Automating the money (collection) business

Published on the 28/02/2019 | Written by Heather Wright

Automating debt collection

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Chasing late payments a cashflow and productivity drain…

If automation is about freeing staff from the mundane, frustrating work, the collections area should surely be ripe for the picking.

Businesses across Australia and New Zealand are put under financial pressure when they’re not paid on time. The Atradius Payment Practices Barometer last year showed that more than 40 percent of the total value of Australian domestic B2B invoices remained unpaid past the due date, with an average payment delay of 20 days.

It’s a big enough issue that Australian Prime Minister Scott Morrison waded in last November, noting that cash flow is a critical issue for small business and saying big businesses will be required to publish information on how quickly they pay smaller suppliers, with those tendering for government required to pay within 20 days.

It is also an issue that is highlighted in the recent report issued from the joint A/NZ Productivity Commission, which estimates up to $30billion in value could be unlocked through e-invoicing initiatives  providing “substantial benefits to firms, through lower administrative costs incurred in processing invoices, faster payment of invoices and fewer errors,” according to the report.

“This information is gold for a credit manager.”

“This demonstrates that there are problems that must be addressed,” says Eric Maisonhaute, Esker director of accounts receivable solutions.

Esker this month launched a collections management automation solution, which it says “automates what should be automated – eg task lists, collection calls needed, sending account statements and payment reminders, etc – while providing real time visibility on collection performance.

Maisonhaute says the potential for automation is ‘immense’ in the O2C (order to cash) and P2P (procure to pay) cycles.

“Our research and development department has not waited for artificial intelligence or robot process automation to become a trend to invest in it,” he says.

“We have embedded machine learning and deep learning inside our solutions, and we keep developing our AI engine to support the existing automation of O2C and P2P cycles.

“This includes leveraging the millions of documents processed through out platform to better recognise and extract data out of orders or invoices.”

Maisonhaute cites establishing collections forecasts based on analysis of previous customer payment behaviours as an example of using AI in cash collections.

“This information is gold for a credit manager.”

There are caveats to collections automation, however. It’s there in the emphasis Esker puts on automating ‘what should be automated’ and in the emphasis DebtorDaddy puts on smart technology with the human touch.

“Automation at this stage is ultimately a critical part of the process but unless you are baking in human intervention in a planned kind of way, you will get sub-optimal results in terms of collection results and there could be impact on customer relationships,” says Matt McFedries, DebtorDaddy co-founder.

“Automation can be a bit of a blunt instrument if it’s set up wrong.”

McFedries is a believer that collections is part of the customer experience.

“If you design your process around the entire customer experience from quote, to invoicing, through to payment, through to follow-up, you increase your likelihood of getting paid – and not annoying them.

“Automation goes wrong when people think switching on automation will fix their problem, without thinking about the overall customer experience.”

That said, automation is playing an increasing role in parts of the process, particularly the very start, and the very end.

McFedries says automated reminders – the ‘oops, did you forget to pay’ note – is an area which can positively impact any business at a basic level. But he warns it’s not a miracle worker. “The effectiveness tails off over time because humans are pretty good at working out what is automated and what has a real person behind it.”

Which is where putting a real person in the equation for a followup call, helps, McFedries notes.

The debt collection aspect – where the customer relationship is pretty much over – is the other key area for automation, he says. Google auto diallers and debt collection and you’ll see the world of pain some in the US have experienced.

“But some of the stuff now is using machine learning and AI to consider other factors and personalise digital follow-up – generally email and txt with customised landing pages to tailor offers that look like repayment plans.

“It’s a digital first option that is fairly new and not that common at this point.”

Meanwhile, Maisonhaute says he’s expecting Esker’s new collections management module to appeal to a wide range of customers, saying it will provide customers with a new opportunity to digitise and automate another significant business process in their financial operations.

“[It] helps companies embrace digital transformation without replacing their core collections processes by eliminating manual collections pains, accelerating payments and empowering the AR department. This includes payment reminders, collections call rules, dispute management, internal collaboration, customer portal, payments and more.

“Buying goods and services and selling goods and services is at the heart of any company, so every company in any industry can leverage our solutions to automate these key processes for their inbound orders, the delivery and collection of their invoices, the automation of their procurement process as well as their accounts payable process.”

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