The Ultimate Truth about Automating Collections and Dunning in Mid-Sized Businesses

How Does Automation Software Help?

AI-driven proactive collections have led to faster payment cycles and lower DSO. As per PYMNTS.com, businesses that employed collections automation had a 23% lower DSO than their manual equivalents. The bottom line is that most SMBs are in dire need of innovations to improve collection processes.

The HighRadius’s eInvoicing & automated Collections solution is a one-stop-shop for all of your AR automation needs. It helps you automate account prioritization, enable VOIP calling, automated correspondence, reduce operating costs, and more! 

With that being said, automation would work as a boon to the receivables industry, streamlining the O2C cycle. Leverage AI-enabled solutions to transform the way you collect payments and accelerate your revenue growth today. 

Even as we come to the end of this blog, here are some of the next steps you can take:

• Identify improvement areas in your current collection processes
• Drill down on the technology that you use presently
• Discuss the problems that your collection teams face
• List down the features that your AR software needs to have
• Contact solution providers to understand the scope of the solution
• Determine the ROI and present it to your management

Reach out to us to learn more about how we can help or get a free demo now!

What Accounts Receivable Collection Challenges Mid-Sized Business Face?

Collections as a process have never been an easy one, however, the current economic situation has made it even more difficult. Most customers tend to ignore repeated reminder emails and delay payments over the due date because of cash flow issues. 

As a result, most mid-sized businesses see a rise in DSO and a downfall in overall cash flow. But why are existing methods failing to cater to the needs of the new-age AR? 

Let’s discuss the three biggest challenges for mid-sized companies below:

Manual processes hold back scalability

A top-performing finance team needs to adapt, improve, and execute new collection strategies. Legacy systems and manual processes don’t provide the required flexibility. The finance team finds it challenging to handle huge customer data and calls manually. 

Although, here are a few collections tips and tricks to help you streamline your existing AR collections processes.

Poor customer and inter-company communication

Due to the absence of proper record management, analysts may not be able to revert to customers on time. Within an environment of manual processes, it gets tough to gather data from different departments as well and stay up to date with the ongoing collection activities. 

Poor collection calls prioritization

A regular finance analyst makes 30+ calls daily. However, to be effective, they need to distinguish between low-risk and high-risk customers. With limited resources at hand, it gets difficult for small and medium businesses to prioritize their calls. It is essential to have a streamlined strategy to deal with changes in collection priorities. 

An average collections team spends the majority of their time on calls. Targeting reluctant customers could lead to long calls eating up the valuable time of an analyst. 

At times, if the customer data is not updated in real time, a customer who has already paid could get a reminder call. This will result in a poor customer experience and affect your business relationship with the customer. 

How Does Digital Transformation Come to The Rescue?

Collections play a crucial role in the business’s financial success. Limited IT and operational resources would act as roadblocks to finance teams around the globe.

In the B2B world, past-due payments can hinder business growth. The older the payment is due, the harder it is to collect. Therefore, the primary goal is to prioritize customers based on aging buckets and follow up to avoid the risk of bad debt.

Automation could make the AR collections management process easier by removing the tedious part of the job and allowing A/R analysts to focus on customer communication as a top priority.

SMBs need to understand how exactly automation can help streamline their collection processes. Let’s dive into how automation can optimize collection processes to collect cash faster while maintaining a positive customer experience.

1. Auto-generated emails and letters

Sending regular correspondences and reminders to individual clients is a tedious process, involving time and effort. However, automated dunning via email with easy-to-create correspondence templates could help in sending and tracking en masse collections emails to scale collections outreach.

Let’s take a look at the two basic types of emails sent to the customers as a part of the dunning strategy:

Reminder Emails

Reminder emails are sent a few days before the due date as a reminder to customers about their unpaid invoices. This ensures that the customer pays on time and ensures that the invoice does not overdue.

Past-Due Emails

These emails are sent when the customer fails to make the payment before or on the due date.

For example:

• The first past-due email is sent either on the due date or a few days (grace period) after the due date of payment. In this case, to ensure a positive customer experience, you need to set the tone right in the email-template with a bit of a sense of urgency.
• When customers fail to pay even after 60-90 days past the due date, a more assertive tone can be used in the email. However, it’s essential to avoid sounding unfriendly to maintain a good relationship with the customer.

2. Excel-Based Optimization

Despite a few businesses adopting new technologies to optimize AR, most SMBs continue to use spreadsheets. However, increasing market share makes it challenging for analysts to rely on spreadsheets as it requires a lot of time and effort.

Excel-based collections and dunning automation tools help SMBs collect more while maintaining a positive customer experience. With ready-made email templates used by professionals across 700+ leading order-to-cash teams, SMBs can focus on higher-priority tasks.

Excel-based tools might boost productivity and help in scaling up collections outreach. However, adopting AR automation software is a more efficient solution to automate processes related to AR collections.

How Can HighRadius Help You?

AI-driven proactive collections have led to faster payment cycles and lower DSO. The bottom line is that most SMBs are in dire need of innovations to improve collection processes.

If there’s only one Sherlock Holmes, HighRadius’ Radiusone AR Suite pre-loaded with apps like Collections, e-invoicing, credit risk, and cash reconciliation app is the one for mid-sized businesses.

HighRadius offers RadiusOne AR Suite specially designed for mid-market CFOs. Its Collections app is a one-stop shop for all of your AR collections automation needs.

RadiusOne AR Suite integrates seamlessly with ERP systems, allowing businesses to streamline their collections and dunning processes. This can help to reduce the risk of errors and ensure that all data is accurate and up-to-date.

The integration also provides businesses with real-time visibility into their accounts receivable data, allowing them to make informed decisions about collections priorities and resource allocation.

The Collections app helps you with:

1. Automated prioritized worklist to focus on high-risk customers
2. Automated dunning with ready-to-use correspondence templates
3. Invoice delivery via emails, or integrated customers A/P portals
4. Enabling collectors with VOIP in-app calling and making notes, payment commitments, and reminders

Access collections data in real-time and improve past-due recovery while reducing operating costs, and more!

With that being said, automation would work as a boon to the receivables industry, streamlining the O2C cycle. Leverage AI-enabled solutions to transform the way you collect payments and accelerate your revenue growth today.

As we come to the end of this blog, here are some of the next steps you can take:

• Discuss the problems that your collection teams face
• Identify improvement areas in your current collection processes
• Drill down on the technology that you use presently
• List down the features that your AR software needs to have
• Contact solution providers to understand the scope of the solution
• Determine the ROI and present it to your management