AI in Action:Transforming Order-to-Cash Operations

AI: Your silent partner in the financial tango! From orchestrating collector schedules to foreseeing payment delays, it's the genius behind an order-to-cash makeover, making efficiency and effectiveness dance hand in hand! And guess what the stats look like?

FleetPride, a popular heavy-duty truck and trailer parts company, faced a speed bump with a growing customer base and a small collections team that worked with a limited set of technology tools.

The manual grind of O2C became a thing of the past when they unleashed AI-driven automation. Dunning, prioritization, and reconciliation became a breeze, unlocking a turbocharged 150%+ boost in efficiency.

Today, AI fuels businesses, turning O2C into a high-speed adventure. Buckle up for a ride through popular use cases of AI in order-to-cash workflows and trends of AI in O2C.

AI in O2C: Popular Use Cases

1. Optimize collections with AI

The workflows in collections management remain one of the most popular use cases of AI to cash.

Here’s a look at popular use cases of AI in collections management:

• Worklist prioritization: AI streamlines collection calls for collectors by analyzing historical data and using predictive models. It prioritizes delinquencies, ranking customers based on impact variables like payment due dates and geography. Additionally, AI optimizes collector portfolios, considering bandwidth and the number of accounts. 
• Dunning and call management: Automate customer reminders via email for past dues, account statements, and payment deadlines. Today’s Generative AI tools handle email drafting, chat responses, and call summaries. Traditional AI in AR solutions prioritizes the collection of emails based on urgency and content while supporting reporting analytics. 
• Customer payment predictions: Accurately predicting customer payments is vital for effective cash flow management. Manual methods fall short in accuracy and require more effort. AI algorithms, leveraging historical and secondary data, enhance predictions, and optimize collections strategy and cash management.

Example: Ferrero reduced DSO by 28% with an AI-based collections system Ferrero grappled with long collection cycles due to manual processes and disorganized data. To make their collections strategy more proactive, Ferrero implemented an AI-powered collection tool that supported worklist prioritization, automated dunning, and a consolidated repository for call logs, notes, and customer data. With AI in collections, they achieved: 28% lower DSO, 67% lower Average Days Delinquent, and 1000+ hours saved through auto-correspondence. Read the full story here

Want more news on the chocolate industry? Check out: Cracking Hershey’s AR: Sweet Secrets to Financial Success

2. Faster and more accurate cash application powered by AI

After collections, cash application is the most popular function with O2C where AI is widely used. Here are some use cases of AI in cash applications:

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• Email remittance capture: Imagine a company gets paid through emails, but the payment details are all over the place – sometimes in tables, plain text, or attachments like PDFs. A smart system uses AI to automatically grab these details and match them with bank payments, helping with quick and error-free processing.
• Remittance capture from checks: Think about a business that receives checks with payment details scattered on extra pages. Regular methods only catch about half of it (40%-50%). AI helps grab the payment details without any specific setup, boosting accuracy to an impressive 70%-90%.

Example: Johnson & Johnson doubles team productivity with AI Johnson & Johnson faced several challenges in applying cash due to a lack of standard remittance formats, multiple systems and files, and scattered data. J&J moved to a cloud-based cash application solution powered by AI algorithms to enable automated remittance aggregation and invoice matching, touchless cash posting, and identifying deductions. With the new AI-driven system, J&J increased team productivity by 100%,achieved 95% straight-through cash posting, and reduced Days Deduction Outstanding by 43%. Read the full story here

3. Simplifying the Deduction Resolution Process with AI

A few dollars slipping through your fingers may not seem like a big problem. But when they balloon into many millions through multiple deductions, it can impact your bottom line badly. We discuss how AI can help you manage your invoice deductions and disputes.

• Spotting valid/invalid deductions: Using smart algorithms that consider lots of details like dispute type, amount, etc, AI tools predict which deductions are valid or not. This prediction power helps businesses make decisions faster and manage deductions better.
• Easy document gathering: Getting all the papers for deductions, like Claim Copies or Debit Memos, can be a big job. AI solutions can automatically collect all the needed documents from customer portals and emails.
• Speedy dispute resolution: When a deduction isn’t right, fixing it usually means a lot of typing and clicking. Not anymore. With AI, once we figure out a deduction is wrong, the system automatically handles the denial process, making the whole process faster.

