5 Common Challenges Faced by AR Teams That Can Be Overcome Through Automation

Contents

5 Common Challenges Faced by AR Teams. 1

1. Slow Payment Cycles and Manual Invoicing. 1

2. Reconciliation Headaches and Missed Payments. 2

3. High Days Sales Outstanding (DSO). 2

4. Disorganized Ledgers and Fragmented Tools. 2

5. Lack of Communication and Follow-Ups. 2

Bonus: Weak or Outdated AR Policies. 2

Spotting Deeper Issues Behind the Numbers. 3

The PDF Problem: Too Much Paper, Not Enough Action. 3

How Automation Solves These Issues?. 3

Real-World Solutions in Action. 3

Time to Let Go of Manual AR!. 4

Automate your AR with NCRi 4

FAQs. 4

Did you know that over 54% of B2B midmarket businesses still rely on manual methods like spreadsheets to manage their accounts receivable and report regular late payments as a result? That’s an astounding reality in an age where automation is transforming everything from marketing to manufacturing.

Nowadays, cash flow is king. But what happens when your accounts receivable (AR) team is constantly chasing payments, juggling outdated spreadsheets, and losing hours to manual tasks? Welcome to the modern-day struggle of many AR departments.

For AR teams, delayed payments, reconciliation headaches, and disorganized ledgers aren’t just annoying—they’re a direct hit to cash flow, operational efficiency, and business growth.

So, why are so many teams still stuck in the slow lane?

While these accounts receivable challenges are common, the good news is—they’re not permanent. The answer often lies in legacy systems, fragmented workflows, and outdated policies. But the solution? It’s simpler than you think—and smarter than ever before.

 With the right automation tools, your accounts receivable process can go from reactive and chaotic to proactive and streamlined.

Let’s explore five of the most pressing issues accounts receivable teams face and how automation is solving them, one invoice at a time!

5 Common Challenges Faced by AR Teams

1. Slow Payment Cycles and Manual Invoicing

One of the most common accounts receivable challenges is slow payment cycles. Whether it’s delayed invoicing, misplaced paper checks, or manual entry errors, the lag in processing severely affects cash flow. Even if you send invoices on time, manual systems are just not built for speed or efficiency.

Enter automation. By digitizing your invoicing and offering customers digital payment methods, you reduce delays, minimize errors, and keep the cash moving. Automated systems also allow for real-time updates, so no one’s guessing if the payment was received or not.

2. Reconciliation Headaches and Missed Payments

Manual reconciliation might work when you’re a small business with a handful of clients, but once you scale, things get messy. Payment mismatches, missing records, and time-consuming cross-checks become daily nightmares.

This is where AI-powered tools shine. AI can now instantly match payments to the right invoices, flag discrepancies, and even alert your team to unusual activity. If you’re wondering how to manage accounts receivable challenges effectively, smart reconciliation tools are a great place to start.

3. High Days Sales Outstanding (DSO)

High DSO means your company is waiting too long to get paid. That delay can cripple your cash flow and impact your ability to invest back into the business. In fact, 54% of businesses report receiving payments past the due date, with 33% delayed over a month. That’s a lot of money just sitting in limbo.

Automation helps lower your DSO by sending reminders, enabling recurring billing, and even offering early payment discounts through customizable workflows. These tools are essential in providing ways to improve accounts receivable collections—and ultimately, cash flow.

4. Disorganized Ledgers and Fragmented Tools

Is your AR team using one tool for invoicing, another for reporting, and spreadsheets for tracking? That setup almost guarantees errors and inefficiency. Disorganized ledgers result in missed follow-ups, incorrect balances, and inaccurate reporting.

Cloud-based AR automation platforms simplify everything by centralizing your entire workflow. Instead of scattered systems, everything from invoicing to collections is visible in one dashboard. These tools address receivables management problems and solutions holistically, not in isolation.

5. Lack of Communication and Follow-Ups

Another often overlooked issue is poor communication. Whether it’s unclear invoice terms or failure to follow up on overdue payments, a lack of consistent contact leads to delayed collections.

Automated communication tools—like email reminders, chatbot support, and customer portals—bridge this gap. Not only do they improve customer experience, but they also ensure your team isn’t wasting time on avoidable follow-ups. If you’re drafting or reviewing an accounts receivable policy PDF, make sure communication protocols are part of it.

Bonus: Weak or Outdated AR Policies

Many companies have written policies that no one follows—or worse, no one remembers. Credit terms that aren’t enforced or inconsistent discount practices can quietly bleed revenue.

