It was recently reported that the U.S. still runs its nuclear program using 8-inch floppy disks. You read that correctly. We’re using floppy disks … in 2016 … to manage the most dangerous weapons in the world.
As shocking as that news was, it should come as no surprise that individuals and institutions still rely on outdated and even obsolete technologies despite the fact that we’re already one-sixth of the way through the 21st century. We don’t like change.
Look at the business world: Accounts receivable (AR) is a prime example. (Ok, so keeping company cash flow positive isn’t nuclear-launch-code-important, but important nonetheless.) Despite often being the largest or second largest asset on a company’s balance sheet, the internal processes of many AR teams remain stuck in the past, particularly the component of collections management.
Today, many AR departments manage their post-sales collections activities using sticky notes, calendar reminders and spreadsheets — not exactly technologies that scream “cutting edge.” These manual and inefficient practices are known to lead to:
- Longer DSO times
- Low staff productivity and engagement
- Lengthy invoice disputes
- High credit risk
- High transaction, financing and admin costs
- Lack of visibility and forecasting
- Increased rate of bad debt write-offs
The Pentagon expects to replace its floppy disk system by the end of 2017. What’s the plan for modernizing AR’s outdated processes? For more and more companies, it’s becoming increasing clear what the remedy is: AR automation.
How AR Automation Empowers Your Collections Team
Automation doesn’t always bring to mind the most positive, reassuring thoughts. People often think of it as a replacement for their jobs and processes. While this might be the case in other industry specific functions (e.g., vehicle assembly line), it’s quite different for AR departments.
An automated AR solution is simply a complementary tool that works with your existing infrastructure. It works by automating the manual tasks that should be automated while helping everyone perform their jobs better.
Here are some of the key ways AR automation empowers collections teams:
- Eliminates tedious, low-value work. Capabilities such as payment reminder emails, report scheduling and an online customer portal take human involvement out of the areas that aren’t actually necessary to make AR function. The effect? Payment is accelerated and your staff gets freed up to make your company more money.
- Optimizes the most essential activities. Not all of AR can or should be electronic. That’s where automated features like customized to-do lists, account lookups and call logging can help optimize team efficiency and make sure everyone is performing the most value-added tasks.
- Provides 100% visibility. Gathering and analyzing data manually can be a nightmare — that’s why most AR departments avoid it. Automation offers tools like root cause analysis, collections forecast and collector performance to uncover and fix issues quickly and easily.
- Positively impacts all stakeholders. Your collections team doesn’t operate on an island. If the processes are slow and confusing for others in the collections cycle, issues will ensue. Thankfully, automation provides a streamlined process for every stakeholder — from a self-service portal for customers to customizable dashboards for management.
Eager to learn more about the benefits of AR automation on collections management? Download our eBook, Using AR Automation to Empower Your Collections Team (Not Replace It). It goes into more depth on the subjects discussed here — you’ll love it!