Accounts receivable (AR), including invoice issuing and payment processing, is one of the core processes in a company’s financial operations. The rising adoption of e-invoices has spurred more firms to acquire AR automation software to support customer demand and respond to digital transformation. My recently published report, The AR Invoice Automation Landscape, Q1 2023, will help you understand the value to be expected from AR invoice automation vendors, learn how vendors differ, and select one based on their size and market focus.
Forrester defines AR invoice automation as:
Software that enables suppliers to present electronic invoices to customers in the format they prefer, track the status of those invoices as customers review and approve them, match customer payments to open invoices, manage the timing and mode of payments, and manage nonpayment issues such as credit, collections, and deductions.
Finance and payment professionals will face a wide range of vendor options and should pay attention to the following market dynamics.
- Main trends: Cloud-based integrated solutions are gaining ground. Businesses increasingly demand integrated AR and accounts payable capabilities and seek AR invoice automation solutions that are enterprise-resource-planning-agnostic. Cloud-based modular solutions have gained strong traction recently because they can integrate with different systems more seamlessly than on-premises solutions, be frequently updated with new automation features such as models and rules, and be more scalable and cost-efficient in the long term.
- Primary challenge: disconnected systems and the lack of digital payment options. Many businesses still use multiple disconnected systems to manage AR. Siloed systems result in increased complexity, operational inefficiencies, data integration challenges, limited reporting, and too many reconciliation points. Businesses are in urgent need of a fully integrated and unified solution that can support multiple digital payment methods.
- Top disruptor: Predictive AI is the new differentiator. Most vendors in this report plan to invest more in artificial intelligence and machine learning. They are transitioning to automated manual invoicing processes and building advanced AI-based predictive analytics capabilities. Powered by predictive AI, clients will have more visibility into and control over their cash flow. Also, they will be able to make financial decisions in a timely manner — which is especially important in uncertain times.
In the report, we identified 14 AR invoice automation vendors with relevant revenues. Based on their global AR invoice automation revenues, we segmented them into three market presence segments — large, medium, and small — and identified four core use cases for this market: electronic invoice delivery and presentment, customer payment management, collection management, and cash application (applying payments to invoices).