financial operations in any business. Without a good solution in place, your business could face delayed payments, increased errors, and inefficient cash flow management. That’s why choosing the right software is a must.
But in a crowded market with numerous options, finding a solution that perfectly fits your needs can be challenging.
The ideal AR software should streamline your workflows, improve cash flow, and enhance overall productivity.
In this guide, we’ll walk you through essential criteria to consider when evaluating AR software, ensuring you make an informed decision that supports your business’s growth and operational efficiency. From user interface to customer support, we’ve got you covered.
TL;DR
- Accounts receivable software is a tool designed to automate and streamline the accounts receivable processes within a business.
- It’s best to choose an AR software that integrates seamlessly with your accounting software, enabling a smooth flow of data between systems.
- Some of the key features to look for include automatic invoice generation, automated payment reminders, online payment processing, and AR reporting.
What is accounts receivable software?
Accounts receivable software is more accurately known as accounts receivable automation (ARA) software. This specialized tool automates and streamlines the AR processes within a business, which includes tasks such as invoicing, payment collection, and managing transaction reconciliation.
Businesses use AR software to improve the efficiency and accuracy of their financial operations, reduce manual errors, and enhance cash flow management
While specific capabilities can vary from one solution to another, most accounts receivable apps offer features like automatic invoice generation, payment reminders, multiple payment options, and integration with other financial systems, making them a valuable asset for managing receivables effectively.
How to find the best AR software: Criteria for selecting the best accounts receivable solution
With so many AR software solutions in the market, choosing a suitable one for your needs could get overwhelming. Yet, your choice could make the difference between chaotic bookkeeping and seamless cash flow.
Here are some factors for you to consider when selecting AR software for your business:
User interface and ease of use
Usability is one of the most crucial factors of good AR software. An intuitive user interface will make it easier for both your employees and clients to use the software whether on the web or mobile app.
A complex user interface makes the learning curve steep. You don’t want to suffer slow user adoption, usability issues, and loss of value just because your clients can’t find the navigation easily.
Investing in user-friendly software that’s easy to use will maximize user efficiency and boost productivity for your team.
You can ask for a demo before investing in the software to gauge its usability and ease of use. Test different aspects of the solution, such as invoice creation, report customization, payment reminders, and payment verification.
Features and functionality
The software solution you choose should offer features and functionalities that suit your specific business needs. On top of automating your AR processes, the software should also provide various customization opinions.
Here are some key features to look for in AR software:
- Automatic generation of invoices and auto payment reminders via email and SMS
- Integrated payment acceptance: The seamless ability to accept multiple payment options, such as credit cards, ACH, and checks, which is powered by a connected payment processor.
- Intelligent dunning management: Automated strategies (e.g., card updater services, retry logic, failed payment notifications) to recover revenue from failed recurring payments.
- Security and compliance: Ensure the software utilizes strong security measures, including tokenization and encryption, and is fully compliant with PCI DSS (Payment Card Industry Data Security Standard) for secure handling of customer card data.
- 24/7 accessibility
- Bank reconciliation
- Custom reports and analytics
- Third-party app integration
- Invoice dispute management
Software with a comprehensive list of features will contribute to a more efficient AR workflow. Note that a primary benefit of integrated AR solutions is liability shift. By securely tokenizing and processing payments through the certified system, the software and the business are protected from the financial liability of a customer data breach.
Integration capabilities
An AR software that integrates seamlessly with your accounting software enables a smooth flow of data between systems. This removes the risk of errors and time consumption that come with manual processes or switching through multiple systems.
Some key systems to ensure that your AR software integrates with include ERP and CRM software. When choosing a solution, confirm that the integrated payment processor provides detailed settlement reporting that plugs directly into your banking and accounting systems, minimizing the need for complex direct bank integrations.
If the integration isn’t smooth, the benefits of AR software will be watered down by the complexity and inefficiency of incompatible systems.
