Automating Accounts Receivable Using RPA

Accounts receivable (AR) is the process of managing the money that customers owe to a business for the goods or services they have purchased. AR involves tasks such as issuing invoices, recording payments, sending reminders, and reconciling accounts. These tasks are often repetitive, time-consuming, and prone to human errors.

Robotic process automation (RPA) is a technology that uses software robots or digital workers to automate business processes by mimicking human actions. RPA can perform tasks such as data entry, data extraction, data validation, and data manipulation faster, more accurately, and more consistently than humans.

By automating AR using RPA, businesses can benefit from:

- Improved cash flow: RPA can speed up the invoicing and payment collection process, reducing the days sales outstanding (DSO) and increasing the cash flow.

- Reduced operational costs: RPA can eliminate the need for manual labor and reduce the overhead costs associated with AR.

- Enhanced customer satisfaction: RPA can provide timely and accurate invoices, reminders, and receipts to customers, improving their experience and loyalty.

- Increased compliance: RPA can ensure that all invoices and payments are recorded and reconciled according to the accounting standards and regulations.

To illustrate how RPA can automate AR, let's look at an example of a typical AR process and how it can be transformed using RPA.

Example of AR process before and after RPA

Before RPA:

- A sales representative closes a deal with a customer and sends the order details to the AR department via email.

- An AR clerk manually enters the order details into the accounting system and generates an invoice.

- The AR clerk manually sends the invoice to the customer via email and prints a copy for filing.

- The AR clerk manually updates the AR ledger with the invoice details and the due date.

- The AR clerk manually checks the bank account for payments from customers and records them in the accounting system.

- The AR clerk manually sends payment reminders to customers who have not paid by the due date via email or phone.

- The AR clerk manually reconciles the bank statements with the AR ledger and identifies any discrepancies or errors.

After RPA:

- A sales representative closes a deal with a customer and sends the order details to the AR department via email.

- An RPA bot automatically reads the order details from the email and enters them into the accounting system and generates an invoice.

- The RPA bot automatically sends the invoice to the customer via email and saves a copy in a digital folder.

- The RPA bot automatically updates the AR ledger with the invoice details and the due date.

- The RPA bot automatically checks the bank account for payments from customers and records them in the accounting system.

- The RPA bot automatically sends payment reminders to customers who have not paid by the due date via email or phone.

- The RPA bot automatically reconciles the bank statements with the AR ledger and identifies any discrepancies or errors.

As you can see, RPA can automate most of the tasks involved in AR, saving time, money, and resources for businesses.