With automation, you can embed those policies directly into your workflows. For instance, if your policy offers a 2% discount for payment within 10 days, automation ensures that invoice reflects the offer and reminders are sent accordingly. Strong AR automation also supports documentation like an accounts receivable management PDF, making training and policy enforcement easier.

Spotting Deeper Issues Behind the Numbers

Sometimes, the root cause of poor AR performance isn’t operational—it’s analytical. For example, unusually low practice collections in the past month might point to underbilling, untrained staff, or economic slowdowns in your client’s industry. Automation gives you access to real-time data and insights, so you can act fast and avoid larger financial setbacks.

The PDF Problem: Too Much Paper, Not Enough Action

Still managing your AR process through printed or emailed forms? Many companies rely on outdated documentation, such as accounts receivable challenges and solutions, PDF files that are rarely updated. PDFs are great for reference, but they don’t solve problems. Automation replaces static documents with dynamic tools, enabling real-time responsiveness and better decision-making.

How does Automation Solves These Issues?

Let’s break it down:

• Automated invoicing ensures timely and error-free billing.
• Digital payments reduce processing time and make it easier for clients to pay.
• AI-powered reconciliation minimizes human error and accelerates close cycles.
• Real-time dashboards improve visibility for finance teams.
• Smart communication tools keep your clients engaged and on schedule.
• Policy embedding ensures rules are followed without relying on memory.

In essence, automation isn’t just a tech upgrade—it’s a complete transformation of your cash flow ecosystem.

Real-World Solutions in Action

Imagine you’ve just upgraded your AR system with automation tools. Your invoicing is instant, your payments are tracked in real time, and your collections have never looked better. Now you’re not just reacting to issues—you’re preventing them.

This is the future that companies like NCRi are already making a reality. Businesses that partner with AR automation providers report faster payments, reduced DSO, and increased operational efficiency. Whether you’re just starting out or scaling fast, the time to automate is now.

Time to Let Go of Manual AR!

Managing AR manually is like trying to drive on the highway with a bicycle—it’ll get you somewhere, but not fast or efficiently.

Whether you’re struggling with DSO, communication gaps, or policy enforcement, automation offers a modern, scalable solution. No more digging through accounts receivable policy PDFs or manually reconciling bank statements.

Automate your AR with NCRi

At NCRi, we’ve helped dozens of organizations streamline their accounts receivable process using customized automation tools tailored to your industry. Whether you’re looking to reduce DSO, improve collections, or eliminate reconciliation errors, we’ve got the tools, team, and technology to get you there.

Don’t let outdated AR processes hold your business back.

Ready to transform your accounts receivable challenges? Connect with NCRi today and streamline your cash flow!

FAQs

What is the purpose of accounts receivable?

The purpose of accounts receivable (AR) is to track money owed to a business by its customers after goods or services have been delivered. It helps companies maintain healthy cash flow by ensuring timely collections and managing outstanding invoices efficiently.

What is accounts receivable in medical billing?

In medical billing, accounts receivable refers to the money healthcare providers are owed by patients or insurance companies for services already rendered. AR teams in healthcare track claim submissions, follow up on denials, and work to reduce the time it takes to collect payments.

How do you reduce accounts receivable days?

You can reduce accounts receivable days by automating invoicing, offering multiple digital payment options, sending timely reminders, and setting clear payment terms. These steps help speed up collections and improve your cash flow.

What is accounts receivable management?

Accounts receivable management is the process of tracking, collecting, and managing customer payments for credit sales. It involves billing, setting payment terms, sending reminders, reconciling payments, and minimizing the risk of bad debt.

Why is accounts receivable important?

Accounts receivable are important because it directly affect a company’s cash flow and financial health. Efficient AR management ensures businesses get paid on time, reducing the risk of cash shortages and improving their ability to invest and grow.

Why is accounts receivable considered an asset?

Accounts receivable is considered a current asset because it represent money that a company is expected to receive within a short period (usually 30 to 90 days). It’s recorded on the balance sheet and contributes to a business’s overall liquidity.

What is an accounts receivable aging report?

An accounts receivable aging report is a financial document that categorizes outstanding invoices based on how long they’ve been overdue. It helps AR teams prioritize collections and identify payment issues or high-risk customers.

What does accounts receivable do?

Accounts receivable play a crucial role in ensuring a business gets paid for the products or services it provides on credit. AR teams manage invoice creation, track payment status, follow up on delays, and reconcile accounts to maintain accurate financial records.