Pricing and scalability
Understand that you will be paying two types of costs: 1. The AR software fee (monthly/annual subscription) and 2. the payment processing fee (the per-transaction cost, which is the most volatile expense).
Transparency in pricing is non-negotiable, particularly for the integrated payment processing fees. Compare the provider’s payment processing model—subscription (like Stax), interchange-plus, or flat-rate—against the software costs to determine your total, long-term ROI.
Don’t forget to ask about any extra charges, such as setup fees, transaction costs, fees for upgrades and support, and fees for extra users.
Add up all the short-term and long-term costs to ensure you get a full picture of what you’re getting into.
Also, since you want to invest in software that will serve you in the long term, understand the scalability of the software as your business needs grow.
For example, can the software accommodate a 10% increase in the number of customers or invoices? What about a 50% increase in the average rate of return? If so, will you have to move to a higher-priced plan?
Customer support and training
Your relationship with the software company or vendor shouldn’t end after purchase. They should have measures to ensure you succeed in the short and long term.
An AR software company with a robust customer support and training team helps you resolve any issues that may arise during software implementation and usage.
Evaluate the channels the company uses for customer support. At the bare minimum, they should offer live chat, email, and phone support. Consider how long their customer support team takes to respond, whether they’re available 24/7, and the level of expertise they demonstrate.
Go through online reviews to evaluate the company’s reputation when it comes to customer support and response times.
Bringing it all together
Deciding on what AR software to use is not something to take likely. Be sure to weigh factors like user interface, features, integration capabilities, pricing, scalability, and customer support. In doing so, you can find a solution that meets your needs and helps your business grow.
Take your time choosing a solution and invest in a tool that enhances efficiency, reduces errors, and supports seamless cash flow management for long-term success.
Learn how Stax can help streamline your payment processing below.
Quick FAQs about accounts receivable software
Q: What is accounts receivable software, and why is it important for businesses?
Accounts receivable software automates and streamlines the processes involved in managing a company’s receivables. This includes tasks like invoicing, payment collection, and maintaining accurate financial records. It’s crucial because it improves efficiency, reduces manual errors, and enhances cash flow management, making it easier for businesses to manage their financial operations.
Q: What features should I look for in accounts receivable software?
Key features to look for include automatic invoice generation, automated payment reminders, multiple payment options, integration with other financial systems, bank reconciliation, and custom reports and analytics. These features help streamline workflows and improve the overall efficiency of receivables management.
Q: How do integration capabilities enhance accounts receivable software?
Integration capabilities allow AR software to seamlessly connect with existing accounting systems, ERP, CRM, and business intelligence tools. This ensures a smooth flow of data, reduces errors from manual data entry, and enhances overall efficiency by allowing different systems to work together effectively.
Q: Why is user interface important when selecting accounts receivable software?
A user-friendly interface ensures that employees and clients can easily navigate the software, reducing the learning curve and promoting quicker adoption. This leads to increased productivity and less frustration for users, which is essential for maximizing the software’s efficiency.
Q: What should I consider regarding the pricing of accounts receivable software?
Consider the transparency of pricing, including setup fees, transaction costs, and costs for additional features or support. Evaluate the return on investment (ROI) by comparing the pricing against the software’s features and scalability. It’s also important to ensure the software can grow with your business needs.
Q: How important is customer support when choosing accounts receivable software?
Robust customer support is vital for resolving issues quickly and effectively. Look for vendors who offer multiple support channels such as live chat, email, and phone support. Assess the responsiveness and expertise of the support team through online reviews and case studies.
Q: What role does security and compliance play in choosing accounts receivable software?
Security and compliance are paramount. Ensure the software utilizes strong security measures, including tokenization and encryption, and is fully compliant with PCI DSS (Payment Card Industry Data Security Standard) for secure handling of customer card data.
Q: How can accounts receivable software improve cash flow management?
By automating invoicing and payment collection, AR software ensures timely payments and reduces late payments. This enhances cash flow management by maintaining a steady inflow of cash, allowing businesses to plan and allocate resources more effectively.
