Robotic Process Automation or RPA has become the buzz in the technology world. RPA revolutionized the field of business process automation. To some extent, RPA has been successful in automating routine and repetitive human tasks, including scanning information, storing and updating customer data, approving customer orders, and validating payments which has led to increased efficiency, lower error rate, and reduced costs. However, one of the key challenges that can be associated with RPA based tech is the lack of agility and how it renders operations extremely static and incapable of evolving to changing business needs.
It is no doubt that RPA is considered low-cost, flexible, and easy to deploy but AI based solutions, with their self-learning capabilities provide an edge and make GBS services highly agile and resilient. (Example) A Durable cash application automation across changing remittance & payment formats using AI or an Automated data capture from customer A/P portals (despite changing portal information) is always much superior to an RPA.
Artificial Intelligence and Machine Learning have opened new avenues of digital transformation and automation, especially for financial processes. AI and ML integrates with the existing systems to make them smarter, enabling them to interpret unstructured information, find patterns in a huge pool of data, and take decisions without human intervention. AI/ML-based automation results in better visibility and clarity across all O2C processes.
“AI/ML-based automation can deliver significant business outcomes, such as 30 – 40% DSO (days sales outstanding) improvements, 35% increase in efficiency, and over 60% faster processing”
In Credit Management, AI can be used to automate complex tasks, such as assessing the creditworthiness of customers, establishing new links between data and evaluating cases based on past trends, and enabling credit controllers or decision-makers with data-backed insights on credit risk.
AI-driven automation can measure credit risk across business units by identifying the common high-risk customers. As the risk increases, the consequent reduction in the exposure to business can be measured.
AI finds application in proactive credit reviews as it can process both large sets of structured and unstructured data. An AI-enabled system could consider both, internal and external, factors to get a micro and macro-economic view of a customer’s account. Then, it could automatically set the credit review period and trigger credit reviews for troubled accounts. This lets the credit team know about a stressed account even before an incident happens.
This way, the A/R, credit and sales team can work in tandem to drive recovery and collections from such identified at-risk accounts.
AI goes a step further to automate the entire credit review process and predicts with a certain level of confidence the probability of an order getting blocked. There are several machine learning algorithms to predict blocked orders but one of the most reliable ones is the learning algorithm, such as regression and classification, which rely on Decision Trees and Random Forest methods. These algorithms are specifically suited for the prediction of blocked orders as they can achieve high classification performance with a set of decision trees that grow using randomly selected subspaces of data. This way, the collections and cash application teams can proactively act to see that orders that should not be blocked are taken care of.
In Cash Posting, exception processes can be automated through machine learning that reads the existing patterns of manually handling exceptions, since ~80% of the exceptions are repetitive.
In Collections and Disputes, AI-based deductions can proactively predict the validity of disputes and fast-track the recovery rate of invalid disputes by triggering an automated workflow to collectors, notifying them about the invalid deductions. This enables collections’ teams to focus specifically on valid deductions and spend time on reducing write-offs
In Billing, AI Automation can create an integrating billing process in which data from different processes can be leveraged, such as contractual discounts or historic payment patterns. Also, these patterns can be analyzed to establish credit terms.
In Reconciliations, Automation with machine learning capability can create an automated cash application process that can reconcile unstructured data and different payment formats. Further, automation can predict a customer’s preferred payment method to speed up the reconciliation process.
AI/ML-based automation unlike RPA not only makes the O2C activities more streamlined and efficient but also generates real-time insights that the Leaders can use to embrace an Agile Operating model across their Global Business Services and make their GBS future-ready. For example, credit risk insights help a sales representative specifically focus on customers at risk of order blocks and similarly, a collections representative gets a better clarity about prioritizing customers for payment collection.
Most of the customers are unaware of the weakness of RPA and fall into a technical debt. Then they realise the potential benefits of AI and ML-based solutions and by the time they realise the cost incurred becomes high to revert. To differentiate from simple RPA workflows that use simple “if, then” logic, finance and technology leaders must highlight and focus on AI- ML models that improve business outcomes as they learn more about the customer.
Automate invoicing, collections, deduction, and credit risk management with our AI-powered AR suite and experience enhanced cash flow and lower DSO & bad debtTalk to our experts