AR Automation ROI: How to Calculate It

What is the ROI of AR automation?

The return on AR automation comes from three places: cash freed by getting paid faster, time saved on manual chasing, and bad debt avoided. You do not need a complex model to size it. A back-of-the-envelope calculation from your own aging report is usually enough to make the decision clear.

1. Freed cash from lower DSO

Take the number of DSO days you could remove and multiply by your daily revenue (annual revenue divided by 365). A team at $20M in revenue that cuts DSO by 12 days frees roughly $650,000 in working capital. That cash is yours to deploy instead of financing.

2. Hours saved

Estimate the hours your team spends each month chasing payments, submitting to portals, and matching cash, then multiply by a loaded hourly rate. Automating that work commonly returns about 26 hours a month per team, which is most of a full work-week.

3. Bad debt avoided

Invoices that age into bad debt are pure loss. Earlier, consistent follow-up keeps accounts from reaching that point, so a portion of what you would have written off becomes recovered revenue.

A simple worked example

For a $20M business cutting DSO 12 days: about $650,000 in freed cash, plus roughly 26 hours a month saved, plus reduced write-offs. Against a flat software subscription, the payback is usually well within the first quarter.

How Monk drives ROI

Monk customers see a 40 percent or greater reduction in DSO and about 26 hours a month back to the team, while resolving more than 90 percent of issues without escalation, with a go-live measured in days.