How can technology be used to transform debt collection processes?
For many businesses, debt collection can be an arduous, time-intensive, and at times, frustrating task. Having an effective handle on your sales ledger control account, however, is vital for ensuring your business maintains a healthy cash flow position. Getting paid what you are owed when you are owed allows you to better manage your company’s finances and plan for the future.
Neglecting your collection strategy and allowing outstanding debts to remain unpaid puts you at risk of the debt turning bad and ultimately being uncollectable. This can have a devastating impact on your financial position and your ability to service your own outgoings. Recurrent non-payment can even tip your company over into insolvency if there are not sufficient reserves to bridge these cash flow gaps.
How can technology help in debt collection?
As with many areas of business, the finance industry is undergoing a transformation due to the growing use of AI, machine learning, and the advancement of technological platforms. The automation of routine tasks from data entry through to payroll and invoicing is helping to improve efficiency and free up valuable resources which can be directed elsewhere across the business.
While it is natural to be hesitant towards a new way of doing things, embracing what AI can do for your business can streamline your current processes and supercharge your returns in the process.
How does debt collection automation work in practice?
Set up a series of tasks (known as workflows) and technology will work through these in order; depending on the outcome of each task, a follow-up task will then be triggered if required.
In practice this could mean sending out a payment reminder to customers a few days before the invoice becomes overdue. If payment is made, no further action will be taken. If payment is not made, a further payment reminder will be triggered on the due date. Further reminders will then be sent should the account become overdue. The wording of each communication can be tailored to the situation, e.g. you could set up the workflow so that the messaging becomes more urgent the longer the balance remains outstanding if you choose.
What are the benefits of using technology in debt collection?
While the benefits of using technology to aid debt collection are clear on the side of the creditor, debtors too can benefit from the convenience and sense of anonymity automation brings.
Debt collection automation helps keep the collection process at arm’s length. This can be particularly beneficial if payment is late and your client feels too awkward or embarrassed to answer your calls and provide an explanation for their non-payment.
A payment request or reminder from an app or other digital platform can be dealt with without having to engage in any meaningful way with the person or company behind the request. They can simply make the payment, close the app, and get on with their day.
While ensuring a human face to your brand can help when it comes to selling your products or services, when it comes to paying debt, sometimes anonymity is best.
Even when payment is not late, giving your customers the ability to settle their account at any time of the day, from anywhere in the world, is likely to increase your returns. A simple notification at the right time could be all that is needed to trigger an immediate payment. Remember, you need to make it easy for customers to pay you what they owe; by removing potential barriers and facilitating a easy transaction, you greatly increase the chances of prompt payment
By harnessing the power of AI you can improve your debt collection processes which not only means greater creditors returns but also more time freed up to focus on doing what you do best – running your business.
About the author – Chris Bristow is a business debt expert at Real Business Rescue, company rescue, restructuring and liquidation specialists with a wealth of experience in supporting company directors in financial difficulty.