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Scale Up Collections Using AI and Customer Profiling – The Mercury Marine Hack

16 January, 2020
3 min read
Brett Johnson, AVP, Global Enablement
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What you'll learn

  • Discover the strategic benefits of segmenting customers into risk buckets based on their credibility
  • Explore the seven steps to implement AI in collections management
  • Learn how to enhance customer relationships for faster collections by leveraging automation
Collections landscape at Mercury Marine
Risk classification based on payment trends
Customized plan for different risk buckets
Key features of the scalable solution
Results across the board
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“Artificial Intelligence is absolutely going to change the way we collect money in the future and the way we run our credit departments” 

– Paul Watters, Director Worldwide Credit & Treasury, Mercury Marine

Are you recession-ready? In times when cash is scarce and banks restrict lines of credit, timely collection of accounts receivable becomes crucial for securing the working capital you need in 2022.

However, for most mid-sized businesses, collecting dues is a burdensome, manual task that takes up the majority of a collector’s time. Critical tasks such as mailing statements, sending reminders, and following up with delinquent customers make  collectors’ work more challenging. 

In such scenarios, having reliable systems and insights to support the collections function becomes imperative. Read this blog, to explore the collections landscape of Mercury Marine, a mid-sized manufacturing business, and see how they transformed their collection processes to improve cash flow and propel revenue growth.

Collections landscape at Mercury Marine

Customers come from the varied reality of payment cycles, so why should the collection strategies be ‘one size fits all’?

Mercury Marine is an industry-leading developer and manufacturer of a broad range of marine propulsion systems. They faced challenges with manual and time-intensive collection processes. The company was not able to influence its customers to pay on time. They realized that there was a multitude of reasons why customers didn’t pay. Some common reasons included cash crunch or financial duress, pending disputes, and unreceived invoices.
Realizing the challenges, Mercury Marine decided to leverage a range of strategies to proactively manage its collections while reducing cash loss.

Risk classification based on payment trends

The first strategy that Mercury Marine leveraged was to segregate customers into risk categories based on payment trends. 

  • Low Risk – Customers who typically pay on time 
  • Medium Risk – Customers who need some reminders for them to make payments
  • High Risk – Customers who pay late or are inconsistent

Customer Risk Bucket

Customer Risk Buckets

The primary challenge was to influence the customers in the high-risk category to pay. Some strategies that helped them included: 

  • Taking collateral which is a lien over their property
  • Negotiating payment commitment for a later date
  • Leveraging credit and next order as an incentive to make payments
  • Establishing ‘more-than-just-business’ relationships with customers and working as partners to sort through open invoices

These strategies were actionable; however, executing across the board meant analyzing thousands of customer trends and formulating the collections plan for each of them.

Customized plan for different risk buckets

There are several channels to reach out to customers to collect payment dues—email, calls, in-person meetings, etc. But using the right channels for the different customer accounts is key to collecting payments faster.

“Calling them is not the most important thing, it’s the frequency of the communication and not the medium.”

– Paul Watters, Director Worldwide Credit & Treasury, Mercury Marine

The second strategy Mercury Marine leveraged was to create customized plans for different risk buckets. The collections team needed a clear perception of customers’ payment behavior. To achieve that they needed a solution that could segregate the customers into logical risk buckets and record tailored rules and regulations to make a collector’s work easier and more efficient. This bird’s-eye view of the entire collection process through a solution could effectively nurture customer relationships while controlling the entire payment hierarchy.

Hence, Mercury Marine invested in a long-term scalable solution by HighRadius that helped them segregate customers based on the risk, tailor strategies for different accounts, centralize all information and enable collectors to focus on correspondence.

Different customer risk category and their correspondence structure

Recommended actions for different risk-profiles

Key features of the scalable solution

The HighRadius solution provided Mercury Marine with a complete set of tools to optimize and automate the collections management process and enable better prioritization of accounts. A few of the notable features of the solution are:

  1. Collection strategies and rules
  2. Customers are divided into distinct categories based on the kind of clients the business has amassed over the years. Additionally, each category has its own set of collection strategies.

  3. Prioritized worklist
  4. Prioritized worklists get automatically generated by the system based on the different account segments and the collection strategies identified for each segment. Analysts can use the worklist to focus on specific, high-risk customer accounts.

  5. Automated correspondence
  6. Automated correspondence is set for low-risk customers with ready-to-use templates to enable collectors to focus on the high-risk customers.

  7. Automated capture of customer interaction history
  8. Call notes are logged in and all communications are tracked. This makes it easier for collectors to revisit the past collaboration history before initiating the next correspondence with a customer.

  9. Automated tracking of payment commitment 
  10. Customers’ payment commitments are recorded and tracked, especially for high-risk customers. Auto-reminders in the solution support the analysts in keeping track of payment commitments and follow-ups.

How Automation Transformed the Collections Process

Steps involved in the collections process

Results across the board

You must have heard about the 80/20 rule of business, 20% of the customers account for 80% of the receivables – but not all risks are equal. At Mercury Marine, it was difficult to track the high-risk customers (the rest of 20%). But, with an intelligent solution, they were able to focus on these critical accounts while ensuring that the medium to low-risk accounts did not fall through the cracks.

Learn more about how the team at Mercury Marine was able to scale its collections process using AI and customer profiling.

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HighRadius Collections Software automates and optimizes the credit & collections management process to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO. It provides a complete set of tools to optimize and automate the credit collections management process and enable the better prioritization of credit collections activities All the information you need (invoices, dispute information, POD, claims, tracking info, etc.) on each case is automatically presented in a collections work-space and is ready for use. Apart from the wide variety of benefits that it has, it also comes with some amazing features like CADE (Collection Agency Data Exchange), collector’s dashboard which has prioritized collections worklist, automated dunning & correspondence, dispute management, centralized tracking of notes, call logs & payment commitments along with cash forecasting functionalities. The result is a more efficient collections team that contributes to enhanced cash flow and reduced DSO.

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