ACCOUNTS RECEIVABLE AUTOMATION MARKET ANALYSIS

The global accounts receivable automation market size was valued at US$ 2,927.4 million in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 13.2% from 2023 to 2030. The growth is driven by increasing business needs for automation of accounts receivable processes and rising demand for e-invoicing solutions among businesses. Moreover, the growing need for improved cash flow and reduced days sales outstanding are also driving the market growth.

Global Accounts Receivable Automation Market: Regional Insights

North America is expected to dominate the global accounts receivable automation market during the forecast period, owing to rise in use of accounts receivable automation solutions in the End User industries such as IT and telecom, retail, healthcare, and BFSI. Moreover, the region is witnessing substantial growth in these industries along with growing developments in accounts receivable space. Furthermore, the region has a strong presence of vendors, which is also expected to contribute in growth of the global accounts receivable automation market in the region.

Moreover, Asia Pacific is also expected to show substantial growth in the global accounts receivable automation market during the forecast period. This can be attributed to rise in need for automating day-to-day operational processes in industries. The demand for precise accounting procedure management and on-time processing of payment process from customers is increasing, due to which accounts enterprises in this region are increasingly adopting receivable automation to propel the payment collection. Thus, these factors are expected to drive growth of the global accounts receivable automation market in the region.

Figure 1: Global Accounts Receivable Automation Market Share (%), By Region, 2022

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Global Accounts Receivable Automation Market Drivers:

Need for improving business efficiency by improvement of cash flow, cost reduction, and accounting cycle time to drive the market pace

The use of account receivable automation helps boost predictable cash flow. As per YayPay, nearly 60% of business owners are worried about the cash flow each month, and use of account receivable automation offers solution to such issues. With automation, the need for manually sending emails to customers, sending reminders of due payments is eliminated for account receivable staff. Using accounts receivable automation tools send all these communications to clients automatically. Thus, this is boosting the demand for accounts receivable automation among businesses, which in turn is expected to drive growth of the global accounts receivable automation market during the forecast period.

Rise in adoption of technologies such as cloud computing to boost the market growth

Several businesses are inclining toward cloud-based solutions, which is further propelled by the digitization of enterprises around the world. As per the data of Leftronic, nearly 90% companies  currently have adopted cloud services, with AWS being the main cloud platform. Moreover, the number of businesses shifting their workloads to cloud, due to its better data recovery benefits and mitigating risks. As per Cisco, by 2021, cloud data centers are likely to process 94% of the workloads. Thus, these factors in turn are expected to drive growth of the global accounts receivable automation market over the forecast period.

Global Accounts Receivable Automation Market Opportunities:

Growing demand for accounts receivable automation software due to various factors such as working capital of firms, more invoice disputes, less agent productivity among others is expected to create significant growth opportunities in the global accounts receivable automation market during the forecast period. Increasing number of firms across industries are reviewing accounting automation systems, as companies cannot wait and manage manual accounting challenges. Other factors such as slower collections, and need for standardized, simplified accounts receivable processes is also creating demand for accountable receivable automation.  Thus, these factors will bring several growth opportunities in the market.

Moreover, growing adoption of artificial intelligence technology is also anticipated to create lucrative environment for growth opportunities in the global accounts receivable automation market during the forecast period. With increasing use of cloud-based technology, the use of AI is has also increased among several industries. AI is considered to be in its budding stages, however, is witnessing increasing investments and growing adoption. As per Forbes, the rate of firms investing over US$ 50 million in AI and big data initiatives increased from 39.7% in 2018 to 64.8% in 2020. Thus, growing adoption of artificial technology is likely to drive demand for different automated solutions among various End User verticals.

Global Accounts Receivable Automation Market Trends:

Increasing popularity of partnerships among insurance and finance industries is a major trend

Several insurance and finance industries are adopting partnerships. For instance, in September 2019, FinTech FastPay and AIG entered into partnership for supporting cash flow of media companies by offering them loans in exchange of anticipated AR payments of borrowers. This is expected to create a way for larger, international media and tech clients to access working capital supported by their trade accounts receivable. Thus, this trend is likely to drive growth of the global accounts receivable automation market during the forecast period.

Increasing use of government-regulated digital money for blockchain is a growing trend

The growing use of such digital money regulated by government for blockchain use is becoming important in the accounts receivable automation industry, as this platform can be utilized as management of rewards or alternate currency payment gateways. Furthermore, AI solutions are helping as they analyze invoice data tapping into capabilities such as natural language processing, ML, optical character recognition for capturing customer communications. Thus, development of such technologies is likely to drive demand for accounts receivable automation in the near future.

Global Accounts Receivable Automation Market Restraints:

Complexity of procedure of invoicing and payment management to hinder the market pace

With no automation in place, processing payments and sending invoices can take lot of time in AR departments, especially when it is reliant on paper process. As per the PYMNTS.com, AR teams assign these functions to the most resources with 25% and 23% of staff dedicated to support invoicing and managing payments respectively. Due to the complexity of digitalization, a substantial share of businesses around the world are still sing manual invoices. For instance, as per Wax Digital, nearly 82% of finance departments are overburdened by the high number of invoices, which is processed daily. Such numbers combined with automation processes having mandatory data inputs increases complexity of this process. Thus, this factor is likely to hinder growth of the global accounts receivable automation market during the forecast period.

