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World-Class Collections

Seven Essentials to Move from `Average’ to `World-Class’ Collections

Collections is a fundamental but time-consuming and costly task for an enterprise. The technologies of digital transformation can change how collections gets done. Through application of integrated, intelligent technologies, organizations can see significant savings and improvement, and achieve data-driven operations, adding new value to an organization.

Enterprises are flying nearly blind in their collection of accounts receivable. The collection process is labor-intensive and requires exhaustive information, but few can access that information in anything resembling real time. So, collection efforts are hampered. The focus is necessarily on the largest customers and bills, with many mid and small-dollar invoices aging unchecked. The more global the organization and the higher its volume, the more difficult it is to keep up.

Advanced technology is essential for efficient collections. To meet the collections best practices identified by the Hackett Group requires an enterprise to “go digital.” That means optimizing automation through the application of machine learning, analytics, and digital assistance. It also means the consolidation of complete information for availability and visibility.

While a pipe dream in the past, today, there are digital AR/Order-to-Cash platforms that bring together the information and tools to provide enterprise-wide visibility and remove 80 percent of the manual collections work through AI and associated technologies. The technologies free collectors to monitor all accounts, manage the exceptions, and gain valuable insights from the data. There are seven “digital” elements necessary to achieve this new level of collections performance, made possible through the application of artificial intelligence (AI) and analytics to automation technologies in a big data environment.

1. An Enterprise-wide View

Gaining a global view of the AR portfolio is paramount to many organizations, especially those dealing with high-volume portfolios. But it has required a great deal of manual effort to assemble the data, and impossible to get close to real-time information. Digital receivables, however, overcome the fragmentation of systems and data, offering visibility of current enterprise-wide AR information.

Digital AR/O2C platforms achieve this by combining advanced APIs and cognitive document processing with the consolidation of all relevant AR information into a single source data lake. Managers can finally view the entire picture, as well as by business unit or customer detail. This long-sought capability is becoming the new model. Such unified digital AR portfolios provide the foundation for digital collections.

2. Automated Collection Strategies

An organization must define a central strategized process for collections. Once an organization develops its strategy, it can apply it to a digital collections system and set it on autopilot. With process defined, a digital system employs machine learning and analytics to determine actions appropriate to each customer.

For example, if an invoice is 15 days past due for a customer that usually pays on time, an organization may want to send a gentle reminder. But if the customer is habitually late in paying, the system will identify that and send a different communication.

So, there is upfront work in determining strategies. But once the organization sets them up, an intelligent digital platform will track customers’ changing behaviors and automatically correspond appropriately to the customer while alerting collectors and AR managers where to place the attention.

3. 100 Percent Customer Touch

The automated collections system does not have the limitations on time and attention that human collectors do. Instead, it can maintain continuous touch with all customers, large, small, and in between, sending invoices, statements, and tailored messages based on customer behavior and collection strategies.

As an essential step in digital collections, an organization sets up correspondence messaging that is meaningful for it and its customers. It must define dialogs for its communications and create templates. Companies must design consistent statement and invoice formats that customers can easily understand and the circumstantial messages for letters and email.

The system takes these tools and messaging and automatically communicates with every customer–100 percent customer touch.

4. Digital Assistance

State-of-the-art AR/O2C platforms employ digital assistants to provide automated, interactive, verbal support to customers. For example, if a customer has a question, wants to see another document, or wishes to make a payment, they don’t have to make a phone call or send an email and wait. Instead, a digital assistant is accessible in the customer communication, ready to answer the question, provide information or guide payment.

For example, AR/O2C platform provider Emagia has an AR digital assistant called “Gia” trained in over 100 AR/O2C tasks. Gia is available in invoices, statements, and collections letters. Gia saves time and facilitates customer self-service in answering questions and enabling payments, significantly cutting collection time.

Customers want to be empowered to get information and communicate online on their schedule. Digital O2C with a digital assistant allows customers self-service.

5. Prioritized Task Lists

Digital collection automates collections activities, removing collectors’ mundane and largely manual efforts for 80 percent of the AR portfolio. Meanwhile, it alerts collectors to the 20 percent that require human interaction. In these cases, an automatically prioritized task list supports the collectors.

In digital collections, analytics play a crucial role, continuously monitoring accounts and presenting collectors with prioritized tasks. As a result, the collector no longer must spend valuable time gathering and sorting information to determine priorities. Instead, every day the system automatically provides collection priorities, along with features like automatic dialing. The system can also transcribe call voice recordings into the customer record.

6. Digital Bots

Digital bots combined with cognitive document processing support productivity by automating several tasks in receivables collection. For example, bots post invoices to customer sites, gather payment or remittance information from customers’ vendor portals and read stacks of emails. Unfortunately, most organizations are doing these activities manually outside their systems, which is highly time-consuming.

Digital collection systems bots handle these tasks. That frees up staff to focus on collection strategies, cash flow forecasts, and analytics.

7. Analytics and Cash Flow Forecasting

What will the organization collect this week? What will it collect next week? These are vital questions. With a single-truth source (data lake), organizations have the data. Digital AR/O2C platforms apply analytics to that data to understand patterns and provide more accurate cash forecasts. And through machine learning, forecasts get more refined over time.

Not only can analytics provide history and predictive forecasts but also prescriptive action. For example, a company can see what it would mean if every customer paid on time versus paying according to standard patterns. The company can look at a black swan scenario to see the impact and look at other “what if” scenarios. Analytics is a powerful aspect of a digital system utilizing combined intelligent technologies.

Consequently, AR and collections can become a data-driven intelligence operation, adding new value to an organization. Digital transformation of business services functions, according to Hackett, is how an enterprise will move to world-class performance.

For a demonstration of Digital Collections or the complete capabilities of digital AR/O2C, contact Emagia.


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