There are many benefits found by those who use debt collection software to automate accounts receivable, one of the biggest though is the time savings it provides. There are a vast number of daily clerical duties that go into accounts receivable management; and while they are critical to the job, they are time-consuming, redundant, and open to human errors that cause payment delays and disputes.
Some of these daily activities include reviewing aging reports, updating spreadsheets, prioritizing contacts and putting together daily to-do lists, researching accounts to prepare for calls, taking notes, etc. all of the activities can be considered non-value added and are a drain on collector productivity and efficiency. With all of that to be done, there is little time left for what really matters- collecting invoices, dealing with disputes, and communicating with customers.
Debt collection software automates many of those tasks, simplifies what cannot be automated, and provides collectors with more time, energy, and focus to devote to making phone calls, managing disputes, and providing your customers with outstanding customer service.
What can your collectors and managers do with automated debt collection software?
- Double, even triple individual productivity and productivity of the entire team- without having to hire additional employees.
- Implement best practices to increase collection success and overall cash flow.
- Provide customers with consistent and confident service.
- Be more responsive to customers during their communications.
- Analyze the results and tweak the automation and processes to continually improve the process.
- Settle invoice disputes faster.
- View customer history, payments, broken promises, and other important account information all in one place.
- Quickly and easily collaborate to the entire team can work together toward one goal.
- Eradicate invoice mistakes.
- Be alerted as an invoice approached the due date and the second it becomes late.
- An auto-generated to-do list to tell collectors exactly what to do and when to do it.
Sounds pretty great, right? It is! Automation is a proven way to increase cash flow, reduce bad debt, and increase customer satisfaction; but before jumping into automating credit collections, it’s important to understand the current state of your accounts receivable department. If you don’t know where you stand today, you won’t be able to pinpoint where you need to improve or which features to look for in a solution. Before you begin shopping for a system, answer the following questions:
Who Are Your Customers Today & Who Might They Be Tomorrow?
You may sell products or services to commercial business accounts such as wholesale distributors or manufacturers but you may also sell to government agencies. What’s good for one group of customers may not be good for another and there may be things you can do to cater to specific types of customers to improve your overall processes for timely payment. Larger companies may even have specific accounts payable procedures which you must take into consideration when you invoice them- the easier it is for them to process your payment, the faster they can do so. Some common ways to segment your customers are:
- Industry – By SIC Code or NAICS Code
- Sales Volume – Large, Medium, Small Sales Volume
- Longevity – Established vs. New Accounts
How Effective Are You Today?
By tracking key metrics, you can see exactly where you stand today which will help you figure out what you need your system to help you work on. Metrics will also be crucial in determining the success and ROI of the debt collection software and provide a benchmark for the future. Most businesses track at the following metrics to keep tabs on their collections effectiveness:
- Average days sales outstanding (DSO)
- Collection Effectiveness Index
- Amount of bad debt / write-offs
- Average days delinquent
Some other important metrics that speak to the productivity of your collectors might be:
- How quickly are you getting your invoice to your customer?
- How often are you sending communications/reminders to customers?
- What is the average number of calls per collector per hour or day?
- What is the average number of active accounts handled per collector?
Accounts receivable is typically the largest or second largest asset for most businesses, so give your collections team the time and tools they need to capitalize on that asset. Learn more about debt collection automation and general best practices in our resource center.