The collection industry is an 11 billion dollar industry. In 2016, companies sent 392.5 billion dollars to 3rd party collection agencies, and they could only collect 78 billion dollars. What if companies had a tool to get more payments? Would collection agencies still exist? Could they get more than 78 billion paid using better tools and keeping all of the revenue in-house? For now, it’s less expensive for companies to turnover uncollected bills to agencies since manual workforces have high costs. They’re willing to lose 20-40% of whatever agencies can get. That’s changing because there is new, less expensive, and more effective software changing the game.
Artificial Intelligence (AI) is new technology helping companies to do more with less. Big, manual, slow, and expensive processes can be automated. Guesswork from not using data to make decisions is also being eliminated. Now, businesses can operate more efficiently and smarter to lower costs and get better results.
AI is being applied to accounts receivable management and collections processes at companies. Currently, companies only ask for the total amount due, now, and rarely offer payment plans which demand more in a shorter period of time than most can afford. The all or nothing strategy is contributing to a lot of revenue leakage and customer stress. Payment plans that are being offered are rules based and don’t factor in the individuals’ current financial picture. There are 392.5 billion reasons why this decades long approach doesn’t work. AI is creating more payment options customized to fit each person getting away from rules-based strategies and one-size-fits all methodology.
Eliminating the mystery of an unpaid account, AI is able to assess data and identify the probability of receiving a payment. For each customer, AI uses unique data combined with pattern recognition from other data to calculate how much the consumer can pay allowing companies to create and delivery tailored payment solutions. Customized, unique payment options generates more cash flow increasing payment rates and reducing unpaid receivables. There are fewer revenue loses, less is spent on capturing payments, and less is lost to collection agencies charging high commission rates.
The application of AI has many places in finance departments especially in A/R management and collections. Since the AI works 24/7, it’s constantly monitoring customer behavior and making adjustments accordingly. For example, if a customer misses a payment or breaks a customized payment plan agreement, the AI automatically troubleshoots to get the customer back on track. There will be a payment plan proactively calculated and distributed, or a new one will be created replacing the old one that failed. All of this is done automatically without the interaction or administration of a human. With the constant attention and solution seeking AI, payment delays are reduced preventing cash flow chokeholds.
How are we able to do this now and not 10 years ago? The reason, companies are collecting more and more data and see the value in data. Simultaneously, the customer’s electronic interaction is increasing leaving a trail or footprints online and with software tools creating data. This data can be measured and analyzed in many ways to make a variety of business decisions. Companies can integrate both data sources, company and customers, to create AI models enabling them to increase collection rates reducing the amount of dollars lost to collection agencies.
Last, AI is solving a pervasive and well known problem caused by collection agencies, terrible customer experiences. Collection agencies commonly call the debtor several times a day all day long. It’s irritating and viewed as harassment by customers. People have learned to ignore unknown numbers especially when they have a bill that has gone to collections. Plus, they expect to be badgered, shouted at, talked down to, and pushed into paying more than they can afford. AI capitalizes on people not answering phones. It can interact with the customers in a friendlier more modern way by answering questions and offering solutions through texting and email. Customers positively respond to text and emails associated with unpaid bills because they are given the power to decide when to interact with the AI without talking to a person breaking down barriers to pay. The emotions and psychology from having a late bill or one in collections has been underestimated.
Is this all science fiction? Nope! A California company has already developed cloud software that uses AI to do exactly all of the formerly mentioned. The AI has proven to increase payment rates on past due to account by 40% within the first two weeks of integration. Combining cutting edge technology with the mission of helping customers avoid negative credit impacts caused by written off accounts, companies keep more of their cash while strengthening customer relationships. It’s a low cost win for everyone benefiting our entire economy.
If you are looking for software that uses AI to help you to manage your accounts receivable, or would like to learn how AI can help, take a look at ““.
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Founder Dinis Guarda
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