Example: Mattel resolves deduction disputes faster with AI Mattel faced difficulty in resolving deduction disputes. The lack of centralized data and reliance on manual workflows resulted in analysts being unable to focus on high-priority accounts and deduction disputes. With AI, Mattel was able to auto-aggregate claims, predict invalid deductions, automate customer correspondence, and integrate with trade promotion systems to auto-match and resolve deductions. Mattel saved 225+ hours monthly, reduced open deductions by 20% and predicted invalid deductions with 94% accuracy using the AI-powered deduction solution. Read the full story here

Checkout: Deduction Benchmarking Report

4. Smart creditworthiness checks with AI

Credit risk models can be hard to manage with manual methods. AI-powered credit management tools can help improve your risk-scoring accuracy and help you with real-time data. Here’s a deep dive.

• Smart credit decisions with real-time data: Utilizing AI, companies can make informed credit decisions by analyzing current financials, payment history, and macroeconomic indicators, ensuring a careful approach to avoid bad debt risks. Additionally, AI algorithms constantly monitor customer behavior, payment patterns, and market dynamics, allowing for real-time adjustments to credit limits, and enabling businesses to adapt swiftly to changes in the financial landscape.

Example: Mosaic cuts time on credit approvals by half with AI Mosaic’s complex credit approval hierarchies, disparate data sources, inflexible credit scoring models, and lack of invisibility into customers’ payment trends led to severely delayed credit approvals and customer onboarding. The switch to an AI-powered credit management solution helped Mosaic auto-aggregate data from global and local agencies, build customized credit scoring models, and automate the credit approval process with real-time risk monitoring. Mosaic reduced credit approval hierarchies and approval time by 50% and increased cost savings by 33%. Read the full story

5. Automated error-free invoicing with AI

AI is increasingly getting embedded in e-invoicing solutions. We cover popular use cases of AI in invoicing here. For more insights, check out: e-Invoicing Trends & Mandates 2024

• Swift invoice processing: In a fast-paced business world, AI plays a crucial role in electronic invoicing. It swiftly processes incoming invoices, extracting relevant data, and ensuring accuracy. This efficiency reduces manual effort and speeds up the entire invoicing cycle, facilitating timely payments and better financial management.
• Predictive payment insights: AI brings a predictive edge to electronic invoicing management by analyzing payment patterns, historical data, and market trends. This allows businesses to anticipate payment behavior, identify potential delays, and take proactive measures. The result is improved cash flow management and better decision-making for financial planning.

Teletrac Navman improves digital invoice payments by 35% Teletrac Navman had a disorganized AI process that affected their invoicing and collections speed. A shift to a cloud-based solution helped Teletrac Navman enable customers to pay invoices digitally and reduce the collection time. A self-service portal for customers to track their invoices and payments helped the AR team improve their productivity by over 50%. The solution enabled Teletrac Navman to reduce DSO by 45 days and increase CEI by 81%. Read the full story here

AI trends in O2C

The burgeoning potential of AI takes center stage in discussions focussing on order-to-cash transformation. Here, we examine the dynamic trends shaping the utilization of artificial intelligence to fine-tune order-to-cash processes.

• Predictive analytics driving proactive management

  Predictive modeling and forecasting tools are increasingly being used to identify risks, prioritize actions, and proactively resolve issues before they impact the customer or the bottom line. AI enables blocked order prediction, customer payment predictions, and dispute prediction for preventative order-to-cash management.

• Automation helps streamline key workflows

  AI and automation technologies help extract data, validate information, reconcile payments, and reduce manual touchpoints across order-to-cash workflows. This includes automated data capture from remittances and intelligent document processing for improved accuracy and efficiency.

• Personalization powering customer experience

  Businesses today invest in AI-powered insights to drive personalized customer engagement and optimize collection strategies. Advanced analytics is powering tools for tailored prioritization and resolution of collection cases and disputes to strengthen relationships and outcomes.

Order-to-Cash Gets Smarter with AI

AI revolutionizes order-to-cash workflows in collections, payments, credits, and invoicing. Powered by predictive analytics and intelligent automation, it enhances efficiencies, informs strategic decisions, and empowers teams. 

By infusing intelligence into tasks and interactions, businesses gain proactive risk management, optimized strategies, and quicker issue resolution. 

The outcome: improved cash flow velocity, enhanced working capital management, and fortified customer relationships. 

Embrace the AI revolution for an agile and insightful cash flow, transforming your invoice-to-cash process.