4 Factors That Make Collections Difficult for Finance Analysts

What you’ll learn


  • Learn about the 4 factors that make AR collections difficult for finance analyst
  • Learn how adaptive Accounts Receivables (AR) solutions help to improve collections drastically

Introduction

If you are a financial analyst in the current volatile market situation, then it is likely that you are wrestling with divergent forces in the current market. The current Covid crisis has created a noticeable dent in the revenue of many industries.

While you can fix some of it with a little adjustment here and there, short-term solutions will not solve the cause. Our approach at HighRadius has always been to dive into the roots of the problem. In this case, we have decided to take you on a trip on the day of a finance analyst to understand improvement areas in the accounts receivable department in a mid-sized business.

Collections weigh heavily in an analyst’s daily routine

A finance analyst’s day in a mid-market business can be described as ‘eventful’. As it starts, analysts go over their worklist for the current day. This includes the review of consumer accounts they need to follow up based on previous conversations and identifying delinquent accounts to focus on, for the rest of the day.

Collection Manual Process Graphic

AN ENTIRE DAY IN THE LIFE OF A FINANCE ANALYST

Finance analysts have to face situations with conflicts that can have a lasting impact on an hourly basis. Often, it is challenging to seek real-time information of their customers from various sources. As a result, they have to work with disjointed information that can result in false promises from customers.

You are getting stuck with sticky notes

The analysts’ job is to negotiate maximum payments or promises of payment from customers. However, their greatest source of information is often the sticky note. Analysts mostly prefer to jot down important aspects of any customer interaction on sticky notes. Why? Because it’s easy to find, possible present on every desk of their workstation. But apart from its environmental implications on deforestation, sticky notes are very easy to get misplaced. This outdated resource makes it difficult for the analyst to sort through past interactions with their customers.

85% additional growth seen in organization

With a lot of customer data, comes a lot of responsibility

Today data is the key to the success of a business and analysts take their data seriously. Since they have multiple roles and responsibilities in their organization, it becomes difficult for them to keep track of the right data. This data can potentially help the analyst to resolve accounts faster, or prolong the opportunity cycle to resolve such accounts if the data is incorrect.

With too much responsibility, analysts turn ineffective

Imagine being in the shoes of a finance analyst. Your responsibilities could supersede your expectations and can lead you to overutilize the resources around you. Analysts in most mid-sized businesses in the USA are majorly involved in simultaneous operational processes apart from just collections involving cash reconciliation, credit review, and dispute resolution. This can create a bottleneck that affects the overall AR operational efficiency.

Graphic shows what 45% of 300 senior Finance Executive expects from employee

For a Blue-Chip AR analyst, digitization offers the necessary tools, which has a ripple effect across all their operations. In the past, making a strategic change across the business was a challenge. But in today’s market, seamless integration with the technology has paved a way to revitalize AR operations with minimal fuss.

You are working with old collection methods

Graphic showing a Manual AR frustrated VS Optimized AR Analyst relaxing

When you work with outdated technology, you are likely to face a collections gridlock. These include AR problems like increased bad debt from smaller accounts, processing and analyzing of new and current accounts, and managing deductions.

Apart from your work-life it also paints a picture of distrust from customers. On the other hand, how can analysts collect faster from their delinquent customers? In short, they need to be vigilant and diplomatic.

12% of customer on USA blamed debt collectors for false statement and Representation

Disputes over deductions: Treading between controversy and ease. Let’s be clear, deductions should be a separate entity to collections. When unmanaged they can consume an undue amount of time and resources. A dispute management solution can take care of faster deductions through the early capture of claims and disputes.

The rationale to harness technology

Here’s some rationale to help analysts and CFOs understand why they should adopt technology to create a significant impact on their revenue.

  • With the right technology, comes automation. The power of automation is second to none. With the right sets of rules, any business can define its collection strategies. These strategies along with automation, analysts would be a click away to determine their customers’ credit score
    30%-past due can be reduced with AI-graphcis
  • Automate AR aging buckets by setting the organizational rules in the collections dashboard. The dashboard would be the single source of truth for all customers. Such an AR dashboard would allow for seamless collaboration with other AR analysts. Analysts can take notes and compare notes in the dashboard itself. Notepads/sticky notes would now be a thing of the past.
  • Never miss following up with delinquent customers with an intelligent payment tracker. This tracker would gently nudge analysts to follow up with accounts, proactively. Struggling to send the correct correspondence to customers? The AR dashboard has a plethora of email templates that make up for every situation on any type of customer. Analysts can also opt to call customers directly from the dashboard to avoid any serious hassle.
    Graphic showing 64% business hurt due to overdue payments
  • Auto Generate reports and dashboard, on the go. Reports on important accounts, operational expenditure, and overall revenue could help in assessing essential v/s non-essential strategies for any business. Track KPIs on the dashboard and plan on how to collect faster from unpaid customers.
    ‘SOME HOURS’ IN THE LIFE OF A FINANCE ANALYST

‘SOME HOURS’ IN THE LIFE OF A FINANCE ANALYST

Afterthought

Impacts that make AR collections difficult for finance analyst

Now with a collection management solution, the analyst’s day gets streamlined and resourceful. From a single source of information, tracking delinquent accounts and sending correspondences becomes efficient. Collaboration is seen as a welcoming addition, with less time taken to find vital notes. While more time is invested in strategizing collection policies and analyzing KPIs.

This is the way

In the absence of a proactive approach to managing collections, the mid-sized businesses may be at the risk of being left behind. With proper supervision, businesses can certainly get started with automating their collections while bolstering their AR analysts. It’s a case of, the right tools for the right people. The results speak for themselves with an average of 10% reduction in DSO, improved productivity, and better working capital reserves.

There’s no time like the present

Get a Demo of Autonomous Receivables Platform for Your Business

Request a Demo

Request Demo Character Man

HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.