Accounts receivable software covers what happens between issuing an invoice and having the cash in the bank, correctly applied. It decides how much credit to extend, delivers invoices the way each customer wants them, chases what is overdue, gives customers a place to pay, and matches each incoming payment to the invoices it settles.
What it does
For a business selling to other businesses, getting paid is a process with many steps. Credit modules score new and existing customers and set limits. Invoice delivery sends invoices by email, e-invoice or upload to the customer's own accounts payable portal, which many large buyers require. Collections modules prioritise overdue accounts, send reminder sequences, log promises to pay and assign work to collectors. Payment portals let customers pay by card or bank transfer and see their statement. Cash application reads bank files and remittance advice and matches payments to open invoices, including short payments and deductions, which are then routed to dispute workflows.
AR data also matters for the books. The allowance for credit losses on receivables is estimated from ageing and history; for IFRS reporters, IFRS 9 sets the requirements for expected credit losses on financial assets. AR software provides the ageing and collection history that estimate uses.
Who uses it
Credit and collections teams work in it daily. Cash application specialists clear unmatched payments. Customer service handles disputes. The controller and treasurer read days sales outstanding and cash forecasts from it.
The parts a typical product has
- Credit applications, scoring and limits
- Invoice delivery, including AP portal submission
- Collections worklists, dunning sequences and promise-to-pay tracking
- Customer payment portal
- Cash application from bank files and remittances
- Disputes and deductions management
- AR reporting, ageing and cash forecasting
Where it meets other categories
Invoices originate in billing or the ERP. Cash receipts arrive through banks that treasury manages, and short-term collections forecasts feed its cash forecast. Applied payments post to the ledger, and the ageing supports reserves at the close. Several vendors sell AR alongside AP automation on one platform.
Questions to ask a vendor
- Which ERPs do you connect to, and is cash application posted back automatically?
- Which customer AP portals can you submit invoices to?
- How is the match rate for cash application measured, and on what data?
- Do you process payments yourselves, and what are the fees for card and bank payments?
- How are disputes and deductions routed to sales or customer service?
- What does a collector's daily worklist look like?