We are entering a new era of generative AI that is set to revolutionise the world as we know it. Latest predictions from McKinsey suggest that generative artificial intelligence will contribute a staggering 4 trillion dollars to the global economy and is “poised to unleash the next wave of productivity” Although generative AI is transformative and “of the moment” for cash collection its true power will be when it is combined with traditional “predictive AI”. In this article, we look at how AI is transforming cash collection processes and driving huge improvements in their efficiency and effectiveness.
AI: An Overview
As outlined by David Sweenor in his article Generative AI vs. Traditional AI: What’s Better? at its most simple AI can be considered to be made up of three components parts: Data, Analytics & Insights & Automation. You input your data, apply analytics to it to gain insights, then utilise those insights to automate an activity.
Traditional AI
Through analysis of historical patterns in data, traditional AI uses algorithms to predict likely outcomes and enable interventions to adjust where necessary. Otherwise called machine learning, at its heart it is probability machine which deals mostly with numeric data. This is not to underestimate its power – continually collecting data and providing analytics and insights in has enabled robotic process automation, business process automation, probably got you to click on an advert within your social media feed and find yourself binge watching endless box sets on Netflix!
Generative AI
Unfortunately for traditional AI, deep learning has driven a step change in AI technology and the advent of generative AI. Whilst traditional AI focuses on the analysis of specifically determined data sets, generative AI can process vast, disconnected sets of data and information. It will trawl the internet for answers. It can carry out multiple tasks such as classification, editing, summarizing, answering questions, and can generate fresh content, visual, audio and written, which is often indistinguishable from that created by a human.
Benefits of Traditional AI for Cash Collection
Traditional artificial intelligence has already delivered a revolution within the invoice-to-cash function, enabling businesses dramatically improve the efficiency and effectiveness of their cash collection processes. Historically a manual and time-consuming process, involving a high volume of repetitive tasks, AI enabled invoice-to-cash software solutions have helped businesses to:
Automate manual tasks and increase efficiency and accuracy.
AI algorithms have enabled the implementation of robotic and business process automation across the function. Eliminating the need for manual data entry and reconciliation this not only improves speed and ensures precision within the process but enables valuable human response to be redeployed onto areas where they can add most value.
Enhance customer credit reporting and reduce risk.
By leveraging AI algorithms, businesses can analyse extensive historical data like credit scores, payment histories, and financial statements, and make enhanced credit decisions based on real-time data. This ensures business can identify risks of potential defaults early and reduce their exposure and risk of bad debt.
Improve effectiveness of cash collection processes and increase cash flow.
AI is transforming cash collection by using predictive analytics to enable the early identification of potential payment delays or defaults. By examining customer behaviour and financial data, AI can create tailored workflows boosting the likelihood of on-time payments.
Access to insights and analytics to enable data-driven business decisions & continuous process improvements.
Through the analysis of agreed collections metrics and customer payment behaviours, AI systems can provide key insights to help organisations make data-based decisions on how to optimise the efficiency and effectiveness of their invoice-to-cash processes. This data can also provide valuable insight into any upstream issues which are impacting customer’s payment behaviours and enable their swift resolution.
AI algorithms continuously analyse data, adapt to changing market conditions, and refine their models. This allows organizations to make continuous process improvement to achieve ongoing efficiency.
The Impact of Generative AI on Cash Collection
Working with vast reams of financial, numeric data it is unsurprising that the AI wins for invoice-to-cash have been so far reaching. However, if we add generative AI into the mix– we truly see a whole new world of cash collection. This is a world where we combine financial data with geophysical, demographic, social and any other personal data available in the public domain and enable the delivery of fully personalised cash collection strategies.
Generative AI-Powered Customer Insight
Generative AI not only categorises customers according to their payment history, outstanding amounts, creditworthiness, and other financial factors. It can build other non-financial metrics into the mix – demographics, family background, social media activities etc to develop a deeper understanding of the factors that impact a customer’s payment behaviours. Rather than looking to manage a handful of customer segments, generative AI has the power to understand individuals and create and deliver collection strategies for each of them that will deliver results.
A deeper understanding of your customers and their behaviours and a more personalised approach to collections is not only more likely to deliver your cash collection targets but will also improve customer experience and secure loyalty. In areas such as delivering fair outcomes for vulnerable customers it will be revolutionary. The ability to swiftly identify key drivers and ensure workflows are appropriately adjusted
Personalised collection strategies
AI powered analytics can enable businesses to identify and deliver each customer a personalised collection strategy that is has the greatest likelihood of success. Payment reminders, negotiation offers, or personalized payment plans – can be delivered in a style and tone personalised for each debtor – every detail can be tailored and optimised to ensure “customer fit” and the business to recover what is owed.
These analytics and insights can also be used leveraged when collection agents interact with customers – providing real time recommendations to help agents optimise call outcomes.
Personalised communication strategies
Through the ongoing analysis of customer data, generative AI can determine the most effective channels for reaching out to each individual debtor – whether it be phone calls, emails, SMS, or digital messaging platforms. AI can also assist in determining the best moment to reach out to customers, considering factors like payment schedules, customer availability, and responsiveness. By optimizing communication methods and timing, collections can be more focused and deliver improved outcomes.
Conclusion
AI is transforming cash collection and business which leverage AI within their invoice-to-cash process will without question improve their cash collection.
The benefits traditional AI in debt collection include improved efficiency through automation of processes, enhanced decision-making with predictive analytics, and increased efficiency of collections activity through intelligent workflows and the prioritisation of accounts.
By analysing vast amounts of data, Generative AI can predict with pin-point accuracy debtor behaviour and create and deliver highly personalised collection workflows which will optimise results from collection efforts and minimise the need for human input.
However, the real win will be their delivery of a customer-centric and compliant approach to cash collection. These are key metrics in the hard-fought battle for market share in an increasingly customer experience driven market place. Understanding customer preferences, financial situations, and payment abilities allows businesses to take a more empathetic and customer-focused approach to debt recovery. This not only boosts customer satisfaction but also raises the chances of resolving debts. As AI advances, businesses utilizing its capabilities in collection strategies will gain a competitive advantage in a constantly evolving financial environment.
If you have an unresolved debt which you would like help collecting, contact the BSB sales team today at business@thebsbco.com or 0116 2182045
About The Author
Ashley Barratt has over 25 years experience optimising cash collection for global blue chip businesses. Leveraging his 15 years of experience at Centrica, he has secured Barratt, Smith and Brown’s position as a leading provider of outsourced recoveries support to the utilities sector with clients including Business Stream, Corona Energy and Shell. Under his direction, Barratt, Smith and Brown have also taken a lead role in managing UK energy administration collections – handing over 85% of energy administration cases since 2018. Their expertise in energy administrations led to their key role in helping The Citizen’s Advice Bureau develop their Supplier of Last Resort – Good Practice Guide.
