Mission impossible: how AI can help you sustain cash flow in a recession
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.
While Tom Cruise performs in the seventh instalment of Mission Impossible this year, AR teams are facing the real thing. How can they keep cash flowing against all odds?
Well, just as Tom needs his gadgets to save the world, AR teams cannot hope to manage their own mission impossible without a little help. As much as you might want Tom’s wall-climbing gloves, artificial intelligence (AI) is the innovation that will enable your AR team to overcome today's cash flow challenges.
Interested in the topic of AI in finance? Save your seat for our session on July 25th!
AI gadget #1 - self-writing emails
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 enquiries.
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.
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.
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.
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?
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.
Use AI to make your mission possible
As an AR professional, you don’t have the choice to turn down the mission of collecting cash in an unforgiving economy. But you can arm yourself and your team with the gadgets to take it on.
If you’re interested in seeing these AI capabilities at work, contact us today for a demo: https://www.quadient.com/en-gb/ar-automation/request-demo
Or, if just want to learn more, join us on our July 25th webinar: AI – The Terminator of Finance Professionals?
