In 2020, companies were forced to accelerate their adoption of digital products and services to stay relevant in a rapidly changing business environment. In doing so, they found that software based on intelligent design and well-calibrated execution can help them unlock higher levels of operational efficiency and improve customer engagement levels. However, this evolution has not been consistent across various departments within each company.
Lenders still rely on outdated communication methods and manual processes to manage accounts receivable, leading to inefficient collections, cash flow issues, and poor customer experiences. In a survey conducted by national consumer credit counseling group, 58 million Americans do not pay their bills on time, including 34 million who are late paying credit card bills. To improve collections and better manage accounts receivable, businesses must adopt modern technology to communicate with customers, manage data, and procure payment. Here are three reasons businesses should embrace digital tools to revolutionize their accounts receivable strategy.
3 Reasons Businesses Should Digitize Their Accounts Receivables Strategy
Manual accounts receivable processes can cause inefficiency within finance teams
Productivity can be a major challenge for staff who must spend the bulk of their day calling customers, sifting through customer master data to remove duplicates, and coordinating the exchange of information and documents with customers. This can cause intense frustration among both customers and lending staff.
A recent study by McKinsey revealed that the collection and processing of data are primed for automation, given their repetitive and predictable nature. Using AI, businesses can do more than automate predictable data management tasks. More complex processes such as credit analysis, risk profiling, and customer communications can also be automated as machine learning processes autonomously become more capable over time. This allows organizations to focus on high-value tasks, such as customer procurement and business development.
Using ineffective communication channels increases the likelihood of late payments
Late payments are a scourge to any business, making it difficult to maintain positive cash flow and forcing companies to spend more time and resources during recovery and collection. However, late payments are also an inevitable outcome for lenders, healthcare providers and many other businesses. The average payment in the U.S. is 19 days late. A major reason for this consistent delay is that ineffective and outdated communication methods are used to facilitate repayment. Paper statements and phone calls are still widely used by lending teams, but customer preferences have changed. Using outdated methods of communication only creates more payment delays.
Voicemail messages and paper statements do not allow customers and organizations to share information in real time. When relying on human input and manual processes, statements will inevitably be sent out with an error or to the wrong party. For these cases, businesses should adopt payment systems with integrated communications systems to allow for the easy transfer of invoices between all stakeholders, ensuring that all customer communication is prompt and concise.
Information silos prevent business leaders from predicting cash flow challenges
A key benefit of adopting AI-based software is the democratization of data across business silos. Data management can be a challenge for many companies. However, for businesses and lenders that conduct business on credit, having access to current data can mean the difference between operating for another month—or having to fold. Business leaders must be able to predict cash flow for months in advance to account for the possibility of late payments or unforeseen market changes. Analog communication creates a massive challenge for businesses. Information changes by the time it reaches the desks of decision-makers. Invoices have been paid, defaulted upon, or edited.
To get a holistic overview of their business’s financial health, a business leader must ensure that their staff can share information in real time. The addition of modern data analytics software can even help business leaders augment the data they receive with behavioral analytics that allows them to predict future cash flow challenges.
How to Effectively Introduce Digital Tools to Existing Accounts Receivable Processes
To remain competitive in an increasingly digital world, businesses must be able to collect and process data, and communicate effectively and efficiently. However, this can be a technically challenging undertaking for many businesses. Introducing a white-label accounts receivable management software allows businesses to improve their collection strategy, maintain high levels of customer engagement, and reduce operational costs, all while keeping this process in line with their overall branding and communication strategy.
Remitter
To find out more about how your business can make use of effective, efficient, and convenient digital tools to revolutionize your accounts receivable department, schedule a demo with us today.
