A Word From AR Experts: Understanding Your Correspondences

Introduction

Anyone aware of the order-to-cash cycle understands the hassle involved during the collections process, especially while dealing with correspondences. Nowadays customers prefer self-servicing portals when they have to gather information such as account statements and invoices. This way they do not get bombarded with multiple requests, calls & emails every day. Moreover, with self-servicing customer portals, they do not have to experience low response time to their requests. But before going into details of personalized correspondences i.e. self-servicing portals and AI-enabled correspondences, let’s first get into a model that deals with the factors necessary to improve a company’s correspondence process. Jill Barnes and Marjorie Beede of Ardent Mills being experts in AR & Treasury Operations have defined the customer collaboration model with respect to the 4 pillars.

Customer Collaboration Maturity Model: A ladder of Improvement

This model contributes to the overall customer experience as it segregates different correspondence types and approaches to deal with them. The correspondences are evaluated according to the four pillars. Before discussing the customer collaboration maturity model, let's look at the four pillars that impact the collections process. The Four Pillars of the Collections Process are:

Cost Efficiency:

It involves investment in terms of mode of correspondence whether Ad-Hoc or Self Service Portals, manpower involved in sending that correspondence. It means greater the number of people involved, the higher the investment is and the one-time automation costs which are introduced when manual correspondence could be replaced by automated self-service portals.

Customer Experience:

It depends on the response time to customer requests, the delay happens because there are 100s of paper of one customer and 1000s of customers for each collector to handle when correspondences are processed manually. The second thing customer experience depends on is the consistency of communication.

Team Productivity:

This involves scalability which means the ability to track and manage the correspondence of each customer at a single place and be able to focus on high-value decision-making instead of low-value tasks such as resending invoices and requesting back-up documents. Having easy data access implies getting a consolidated summary of metrics/info before the next call.

Process Efficiency:

It depends on the prioritization of work such as having an exclusive focus on more critical accounts first. And having better visibility into the metrics and a dynamically prioritized work-list. After knowing the factors that can be used to gauge and evaluate the several modes of correspondence, it’s time to dive into the model. There are four levels in the customer collaboration maturity model. The sequence of these correspondences acts as the level-up stages in the model where the succeeding one is better as it reallocates resources to by introducing automation.

Ad-hoc or Manual Correspondence- The teams at this stage would typically use tools like calendars, emails, excel sheets, PDF readers, and ERPs for correspondence.

Partially Structured Correspondence- The teams at this stage would use dunning templates for maturity to track correspondences.

Inbound Correspondence- The teams at typically this stage move to self-service portals used for correspondence.

AI-driven Correspondence- The team at this stage introduces Artificial Intelligence and starts using it to analyze, create algorithms, and make decisions during correspondence.

How much will the four pillars help in ensuring a better customer experience?

Manual Correspondence - Primitive but still present

Ad-hoc manual correspondence requires a very high FTE investment as it involves paper-based invoicing as well as numerous external tools such as calendars, excel sheets, pdf readers, emails, ERPs, and multiple people working on them. A manual process demands a huge involvement of customers as they have to deal with multiple calls, emails, and requests almost every day. The problem faced could substantially increase if the response time to customer requests would be large. This could, in turn, result in a sour taste and could lead to negative customer feedback. Speaking of team productivity, if the entire correspondence process is manual, the workload combined with a lack of organized data would be enormous and could result in low team productivity. This, as a result, would definitely affect the scalability of the business. And the lack of organized & accurate data along with low visibility would hence result in an inconsistent and error-prone process that consumes more time.

LEVEL 1 SUMMARY

Partially Structured Correspondence

Until now, the manual correspondence procedure has proven to be inconvenient, inconsistent and costly. It generally falters in tracking a large number of correspondences. However, the efforts taken by the team dealing with correspondence could have been lesser if they used one of the more popular tools in the correspondence process, i.e. ‘Templates’. The teams at this level would leverage scenario-based templates & dunning templates for maturity to track correspondences. In order to introduce this method with basic software costs leading to long term ROI savings, it could result in a comparatively lower FTE Investment. Further, more structured correspondence can be achieved through leveraging templates. This results in less frequent calls and higher response times for customer requests. All of this could lead to better customer experience. Now that tracking is possible, there would be better visibility into correspondence history, resulting in higher team productivity as the entire manual work becomes 60%, leaving the remaining 40% to automation. All of the above results in a structured work-list with access to accurate data leading to better visibility, thanks to precise tracking. This results in higher efficiency in managing correspondences.

LEVEL 2 SUMMARY

Inbound Correspondence

According to Microsoft State of Global Customer Service, 90% of the organizations expect self-service from a company. Where partially structured correspondence improved the customer experience and productivity as compared to manual correspondence, it lacked in providing a flexible customer experience. These days, customers expect a more transparent form of correspondence which usually involves self-help portals. It could mainly include a self-service portal with detailed FAQs with categorically raised information for the ease of customers such as account statements, invoices. The portal also bears an ability to raise or claim any disputes in the collections process and requires no middlemen in order to make payments or payment commitments. According to Gartner’s global research and advisory firm, Self Servicing is among the top 3 priorities of companies. The investments in such a form of correspondence include software costs with reduced FTE costs, resulting in a stable one-time investment which increases the profits with the passing of time. The customers do not get contacted personally except during critical scenarios such as cases of bankruptcy, more than 120 days past due, or unresponsive collections. The self-service implies that no waiting time for customer requests improves the customer experience multiple folds. Instead of low-value tasks such as re-sending invoices and requesting back up documents, analysts can spend their time focusing on high-value decision making. This results in improved team productivity as the manual to automation ratio improves to 1:4. Now with a one-click access spot for all of the data, the entire process not only becomes more precise and less error-prone but also more time-efficient in data analysis and correspondence. Looking at the four pillars of customer experience, where does this sort of correspondence stand?

Balanced FTE leads to better cost-efficiency.

A self-servicing portal results in better customer experience.

Dynamically prioritized work-list results in higher team productivity.

One-click access to all data, results in higher efficiency.

It’s not a surprise that the Inbound self-service approach stands among the top in the model.

LEVEL 3 SUMMARY

Scope of Artificial Intelligence

Apart from automation, AI provides a broader scope than traditional correspondence methods. It uses customer risk segments to create correspondence strategies and creates a high-quality correspondence with sentiment analysis. With the automation software costs acting as the investment, the analysts get reallocated to higher-value tasks. Thanks to instant customer responses and AI-backed quality assurance reports, the customer experience has significantly improved and enhanced. The customer segmentation based on risk categories improved team productivity and dynamically prioritized worklists, making the entire process more efficient.

LEVEL 4 SUMMARY

Leveling Up: A Necessity

Moving through all of these levels of correspondences as a measure to understand the customer collaboration maturity model, experts witnessed how leveling up in the correspondence methods also ensures the leveling up of customer experience. While artificial intelligence is the next big thing and is slowly growing amongst the companies as a necessity, leveling up in the four pillars, i.e. cost, efficiency, team productivity, and customer experience, is the current need of the hour and should be focused on.