AI vs Human: what’s best for cash collection?

Rob Harvey, Chief Product Officer, Sidetrade, explores the role that AI plays in a cash collection.

A struggle is raging in the boardrooms; it’s all about cash, and it needs to be because the creation of a technology-aided strong cash culture will not only help businesses weather the storm that is the Covid-19 pandemic but also sail through future crises.

Financial advisory firm KPMG’s recent survey of CFOs found that 75 percent of them pointed at cash as a principal item on financial boards’ agendas. And that’s perhaps no surprise, with the lockdown exacerbating the speed of cash collection.

According to the Sidetrade unpaid invoice tracker, the average volume of unpaid invoices in the UK has increased by 217% since the World Health Organisation declared a pandemic on 11th March 2020. A recent survey by KPMG France showed that 35 percent of invoices were 10 days behind the payment date, compared with 20 per cent before the French government introduced what were, in effect, quarantine rules.

With a cash conundrum to be solved, the world of finance leaders and enterprises is turning to innovation for help, and where better to seek a solution than AI-based automation technologies? Specifically speaking, an intelligent automation system fashioned out of machine learning, and natural language processing algorithms, all working together to produce a formidable predictive analytics package.

Benefits of AI cash collection

One of the big advantages of AI cash collection is its versatility, and it can assume a number of roles in the finance team of every B2B organisation. In real-world terms, it’s like the footballer who you can put in any position on the pitch and who’ll always deliver consistently.

AI can balance workloads across finance team members and automatically generate those all-important ‘to-do’ lists, concentrating on the cash opportunities generating maximum profit. With its workload share boosting the overall team capacity, it could be tasked as being another head in the collections team.

The other scenario sees AI as a ‘backroom operator’ carrying out those tedious, repetitive but essential dunning tasks, which saves a significant amount of time compared with human intervention.

Systems using AI can also be used to ‘cherry-pick,’ focussing on cash collection from lower-value accounts, freeing human collectors to concentrate on those all-important accounts.

This flexibility makes your human collectors’ lives much easier, and the impact on their stress and morale levels is a genuine positive, something you’ll be appreciated for given the current health crisis that continues to play out.

How AI works within cash collection

The AI system pulls information from sources such as CRM (customer relationship management) and ERP (enterprise resource planning) databases and open datasets. Using the data mined from these will score your customer payment behaviours, assess them, and then decide on the correct strategy. Being linked automatically to any electronic data interchange formats also simplifies and speeds those business processes up – like sales orders and e-invoicing, for example.

It can then track and adapt that strategy on future customer data, ‘seeing’ trends in that data useful for modelling and predicting customer behaviour. Recognising patterns in past data and customer habits is very useful for improving future customer payments.

AI is not replacing the human, it’s simply presenting the opportunity to focus

Replacing manual workflow processes, which could be using outmoded spreadsheets not originally intended for processes like these – think ‘Excel’ here as an example – can also help minimise business risk in new ventures whilst automatically complying with the General Data Protection Regulations. Falling foul of these regulations can be very expensive, not just financially, but also reputationally. Who wants to do business with a firm whose data protection strategies are flawed? 

A key argument for using AI in the standard workflow process is the analytical functions such a system can provide. Intelligent automation can deliver fine-grained insight into the cash collection process, allowing trends and patterns to be distilled. If you’re a business the datasets overseen by AI could run into millions of payment experiences and dunning actions.

Imagine a human being asked to oversee and spot trends in such a large dataset and the time it could take. AI does this automatically and as a result can predict good and bad client payment behaviours, significantly minimising business risk by identifying customers who are wrestling with debt repayment. That information can be used to set up payment plans for customers who are having difficulties paying.

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There really is no time to waste…

Firms deploying an intelligent automated system will help their finance departments collect cash quicker whilst understanding customer behaviour better. An added benefit of this is that employee satisfaction with their job improves, and it enhances collaboration between previously siloed departments and the applications they use. This has the knock-on effect of improved customer retention – and that leads to faster business growth and better profitability.

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