YayPay CEO Anthony Venus writes for PaymentExpert on how firms are benefiting from Artificial Intelligence when it comes to steering away from bad debts and ensuring bills get paid efficiently. 

Cash flow and working capital are the lifeblood of every business. Delays in collecting cash for the goods or services companies deliver can delay growth and increase costs, for instance, triggering interest on borrowed money to cover production costs, or forcing companies to hire or assign employees to collect debts. Bad debts sometimes have to be written off, blowing a hole in a business’ balance sheet. 

The accounts receivables process has been one of the last business functions to embrace change in the way that enterprise solutions such as Salesforce have done for client relationship management (CRM). Today, debtor management is typically performed across disconnected spreadsheets and siloed systems. The reconciliation process can involve merging disparate CRM, Enterprise Resource Planning (ERP) and email systems. Accounts receivables teams are having to execute mail mergers often with thousands of different communications over email. Manual data entry can lead to mistakes and disputes companies also have to send out individual follow-ups and chasers for each invoice, numbering in the thousands (or more) every month. SMEs deal with anything between 500 to 1 million invoices. Companies often end up having to hire a small army to do the work. 

Thankfully, with new technology, these are inefficiencies that can be easily addressed. Clever accounts receivables software can help mitigate these risks and transform a cost centre into a revenue-generating engine. The way that companies collect bills can have a huge impact on the relationship with the customer. With new technologies you can bring this aspect into the future and automate the process, taking finance to the levels of efficiency that we see in the marketing and sales departments. Accounts receivable software that is turbo-charged with machine learning, artificial intelligence and automatic payment communications can reduce the number of manual processes and human judgements currently required to collect balances due. 

Smart software can predict how long a customer will take to pay an invoice, and what is the likelihood it will turn into bad debt. Companies can then focus resources on anticipating problems before they happen, and on building stronger relationships with customers to ensure speedy payment. By accelerating collections and eliminating or streamlining the manual effort associated with following up on late invoices, organisations can improve productivity, predict cash flow and increase revenue.

It sounds obvious, but by connecting all the disparate pieces of data onto one system, you can make the accounts receivables process much smoother. It also makes the customer’s job easier. If you are a buyer, you can log on to the system, log a dispute and pay online. Accounts receivables teams then have visibility on who is going to pay you, who is not, who is going to be delayed in paying you. The rate at which companies can speed up the rate of payment is huge.

All these functions and processes have become increasingly important during the COVID pandemic, as ‘cash is king’ and companies rush to conserve liquidity and ensure they get paid. That’s harder than ever for those accounts receivable teams that are trying to work from home and away from their desk-based, clunky, legacy software systems and paper files. Maintaining communication and collaborative working in this environment is a challenge, but with new technologies simplifying and streamlining this process has become easier. 

There are a few additional factors driving this technological acceleration in the accounts receivables space. The future of work requires digitisation of the back office. If you are a digital native, you don’t want clunky spreadsheets and disparate systems. You want user-friendly interfaces, intelligent platforms and smart applications. The millennial workforce is driving this increased digitisation of the back office. 

Furthermore, the digitisation of B2B payments and the replacement of paper payments is another driving factor. No more paper invoicing. The UK is right at the forefront of this movement. 

Digital automation in accounts receivables is a new trend that will only accelerate thanks to the pandemic.  For CRM, read Salesforce, for ERP, read Netsuite and for expenses, read Concur. Accounts receivables may have been last out the door, but it is growing fast, and thankfully the technology now exists to supercharge the automation of this back-office function.