How Fortune 1000 companies and SMEs automate credit and accounts receivable operations to improve productivity and reduce DSO and past-due A/R.
A study by McKinsey found that 70% of collections calls go to customers who would have paid anyway. This is yet another place to optimize the process to increase the efficiency of customer contact and improve DSO.
Figure 8: The Biggest Challenge with the Collections Process ? Too Many Assigned Accounts
The biggest challenge continues to be the account coverage and given the limitation in the number of collections calls that could be made on any given day. Agents are assigned too many accounts at a time and the preferred medium of communication is phone with very limited time spent on other mediums including email and physical letters. Collections analysts focus on invoice value and aging data and make calls while ignoring a large number of assigned accounts, there are always accounts from the SMBs that makeup to 80% of the collections worklist but fall through the cracks since analysts tend to focus on high invoice value accounts. It is also impractical for collections analysts to call these customers for small amounts.
Figure 9: Automating Correspondence to Let Collectors Focus on Calling Only the Most Critical Accounts
As figure 15 illustrates, systems have to be designed so that the collections analysts call only the most critical accounts. This automation is an extension of the previous section where we talked about how to let the system handle credit policies and score customers on the risk that they pose for the organization. Based on each account score, the system will be able to tell the analyst what the next step should be. For example, if habitual late payers belong to a customer segment, the system should suggest that collections analysts to send out email correspondence 15 days before the invoice is past-due. The system should also have ready-made email templates so that the analyst is able to send mass correspondence to all the customers in that segment with the click of a button. Taking correspondence automation further, the system should be able to automatically send proactive reminders for all accounts depending on the credit policies. While email correspondence automation takes care of account coverage and brings the money to the bank through proactive reminders, collections analysts continue focusing on high priority large accounts. This optimizes the collection process thereby reducing DSO.
Yaskawa America, the leading manufacturer of HVAC equipment adopted automated prioritization of worklists and was able to contact more customers. The process improved overall to help Yaskawa in reducing DSO by 5.5 days and achieve a Collections Effectiveness Index of 90%. Similarly, Dr. Pepper Snapple, the beverages major was able to improve collector productivity by 40% by adopting collections correspondence automation and reduce the number of accounts in a collection?s analyst?s worklist by 88%.
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.