Concerns regarding privacy and security to impede the market growth

Data security is a major concerns for majority of stakeholders in accounting fields. With rise in number of identity, cybercrimes, frauds; several businesses are becoming hesitant in adopting digital solutions. When there is any data breach, businesses are likely to face loss in a certain share of revenue in both market and damages accountability. Thus, these in turn impacts adoption of accounts receivable automation, which is likely to restraint the market pace. However, vendors are focusing on offering solutions with robust data security and privacy, which is likely to support the market growth in the near future.

Figure 2: Global Accounts Receivable Automation Market Share (%), By Component, 2022

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Global Accounts Receivable Automation Market Segmentation:

The global accounts receivable automation market report is segmented into Component, Deployment Mode, Size of the Organization, and End User Industry.

Based on Component, the market is segmented into Solution, Services. Out of which, Solution is expected to dominate the global market over the forecast period and this is attributed to the growing need for e-invoicing compliance. This is also increasing the corresponding technical complexity required for implementing them. It is specifically applicable for Business to Government supplies, as well as B2B invoices with Tax authority clearance. This acts as a major driver for increasing AR solutions. Thus, the segment is likely to witness strong growth in the near future.

Services segment is also expected to witness significant growth in the near future and this is owing to the increase in demand for AR automation services. The revenue generated through deployment, consulting, integration, and after-sales services that the vendors offer falls under services segment. These services mainly focus on improved customer services. Thus, the growing demand is likely to support growth of this segment.

Based on Deployment Mode, the market is segmented into On-premise, Cloud. Out of which, On-premise is expected to dominate the global market over the forecast period and this is attributed to the various benefits of on premise deployment. This option enables purchasing of only the required and desired products for organization. On-premise accounts receivable software is hosted on the server of an enterprise and needs a complicated setup. However, using this option means only one time payment for user license, giving control over the platform.

Cloud segment is also expected to witness significant growth in the near future and this is owing to the widespread adoption of cloud-based accounts receivable software. This software is the most common. The vendors hosts this software in their server, due to which the setting up and maintaining the software becomes easier. Thus, the segment is likely to show strong growth in the coming future.

Based on Size of the Organization, the market is segmented into Small and Medium Enterprises, Large Enterprises. Out of which, Small and Medium Enterprises is expected to dominate the global market over the forecast period and this is attributed to the growing number of SMEs looking for automation leading to rise in adoption of accounting software such as accounts reconciliation software or accounts receivable automation software. Thus, automation in the workflow process of SMEs is driving growth of the segment.

Large segment is also expected to witness significant growth in the near future and this is owing to the rapid adoption of accounts receivable automation in the large enterprises. As the solution offers a completed end-to-end service that can streamline the entire process of accounts receivable from customer onboarding to credit management as well as risk reporting, this contributes to the better financial outcomes. Thus, this in turn is expected to fuel growth of the market.

Based on End User Industry, the market is segmented into BFSI, IT and Telecom, Manufacturing, Healthcare, Transportation and Logistics, and Other End User Industries. Out of which, BFSI is expected to dominate the global market over the forecast period and this is attributed to the growing automation in the banking sector helping financial institutions in simplifying operations, minimizing operation costs, and optimizing their credit collection process by automating repetitive back-end tasks. This in turn is expected to drive the demand for accounts receivable automation in this segment.

IT and Telecom segment is also expected to witness significant growth in the near future and this is owing to the significant growth of the IT and Telecom industry globally. The demand for accounts receivable automation tools is increasing in this industry, as it helps reduce the time consumed in creating and sending invoices to the customers, management of high volume payments, and timely management of subscription.

Global Accounts Receivable Automation Market: Key Developments

In January 2021, SAP SE sponsored a seed investment in a venture led by employee in account receivable solutions called as Paid Pronto by SAP. Moreover, the company also joined SAP.iO Venture Studio for minimizing late invoices and follow ups, and for solving billing disputes with automated software by the company.

In May 2021, Quadient announced the availability of its SaaS accounts receivable automation solution, Yay-Pay by Quadient to SMEs through the web-based Marketplace of Sage. The company partnered with Sage, who provides cloud business management solutions, and with this partnership, Quadient will build a fast-growing AR automation SaaS solution in the market.

In March 2021, SAP SE acquired a majority stake of Taulia, a working capital management solutions provider. With this acquisition, the company now will be able to help its client companies gaining financial flexibility and stability, as well as contribute to making more resilient supply chains.

In October 2022, Netsmart launched a cloud-based revenue cycle management solution, a new additions to its CareFabric integrated platform. This solutions allows healthcare provider to reduce the hours on account receivable collection by nearly 20%, while it boost cash flow, productivity, and profitability.

Global Accounts Receivable Automation Market: Key Companies Insights

The global accounts receivable automation market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global accounts receivable automation market are Esker Inc., SAP SE, Comarch SA, Oracle Corporation, Bill.com Holdings Inc., SK Global Software, MHC Automation, Quadient(YayPay Inc.), Qvalia AB, Kofax Inc., HighRadius Corporation, Workday Inc., and Corcentric LLC.

*Definition: Accounts Receivable Automation helps businesses improve efficiency and boost cash flow by removing the manual processes that have long occupied their accounting departments. It enables business managers to spend more time on value-added tasks, including financial planning and reporting.