Buyers’ expectations around what makes a good customer experience has undergone significant transformation in recent years. In today’s world, we expect things to be easy to use, and to receive things how and when we want them. Naturally, these expectations have migrated to the business world and are now impacting the collections process.
Your customers want to be able to pay you how they want, when they want, and they want the process to be as easy as possible. A traditional highly-manual collections process is unable to offer this level of flexibility, and with so many alternatives available in the marketplace today, your customers’ negotiating power is at an all-time high. If your customers feel they are not being adequately accommodated, they will simply take their business elsewhere. Automating your collections process allows you to offer a more customized user experience that enables your customers to pay you according to their terms – permitting your business to better meet these new customer expectations.
What Your Business Gains from Automated Collections
The right AR automation solution will transform your collections process, enabling you and your team to do more with less, better serve your customers and better manage your cashflow. Here are just 5 of the ways an automated collections process will improve your AR:
1. Reduction in Human Error
The margin for error in manual collections processing is too great to be overlooked. Invoice dates and amounts, supplier names, and check numbers are all prone to containing mistakes when typed in by a person. With an automated collections solution, human error is eliminated, and your team can feel secure in knowing they are always working with accurate information.
2. Faster Collection
Most AR automation platforms enable your business to accept a wider variety of payment options. Allowing your customers to pay using their preferred method will help you get paid faster. In addition, accepting more digital payment methods such as ACH, EFT, and credit card reduces the processing and reconciliation time that comes with traditional paper-based collections fulfillment.
3. Cash Flow Optimization
By driving faster collections, an automated collections process will free up money that would otherwise be tied up in late paying and overdue receivables. Automating your collections will help you to better optimize your cash flow, enabling you to be more competitive, and able to invest in projects that further grow and scale your business.
4. Exception Based vs. Task Based Collections
Popular collection management software, while an improvement over a purely manual collections process, fails in comparison to automation. Most invoice and collection software solutions in the market today better enable task-based collections. With these platforms, all collections activities – sending out invoices, follow-up calls, overdue reminders, etc. – are all treated as individual tasks that need to be completed and checked off before you can move onto the next task. Although this may help the team stay organized, it’s not providing any meaningful efficiencies. Every task still needs to be completed by a person.
Managing collections via automation, however, handles all of the repetitive, predictable and tedious tasks for you, so that your finance team will only be required to manage the exceptions. By focusing solely on the customers that can’t or won’t pay, your finance team is able to take back control of their time and complete the high-value tasks that will make your business stronger and more competitive.
5. The Ability to Navigate Economic Uncertainty
For many businesses, the current economic environment has created a shortfall in cashflow, which has meant significant challenges. With continued uncertainty surrounding COVID-19, businesses need to make processes digital where and when they are able to. This means that suppliers who rely on paper checks or cash on delivery (COD) from their customers, need to find alternatives. An AR automation solution enables you, your team and your customers to continue to transact while working remotely. By automating your collections, your business will be better equipped to navigate future economic uncertainties as they arise, while helping to maintain adequate cashflows.
What You Lose by Not Automating Your Collections
In the case of collections, choosing not to implement an automation solution will leave your business struggling to keep pace in today’s rapidly changing environment. Success today does not guarantee success tomorrow. Maintaining a manual collections process in today’s economy will ultimately see your business lose its competitiveness and become vulnerable to future challenges.
Externally, pressures from both customers and competitors will create added difficulties, and potentially result in lost business. Internally, you may also face challenges from staff as they grow tired or frustrated with the repetitive and mundane tasks plagued by a manual collections process. When considering transforming your collections process, it is equally as important to think about what you are gaining as it is to think about what you are losing. Reviewing the latter, as we’ve done here, will more often than not help give your business the clarity it needs to make the final call.