Late payments, why do you haunt us so?
If you’re struggling to get your customers to part with their cash, you’re not the only one. This has been an eternal challenge in accounts receivable (AR), and it’s only getting worse.
In the 2023 edition of the Atradius Payment Practices Barometer, it was revealed that overdue B2B invoices had increased by 7%. As banks around the world continue to raise interest rates, customers are responding by conserving cash and limiting borrowing to better manage today’s volatile economic environment.
So, how do you keep cash flowing against all odds?
Well, just like Batman had his utility belt to fight crime, there are tools you can use to optimize your financial performance. Artificial intelligence (AI) is the innovation that will enable your AR team to overcome today's cash flow challenges.
➜ Become an AI Expert with the Ultimate AI Guide for AR Professionals
AI gadget #1 - self-writing emails
Customer communications are one of the most important tools in your collections arsenal. An effective email can speed up payment while increasing customer satisfaction, but what’s the secret to better communications?
Learn how CorneaGen used AI to streamline their email communications.
Using AI, you can build out your email template library in a fraction of the time than if you were writing communications manually. Pre-defined prompts allow you to quickly compose messages, meaning you don’t need to spend time researching the right words to say. AI will tailor prompts based on the stage of the dunning cycle, proposing softer language for emails at the beginning of the process and more urgent messaging for emails sent later down the line.
These emails can be easily personalized, with AI pulling in smart fields for all your communications, such as the name of the recipient and the invoice number. This ability to personalize may sound basic, but it’s essential. It creates engaging emails that speak directly to your customers and demonstrate that their business matters. And when you do this, you increase your chances of being paid.
AI gadget #2 - language processing
AI doesn’t just support customer outreach. Using the technology, you can more efficiently manage inbound emails and inquiries.
If there’s one thing that won’t help you get paid on time, it’s ignoring customers. Of course, you would never do this intentionally. But the sheer volume of responsibilities that your team must manage often means that customer requests are left languishing.
Want to go deeper with this subject? Discover how to effectively manager customer inquiries with this blog post.
Using natural language processing and machine learning, AI scans incoming customer messages, categorizing communications and recommending effective actions to take. That means your team no longer needs to sift through emails and time can be better spent immediately engaging the customer on their query and determining a resolution. And guess what? This gets you paid faster.
Featured Resource: The AI Guide for AR Professionals
AI gadget #3 - payment prediction
You’ve got your dunning notices lined up and ready to go, but have you got a collections strategy?
Using predictive analytics, AI helps you to understand customer payment behavior on a much deeper level. Through studying historical payment performance, AI provides a credit grade that indicates the payment risk each customer poses. It also goes further, offering accurate insight into when you can expect to receive payment for each invoice.
Ready to take your cash flow forecasting to the next level? Make your forecasting dreams come true with this article.
The advantage this offers your business cannot be overstated. In the context of collections, it means you can identify at-risk customers and prioritize them in your follow-up efforts. In the context of credit management, it means you can make informed decisions on who you next extend credit to. And in the overall context of your business health, it means you can gauge your company’s current economic status, see where it’s headed, and mitigate risk by conserving cash when funds are tightening.
AI gadget #4 - touchless cash application
Cash application is the last piece of the puzzle. Until it’s completed, the money you’ve received from a customer might as well not exist. That means a slow cash application process directly impacts your cash flow.
When a payment is received without customer data, should your AR team have to spend time scrolling through systems to identify the account the payment should be applied to? Or would you prefer to use AI to simultaneously analyze payments and corresponding invoices to suggest the most likely accounts the cash has come from?
Manual cash application hurts your cash flow and customer experience. Learn more about the consequences of manual cash application in this blog post!
With AI, you can welcome in a world of touchless cash application that benefits your business, your employees, and even your customers. Customers no longer face the risk that their credit is put on hold when they’ve already paid their invoice, but it's tied up in your cash application process. Your cash is applied faster — so it’s available to use — and you foster good relations with your customers that keep them paying for your services.
Featured Resource: The AI Guide for AR Professionals
Use AI to keep the cash flowing!
As an AR professional, you don’t can’t control an unforgiving economy. But you can arm yourself and your team with the gadgets to take it on.
By leveraging the information and links in this article, you will be able to utilize AI-powered technology to accelerate cash flow in accounts receivable like never before! Best of luck to you.
