How to Leverage NetSuite to Improve Collections

20 July, 2021
4 min read
Terri Miller, Director of Business Operations
Linkedin profile

What you'll learn

  • Key challenges businesses face in their collections process
  • How to use NetSuite to improve your collections process
  • Tips to strengthen your collections strategy
What are the challenges in the collections process?
How to improve collections process with NetSuite
3 Tips to improve your collections strategy and reduce DSO
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Bob, the collections manager with a midsize business, has just had a meeting with his CFO. And he is frustrated. He has been reprimanded again for the low volume of payment collections.

Back from the meeting, he scrolls through his ERP system to identify open invoices. He switches tabs to get client contact details and then opens another page to get their credit history. He fumbles to get back to the invoice to check the due date and payment amount, before dialing them up from his desk phone.

Phew! Sounds tedious and tiring? And that’s just for one delinquent account. Imagine having to do it for hundreds of accounts!

Why do I have to do these mundane tasks? Couldn’t these tasks be automated?’ Bob thought, echoing the feelings of hundreds of other collection managers and agents.

At HighRadius, we are all too familiar with the scenario that Bob is facing. Many of our mid-market customers come to us seeking our help. Our AR solution, RadiusOne, integrates with NetSuite ERP and provides you real-time visibility into metrics such as DSO (days sales outstanding) and CEI (collectors effectiveness index). We can help you achieve up to 75% faster past-due recovery.

Before diving into how to leverage NetSuite and RadiusOne to improve collections, let’s look at some common challenges faced by collection agents.

What are the challenges in the collections process?

Collections refer to the process of persuading customers to make payment when their invoices are about to be due or are already past the deadline.

Companies send invoices to customers after the delivery of goods or services. Most customers are given a time period to pay (e.g. 30 days from the invoice date). But many fail to make the payment even after this credit period is over. Your company then has to actively pursue such clients and ensure that they pay you for the goods or services that you delivered.

The common payment collection challenges include:

  • Excuses made by clients: Many delinquent customers give excuses of financial woes or delays in the payment approval at their end. Customers may also use delay tactics to avoid payments by raising unjustified disputes on the invoice or blame the quality and quantity of the goods or services.
  • Identifying correct information of delinquent accounts: A survey by Thomson Reuters found that 62% of collection teams lacked the current contact information (e.g. address, phone numbers) of debtors. 29% of the survey respondents said they had difficulty identifying and contacting debtors. The use of multiple systems to log client details can result in collection agents not being able to find the required information at the right time.
  • Delays and errors due to lack of automation: Collectors often end up doing many tasks (e.g. sorting through clients to identify priority AR accounts) manually, making the collections process inefficient. It also increases the chance of errors. Without automation, collectors spend more time than needed to track and contact delinquent customers.

How to improve collections process with NetSuite

NetSuite ERP can help address many of your collection woes. It helps create invoices, track accounts receivables, manage and prioritize delinquent accounts, and streamline collection processes. Additionally, you can integrate NetSuite with AR solutions like RadiusOne to automate finance tasks, reduce DSO, and eliminate inefficiencies.

Here are some features of NetSuite that you can leverage to streamline and improve your collections.

Automated dunning

Dunning refers to the communications you have with your customers to collect accounts receivables. The communication techniques usually include emails, print letters, and phone calls.

The automated dunning feature provides email templates that help automatically send customized emails en masse based on the age of the receivables. You can also pause the automated dunning process if the payment terms are restructured. With automated dunning options, you no longer have to create new dunning emails every time or manually track the dunning stage of different AR accounts.

Collections dashboard

NetSuite offers dashboards and reporting features to track your accounts receivables including payment collections. The dashboards help track overdue balances, the average number of days a customer takes to pay, invoices with paused dunning, and customers to whom dunning letters were recently sent.

While creating custom reports and dashboards in NetSuite requires technical know-how, integrating the ERP system with RadiusOne can make the job easier. You get to personalize the dashboards and set custom rules to prioritize your collections worklist. The dashboards also provide automated account-level recommendations to improve collection metrics such as DSO.

Native VoIP Calling

Native VoIP (voice over internet protocol) calling is a feature that is available with NetSuite-RadiusOne integration. Calling clients to remind them of the open invoices and persuading them to pay at the earliest takes up much of the collectors’ time and efforts.

Native VoIP calling features help by allowing you to call customers directly from the app using CTI (computer telephony integration) technology. It also provides you centralized access to client details including all previous correspondence with them. This saves you the hassle of having to collect client details from multiple places.

Quick payment options for speedy collections

Often the trick in getting your customers to pay up immediately is to offer them quick and easy payment methods. Embed ‘Pay Now’ options in your invoices and dunning emails to guide customers to payment pages where no sign-in or registration is required. Allow for different payment formats including ACH, wire transfer, and credit cards.

Collectors must remind clients that there’re easy payment options embedded in the invoices, emails, and reminders and encourage them to use them.

Prepare for and record your collection calls

Practice and preparation are key to perfecting your collections call strategy. You cannot be dialing a client without a plan on how you’ll persuade them to pay up. NetSuite helps you prepare call scripts, schedule calls, take notes during calls and record calls. These notes and call recordings can in turn help you update the credit risk profile of customers.

3 Tips to improve your collections strategy and reduce DSO

While tools like NetSuite and RadiusOne help you automate and streamline your collection processes, it is important to start with a clear collections strategy. Here’re three tips to improve your accounts receivable collections.

1. Be proactive in your collection efforts: Do not wait for the invoice to go past its due date to start your collections effort. Set reminders or automated dunning emails that can be sent to clients a week before the due date.

2. Offer discounts on early payments: If you are in an industry where margins aren’t tight, consider offering discounts to customers who pay early (e.g. 1% discount on the invoice value if customers pay in 10 days instead of 30). Additionally, you can also levy penalties if they pay later than a certain date, say one week after it’s due. Ensure that clients are aware of these terms.

3. Integrate your collections process with other AR functions: Integrate your collection efforts with other processes such as reconciliation and credit risk to get up-to-date information. Without integrations between these processes, you may miss out on the latest info about when a client pays, how their risk profile has changed, etc. This can affect your client relationships and derail your collection efforts

Schedule a call with us if you want to identify ways to improve your DSO or CEI. We at HighRadius offer you integrated AR automation software that works seamlessly with NetSuite and helps improve and ease your collection efforts. Demo our product to learn more about it.

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