Transforming AR Through AI

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Transforming AR Through AI

By Tracy Bracken, Director - Credit & Collections Oldcastle Infrastructure

When looking at today’s business landscape and in particular the world of credit and AR, you are forced to accept some common realizations. The lines of demarcation between people and technology are becoming increasingly blurred. Where once you had printouts to work off, you then had Excel spreadsheets; where you once had Excel Spreadsheets, you then had (true) databases. Then came along automated scoring models along with auto dunning and payment portals. But how best to incorporate all of this? And what does it do for credit departments?

Well, you cannot answer what it does for you unless you are stringently aware of your departmental and industry shortcomings. What do you consider the primary drivers to inefficiency? Common challenges I see are wait times, excess AR, lagging communication, inefficient movements, and human error as a few of the most common. Luckily though, these tend to be easily solvable issues with the right system(s).

Wait Times.  How long does it take the average analyst to gather data/backup to supply to customers? If they are gathering information from multiple sources and can’t easily combine data from different workstreams (think POD’s and invoices), then chances are they are spending roughly 30 percent too much time waiting to service their customers. Automating backup retrieval through AI eliminates wait times and cuts down on conversion as well (moving from one system to the next).

Excess AR.  How much is AR sitting out in your portfolio that really should not be there? Availed discounts, short paid invoices, unapplied cash, etc. are all log jammers. There are tools available today in AI that will auto-detect, filter, and handle these types of deductions without ever being touched. Or you could spend all your time handling issues that makeup only a small portion of your portfolio instead of wasting your time more wisely. Not only will the company benefit, but your customers will also as well when they can see less “junk” on their statements making payment processing and account reconciliation necessarily simpler.

"For companies growing in revenue and internal infrastructure, incorporating AI is an easy win for credit and collections teams looking to provide sustainable growth and scalability"

Lagging Communication.  Here, we are talking about having an end to end Credit System that will allow you to work between functionalities making communication more efficient and effective. Consider a check that comes in with no remittance that can be applied automatically, where deductions were taken and automatically disseminated to the people that can remedy them, that leaves notes on account of what happened and notifies the customer of the situation all without lifting a finger with all systems speaking and working together. How much time would this save your team daily? How much better would your customer relationships be? This is no extended fantasy. These functionalities are now becoming familiar with new AI infrastructures.

Inefficient Movement.  Approximately 70 percent of collections calls are made to customers who would have paid, regardless of whatever contact is made by you. So instead of spending that time on more challenging customers, chances are your team is spending their time on the customers that require the least amount of attention. AI platforms are very adept at identifying and concentrating risk efforts, so the team is not spinning its wheels over half the time just doing “busy work.” If you are going to work, add value. “Smart Lists” that drive employee behavior to the correct functions needed to drive daily results, Dunning frequency that is targeted and set by individual customer behavior and credit and cash application processes that eliminate manual movement, scale businesses, and drive results are not the future. They are the “NOW.”

Human Error.  How many of your processes are reliant on humans being perfect? Are you safe from an audit? Is your process foolproof?

At every phase of the credit cycle (credit app/underwriting/approval or decline/credit control/documentation/ collections/cash apps) there are areas of risk not just with onboarding and servicing a customer but to validate the company is taking on an acceptable risk, being able to notate why it is acceptable, communicating that to management as well as being audit safe. An automated AI platform can provide the controls necessary to bring ease to your process, cut down on employee training, standardize your systems, and provide a structure beneficial to the customer base as well.

For companies growing in revenue and internal infrastructure, incorporating AI is an easy win for credit and collections teams looking to provide sustainable growth and scalability. AI can do for C&C Departments now what Excel did, well, a long time ago and is the biggest game-changer in this industry to date in regards to efficiency, scalability, and communication.

It is simply no longer feasible to hope that you can onboard, train 50 perfect employees, and then retain these employees. Focusing on the right systems will allow your management team to focus more on the employees you have and drive results to meet your goal. Because being left behind is not an option.

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