Workflow Guide: Accounts Receivable (AR) Automation

This is RootFi's Accounts Receivable Workflow Guide, which helps Accounts Receivable companies automate the creation and reconciliation of invoices, invoice payments, invoice credit notes, and sales orders with their customer's respective accounting systems.

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Automation transforms how your Accounts Receivable (AR) product help your business customers generate, track and collect payments for invoices. The challenge, however, lies in seamlessly reconciling these invoices with the range of accounting platforms used by various customers.

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Accounting integrations play a pivotal role in bridging your automated Accounts Receivable (AR) solution with your customers' accounting systems. This document is a step by step guide that details the process of using accounting integrations (via RootFi's Unified Accounting API) to develop an automated Accounts Receivable (AR) product with reconciliation.

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What is the Accounts Receivable (AR) Workflow?

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Automating the AR workflow involves the following key steps:

1. Invoice Generation: Automatically create and send invoices based on services rendered or products sold.
2. Payment Tracking: Monitor incoming payments and match them against outstanding invoices.
3. Reminders and Collections: Send automated reminders for overdue invoices and manage collections for delinquent accounts.
4. Reconciliation: Ensure payments are accurately reflected in the accounting system.

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Integrating with accounting systems is vital for automating these processes, ensuring that both invoices and payments are processed and reconciled accurately.

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The Role of Accounting Integrations and RootFi's Unified Accounting API

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Building and maintaining integrations with various accounting platforms in-house can be a daunting task- the time and expert resources required come at a high cost.

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Related: Use our API cost calculator to estimate the cost of building integrations in-house.

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RootFi's Unified API provides a more efficient solution by offering:

• Broad Connectivity: Access to multiple accounting platforms, ensuring comprehensive coverage for all current and future customers.
• Accelerated Go-to-Market: Integrating once with a Unified API significantly reduces the time and effort needed to test, launch and scale an integrated solution.
• Cost Reduction: Using RootFi eliminates the expenses associated with developing custom integrations.
• Ease of Maintenance: Offloads integration maintenance responsibilities to RootFi, allowing your team to focus on core product enhancement.

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Leveraging RootFi's Unified API accelerates the development of your AR automation solution and enhances its reliability and value to customers, ensuring seamless integration with their preferred accounting platforms.

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How to Build an Automated Accounts Receivable (AR) Solution with a Unified Accounting API

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This step by step guide can help expense management companies use RootFi’s Unified Accounting API to automate their customers' invoices, invoice payments, invoice credit notes, and sales orders reconciliation with their respective accounting systems.

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Handle all of the common workflows required to offer an Accounts Receivable/ Invoice Payment product to your customers. Here is a quick summary of all the steps involved:

1. Use RootFi’s Auth Flow to connect a business customer's accounting system. More Information here.
2. Use the Invoice API to create an Invoice and link Customers, Sales Orders, Items, and Accounts to the respective Invoice.
3. Upload Documents to their respective Expenses/Invoice/Bill
4. Create and Link Invoice Payments and Invoice Credit Notes to Customers and Open Invoices.

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Set Up an Automated Accounts Receivable (AR) Workflow with Accounting Integrations (Step-by-step Guide)

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Step 1 (One-Time Activity): Connect with your customers’ accounting platform

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RootFi provides two convenient options to connect with your customers’s accounting platform:

1. Use RootFi’s Invite Link, a convenient and secure URL, or
2. Embed RootFi’s Connect SDK into your application

The Invite Link requires no code to use, making it suitable to get started without a developer. You can customize and white-label this onboarding process with RootFi’s Connect SDK, allowing authentication to occur natively in your product.

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Either way, your customers will be guided through a simple authorization flow to connect their respective accounting platforms to your product.

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Learn more about how to offer your customers a seamless onboarding process for data authorization.

1. Use our Dashboard or APIs to connect a customer’s accounting platform
2. Use the POST/Invite-Link API.
3. Name your customers’ company.
4. A unique company_id will be generated once your customer completes the authentication flow. This company_id will be used to read and write data to their accounting platform.

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Step 2 (Recurring): Create Invoices

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Use  POST/Invoice API to create an invoice.

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Here are some important points to note:

1. Customer - This is the customer linked to the Invoice. Use GET/contacts or POST/contacts APIs. Please note a Contact ID is required to post an Invoice, so if the customer in question does not already exist on the accounting platform then you will first have to create a new customer using the POST/contacts API.
2. Items: Every invoice contains multiple items (either goods or services) that were sold as part of the invoice, each of which credits certain accounts depending on what comprises their cost of goods sold. The GET /items API lets you fetch all items in the business entity’s catalogue.
3. Sales/Purchase Order: Most companies usually issue Sales or Purchase Orders before an Invoice is generated. Use GET/Sales_Orders to get the Sales order ID, which can be passed in the POST/Invoice API to link the purchase order and bill.
4. Credit Account (Not Required) - When you use the POST/invoices API, invoices are automatically placed under the Account - Category= ‘asset’ and account_type= ‘accounts_recivable’

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Step 3 (Recurring): Upload Documents

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The POST/ documents API lets you upload a file to an expense, invoice, or bill.

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Step 4 (Recurring): Link Invoice Payment and Credit Notes

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An Invoice Payment debits an accounts receivable account and credits an asset account.

1. Use the Post/invoice_payments API to create and link Invoice payments.

The Invoice credit note can be created and immediately applied to a bill, or it can be created and left unapplied.

1. An Invoice credit note can be created using the POST/Invoice_credit_note API and is linked to a Customer.

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Learn how to build an Automated Accounts Receivable (AR) product

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The steps above explain how to manage the most common actions of an automated Accounts Receivable (AR) product with RootFi’s accounting integrations. If have more questions or would like to build an automated Accounts Receivable (AR) product with RootFi’s Unified APIs, we’d love to help you get started. Speak to our integration experts today!

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