High Touch to Hi-Tech: The Journey to Touchless Collections

High Touch to Hi-Tech: The Journey to Touchless Collections

Collections is usually envisioned as calling customers on the phone to collect past due amounts. That element of collections will continue and probably never change. However, there are many other important time-consuming tasks that are part of the Collections effort. These include compiling the database of amounts owed by all customers (aka the AR Ledger), prioritizing collection contacts, sending dunning letters & emails, routing disputes, and compiling and reporting results. If performed manually or via Excel processing, they can consume over half of Credit & Collection department time.

These are especially important now because:

  • Overall credit risk has never been higher
  • Credit department workloads have increased 200 – 400% because of drastically increased credit rating and collection workloads in the pandemic economy
  • Cash flow is a top priority
  • Expenses are tightly controlled because of revenue declines; increases in staff are unlikely

The need for efficiency and effectiveness in Credit & Collections has never been greater. Without it, cash flow will decrease to levels which could threaten the very existence of the company. Many more collection contacts will be required to keep customers paying. In addition, potential bad debt losses could build to unprecedented levels. Credit investigations of existing customers will need to be conducted every three to six months vs annually like in the past.

New customers will approach you seeking to buy on credit. They will have to be quickly and effectively vetted to ensure you do not onboard yet another credit problem. With artificial Intelligence (AI) powered digital automation, most of these tasks can be automated and made more effective.

Let’s focus on elements of the Collection process that need to be automated today

  1. Compiling the AR Ledger which is the single source of the truth encompassing all of the company’s operations (even non-integrated acquisitions) and customers.
  2. Prioritization of Collection activity incorporating the parameters and weighting chosen by Credit Leadership. This focuses effort to generate the best results with the available resources.
  3. Contacting customers to inform them of their delinquency, ascertain the reasons for non-payment, and secure a commitment to pay. Much of this contact can be performed without touch via dunning to 50% (or more) of delinquent customers, communicating through customers’ vendor portals, and your EIPP portal.
  4. Holding customer orders until a payment commitment has been secured.
  5. Reporting of results

Digital automation powered by artificial Intelligence (AI) is the need of the hour. Digitization decreases manual labor by up to 90% in most of the key activities listed above. The time and effort saved can be applied to establish personal contact with customers, analyze threats and opportunities, and develop actions to improve results.

Meeting the demands on the typical Credit and Collection Department cannot be achieved without a substantial shift to “Touchless” Collection operations. AI powered digital transformation is the only path forward to ensure exponential efficiency and to see performance gains especially in this uncertain economy.