Customer communications surrounding accounts receivable (AR), particularly those regarding overdue payments and the initiation of collections, are among the trickiest to craft given the critical balance of clarity, urgency and compassion. However, AR communications are also some of the most frequent and consistent messages sent to customers, making AR an integral piece of your company’s customer communications portfolio. The increase of overdue payments during the COVID-19 pandemic resulted in a turning point for these communications by highlighting the power of AR to make or break a customer experience. Among other findings, it became clear during this period that factors such as account visibility and range of available payment options also have a powerful influence on customers’ ability — and willingness — to pay on time.
Automation provides a consistent communication sequence
In a typical sequence, AR communications begin with an advance reminder before growing increasingly urgent during the first 30 to 60 days after a missed payment. In some cases, this sequence is altered slightly to fit standard customers (often individuals with smaller accounts) versus white glove customers (often companies, larger accounts or customers who have indicated specific preferences regarding their communications). Regardless of segment, customer experience is negatively affected when a notice of collections isn’t preceded by gentle reminders, and the customer relationship can become strained when these urgent messages appear to arrive out of the blue. However, this aspect of customer experience can be greatly improved by automation, which ensures reminders are sent at regular, predictable intervals.
In a recent study of companies at the beginning stages of AR digitization, 96% said their primary reason for the investment was a desire to improve interactions and overall customer experience. Whereas manual processes may mean customers don’t learn of their past-due status until they receive a phone call from a team member, automated communications offer a more gradual course of action — all while using this important customer touchpoint as an opportunity to create a consistent image of your brand.
Introducing automation into your AR processes also has benefits for your workplace. By reducing the amount of time spent on tedious processes, such as drafting and tailoring communications or making phone calls, automation frees your employees to focus on higher-order and strategic concerns. Additionally, the ability to track the delivery of communications using a digital AR tool can make it easier to parse ignored communications from ones that have bounced due to an invalid email address. Determining whether and when a communication was received in the first place, in turn, increases the efficiency of the troubleshooting process, eliminating one potential reason why a payment wasn’t made on time.
Finding the right tool to automate your AR operations
Searching for the right tool to automate your AR communications begins with an assessment of your current process. In addition to identifying any inefficiencies in your workflow, you’ll want to determine your days sales outstanding (DSO), the metric that measures how quickly your customers pay. A lower DSO frees up working capital, so it’s important to identify a solution that offers a reduced DSO as part of your ROI. Since many products offer a full suite of automated options — including everything from customer onboarding and credit risk to collections, payments and dispute resolutions — assessing your current processes is a critical step in identifying your highest priority must-haves to select a solution that fulfills at least 90% of that wish list.
Another important determination concerns the existing systems you plan to integrate with your AR solution, which need to be compatible with the solution you ultimately choose. The use of generative AI may also be an attractive feature of these tools, since these platforms can provide a strong starting point for email templates that reduce the amount of time human employes spend on drafting. Generative AI models such as ChatGPT can also populate templates with relevant customer data, contributing to streamlined efficiency. However, it’s important to keep in mind that any communications drafted by generative AI are not error-proof and still need to go through a quality assurance check in advance of delivery.
We often hear that AR is more about collections than customers, but nothing could be further from the truth. AR communications are among the most consistent touchpoints throughout the customer relationship, in addition to being a frequently overlooked opportunity to communicate a consistent brand identity and voice. Automation improves the customer experience by increasing consistency of communications and by offering a more gradual way to escalate concerns regarding an unpaid balance. While it may seem counterintuitive, automation enhances the human element of each transaction — prioritizing the satisfaction of white glove and standard customers alike.
SARAH-JAYNE MARTIN is Director of Financial Automation for Quadient. Martin has more than 20 years of experience in finance. Prior to Quadient, Martin served as Director of Order to Cash for several large firms, managing global teams. Martin is passionate and deeply committed to helping businesses improve the accuracy and efficiency of their financial processes and customer communications through industry best practices and the applications of financial technology.
