September 20, 2022

What Is Accounts Receivable Software?

Millions of businesses around the world rely on accounts receivable software to simplify their backend processes. From easy invoicing to insightful reporting, this effective modern software can transform your business.

If you’re yet to make the leap away from manual accounting, this article will cover everything you need to know. 

What is accounts receivable software?

Accounts receivable software automates a business’s invoicing, payment and credit management processes. It offers users a collection of tools they can use to manage their finances better.

Companies use accounts receivable software to streamline their daily operations. At the click of a button, you can create invoices, record expenses and track cash flow, all with better accuracy than ever before. And, when the time comes for end-of-year reporting, all the relevant data is in one place. If your business is growing, accounting software is a must. 

Two of the most popular examples of accounts receivable software are Xero, used in more than 180 countries, and Quickbooks, with over 5 million subscribers. Both programs are similar in structure, so let’s explore some of the core features they offer. 

Top features of accounts receivable software

When it comes to the functionality of your AR software, you get what you pay for. This is ideal for smaller businesses that don’t need the same range of features as a larger firm. An accounts receivable system at the most basic price point allows you to create accurate invoices, capture bills and automate reconciliation. At higher tiers, you can access added functionality that will enable you to take your business global. 

Basic Functionality

  • Get paid online
  • Invoice generation 
  • Cash flow management
  • Submit GST/VAT returns

Added Functionality

  • Payroll 
  • Multi-currency invoicing

Get paid online

Many accounts receivable systems can be integrated with payment platforms, allowing clients to pay you by debit or credit card. When choosing an accounts receivable system, look for those that support trusted platforms like Paypal and Stripe. 

Invoice generation 

Not only is it labour-intensive to create your invoices manually, but you also have a greater risk of human error. Automate invoice generation with drop-downs for services and pre-set payment terms for each client. 

Cash flow management

By consolidating your sales, invoicing and expenses through one system, you can keep track of your cash flow 24/7. Reduce oversights and spot potential bottlenecks before they occur with regular reports and insights.

Submit GST/VAT returns

Becoming GST or VAT registered is a right of passage for any successful business, but one that comes with more than its fair share of headaches. AR software eases growing pains by making it easier than ever to file your monthly, quarterly or biannual returns.

Payroll

Keep your employees happy with easy-to-use accounting software that makes payroll a breeze. From superannuation contributions to taxation rates, onboarding new staff and paying them on time has never been easier. 

Multi-currency invoicing

Cast your net wide with the functionality of multi-currency invoicing. Invoice clients in their chosen currency and let your AR software take care of the exchange rate conversion when the money hits your account.  

What are the benefits of using accounts receivable software?

By now, you’re in no doubt that accounts receivable automation is a robust system for businesses of all sizes. But how can it help yours? Let’s take a look at some of the direct benefits you can expect from moving away from manual processes. 

  • Get paid faster
  • Save valuable time
  • Invoice anywhere
  • Gain payment cycle insights
  • Enhance cash flow 
  • Improve customer service
  • Decrease paper usage

Get paid faster

Automation allows you to move your customers from order to payment faster and more efficiently than with manual processes. Transform a quote into an invoice with a click, then send it off with a range of payment options. 

Save valuable time

In any business, time is always at a premium. Whether it's your own or that of your employees, time is money. By automating your accounting processes with AR software, you can spend less time on paperwork and more on the bigger picture.

Invoice anywhere

With cloud-based accounts receivable software, you can access your financial systems by mobile from anywhere in the world. Send customers their invoices whether you’re on-site, working from home, or on holiday.

Enhance cash flow

Late payments can slow your business to a crawl and can prevent you from paying your expenses. Businesses that use AR automation software have a better grasp of their receivables and their cash flow position. By speeding up your invoicing and integrating late payment automation, you can achieve a healthier cash flow than you thought possible.

Improve customer service

Unclear invoices and manual bank transfers can leave customers feeling undervalued and frustrated. Instead, accounts receivable software allows you to send professional, consistent invoices and offer a wider range of payment options, whether BACS, Paypal, debit or credit card. 

Decrease paper usage

Last but certainly not least, businesses can reduce their paper usage by transitioning to an online system. Paper invoices, envelopes and cheques all add up over the course of a year and are an unnecessary part of the accounts receivable process. Reduce your carbon footprint by digitising your systems.

What doesn’t accounts receivable software do?

With such a wide range of features and benefits, you might be surprised to hear that there are some things that AR systems can’t help with. Some features are only available with premium packages, and others are missing altogether. 

Notably, credit collection or “debtor chasing” features aren’t robust in either of the main software options. While Quickbooks offers some basic functionality, Xero has no option to chase late payments.

Until recently, Xero users had to manually chase unpaid invoices, but there is now the option to integrate Latechaser. 

Seamlessly linking into your Xero platform, Latechaser allows you to set fixed penalties or interest charges for late payments. Users who combine Xero with Latechaser receive payments 40% faster than those who don’t, making it a valuable tool in your financial arsenal. 

Learn more about how Latechaser can reduce late payments today.