AR Automation: Empowering Your Collections Team — Not Replacing It.
Written By Dan Rogney
It was just announced that the U.S. still operates the nuclear program using 8-inch floppy disks. You read that accurately. We’re using floppy disks … in 2016 … to manage the deadliest weapons in the world.
As outrageous as that news was, it should come as no surprise that individuals and institutions still depend on antiquated and even obsolete technologies despite the fact that we’re already 1/6th of the way into the 21st century. We don’t enjoy change.
Take a look at businesses: the lack of Accounts receivable (AR) automation solutions is a first-class example. (Ok, maintaining company cash flow positive isn’t nuclear-launch-code-important, but important nevertheless.) Although often being the largest or second largest asset on a company’s balance sheet, the internal processes of various AR teams remain stuck in yesteryear, particularly the aspect of collections management.
Currently, many AR departments manage their post-sales collections activities using sticky notes, calendar reminders and spreadsheets — not quite methods that scream “cutting edge.” These manual and inefficient practices are known to lead to:
- Lengthier DSO times
- Low staff engagement & productivity
- High credit risk
- Longer invoice disputes
- High transaction, admin and financing costs
- Lack of forecasting and visibility
- Increased rate of bad debt write-offs
The Pentagon predicts to oust its floppy disk system by the closing of 2017. What’s the plan for modernizing AR’s outdated processes? For a growing number of companies, it’s becoming evident what the solution is: AR automation.
How AR Automation Jumpstarts Your Collections Team
Automation doesn’t always bring to mind a positive connotation or reassuring thoughts. People oftentimes think of automation as a replacement for their jobs and processes. While this may be the case in other industry specific functions (e.g., vehicle assembly line), it’s not the case for AR departments.
An automated AR solution is simply a complementary tool that works with your existing infrastructure. It automates the manual tasks that should be automated, which allows everyone to perform their jobs better.
Here are some of the major ways AR automation empowers collections teams:
- Eliminates low-value, tedious work. Capabilities such as report scheduling, payment reminder emails, and an online customer portal removes human involvement out of the areas that aren’t imperative to make AR run. The result? Payment is sped-up and your staff has more time to make your company more cash.
- Optimizes the essential activities. Not all of AR can or should be electronic. That’s where automated features like account lookups, customized to-do lists and call logging can optimize team efficiency and ensure everyone is completing the most value-added tasks.
- Provides 100% visibility. Gathering and analyzing data manually can be a doozy — that’s why most AR departments don’t do it. Automation provides tools such as root cause analysis, collections forecast and collector performance to address and resolve issues quickly and easily.
- Positively impacts stakeholders. Your collections team doesn’t function on an island. If the processes are slow and complicated for others in the collections cycle, issues will arise. Luckily, automation supplies a streamlined process for every stakeholder — from a self-service portal for customers to customizable dashboards for management.
Ready to learn more about the benefits of AR automation in collections management? Keep your eyes peeled for our latest eBook, Using AR Automation to Empower Your Collections Team (Not Replace It). It goes into more depth on the topics discussed here — you’ll love it!