Welcome to Collections Maturity Assessment Model

In today’s business environment, with tough competition, increased customer expectations, and numerous demands on your resources, it is difficult to proactively manage collections. As a result, many businesses face problems such as low cash inflow and high Days Sales Outstanding(DSO).

Do you want to assess if your collections processes are efficient enough to enable a stable cash flow?

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Do you have a high dependency on your staff for collecting past-due receivables?

How do you create a collections worklist?

How do you identify past-due invoices?

Do you get recommended actions and strategies based on the customer information and past collaboration?

How do you get customer information such as credit limit left, payment statuses, and open invoices from other receivables processes such as credit, cash application, and deductions?

How do you send collections-related correspondence to your customers?

Do you have a single source of truth (centralized data repository) for all your collections activity and customer information to make collaboration easier?

Do you have a technology to predict customer delinquency?

Please answer the question to move forward

Collections Maturity Model - Where Do You Stand?

Ad-hoc

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Reactive

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Preventive

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Proactive

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Excel-Based Template

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Ad-hoc

Your company is evaluated as ‘Ad-hoc’ on the collections maturity model.

What does that mean?

  • You have trouble effectively managing past-due AR
  • The factors to blame include insufficient internal resources
  • Your team maintains spreadsheets on accounts with past-due AR
  • Much time is spent calling these customers to collect payments
  • Analysts don’t have the latest information on credit limits, open deductions, cash posting data, and blocked orders
  • Account prioritization while contacting the customer is affected

Reactive

Your company is evaluated as ‘Reactive’ on the collections maturity model.

What does that mean?

  • You are most likely chasing past-due AR
  • Usually, the process is triggered after the account goes past due
  • There might be strategy documents on how to segment and contact customers. But the AR team relies on collections analysts to implement these strategies
  • There is very basic support in the form of systems
  • Your company relies on aging lists and customer master data from ERPs for day-to-day customer correspondence
  • A limited process is there to proactively reach out and communicate with key accounts

Preventive

Your company is evaluated as ‘Preventive’ on the collections maturity model.

What does that mean?

  • You most likely have systems to set collection segments and strategies and integrate data with other AR teams
  • The analysts no longer need to manually prepare a worklist on who to contact as the system automatically generates a worklist
  • Prioritization is still static based on Average Days Delinquent(ADD), which may not prioritize accounts efficiently
  • Some parts of the customer correspondence would have shifted to emails from calls so that the account coverage on any given day could increase with customized templates
  • Your company relies on systems designed explicitly for collections to achieve automation of 30%-40%
  • The AR team doesn’t provide a self-service portal for downloading invoices and collaborating on dispute cases

Proactive

Your company is evaluated as ‘Proactive’ on the collections maturity model.

What does that mean?

  • You have all upstream processes integrated into the collections system
  • The collections analysts have all the critical information on any account in a centralized platform
  • Analysts effectively leverage email automation to scale communication and prevent collections from falling through the cracks
  • The system is powered by predictive analytics that presents the analyst with at-risk invoices that are likely to be paid late
  • Analysts can proactively follow up with customers and prevent late payments
  • The analysts are also empowered to offer early payment discounts to reduce DSO
  • The people and processes are efficient because the company is technology savvy, automates manual tasks, scales cash forecasting, and ensures seamless collaboration with customer AP teams
  • The organization has a high level of visibility into operations and reporting capabilities

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More information on your maturity level

Ad-hoc

  • People:Your AR collection process is heavily dependent on the collector’s skills and efficiency to improve collections. This means you might be following the simple equation of leveraging additional resources to handle a larger volume of work, which is inefficient.
  • Process:There is no process flow defined for the collections analysts in your finance team, and they work individually on different accounts.
  • Collaboration:Your analysts collaborate with different departments and customers manually via email or phone calls.
  • Data:Your collections analysts obtain data on invoices from various sources and enter it manually. There is no means to log communication details in a centralized manner in the process.
  • Technology:IT implementation is zero or at the minimum in the day-to-day activities of your collections analysts since their workflow is manual.

Scale up to the next maturity level

Getting to Reactive

  • People:Create a dedicated collections team and define clear goals and responsibilities for all collections analysts so that the team can promptly connect with the right accounts.
  • Process:Define process flow to assess and segment customers. Define strategies based on the customers' risk categories and payment behavior.
  • Collaboration:Use pre-defined collections email templates' to scale-up dunning outreach and improve collections collaboration. Create a centralized system for analyst notes on receivables transactions to ease customer collaboration.
  • Data:Create a single repository to capture and store all customer data. Use ERP to capture the aging list or use an excel-based aging report template' to assess your accounts receivable aging quickly.
  • Technology:Invest in an ERP system or accounts receivable software for better technical support and process optimization.
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About RadiusOne

The RadiusOne Accounts Receivable Suite includes a set of intelligent solutions designed to support AR processing for midsized companies across industries with a complete order-to-cash automation solution. Automate and fast-track key accounts receivable functions with RadiusOne AR apps, pre-loaded with order-to-cash best practices and ready-to-use with popular ERPs, including NetSuite, Sage Intacct, Microsoft Dynamics, and Infor.

The HighRadius RadiusOne AR Suite includes automation solutions for processes, including eInvoicing, Collections, Cash Reconciliation, and Credit Risk Management.

RadiusOne AR apps are designed to suit the needs of AR teams and aim at automating labor-intensive processes, maximizing working capital, and enabling faster cash conversion. The solution helps small & mid-sized businesses secure cash for today and nurture customer relationships for business growth tomorrow.

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