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End Your Customer Journey on a High Note

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collections

When you think of collections, you might picture a pushy credit agency trying in vain to contact those who don’t pay their bills. Handling B2B collections this way is a difficult task because it often antagonizes customers who may have legitimate reasons for not paying their bills immediately.

Stop and consider your own business procedures are perhaps the reason why you don’t receive payments on time. Since customer communication is more important than ever now, you need to make your collections efforts part of a customer journey to maintain cash flow.

If you don’t know how to do this, it’s time to learn. Here at Esker, we recently wrote a piece about how to end your customer journey on a high note with an effective collections management strategy.

Let’s look at what you can gain with new perspectives on persuading your customers to pay earlier.

Providing the Ability to Pay Online

How convenient do you make it for your customers to do business with you and pay for your products or services? According to a recent Harvard Business Review study across industries, 81% of all customers attempt to take care of matters themselves, such as going online, instead of reaching out to a live representative. However, only 33% of businesses allow customers to pay online. Why there’s such a wide gap is a mystery.

In truth, businesses want as much convenience as possible in payment methods. They’re already busy enough and may forget to pay or misplace an invoice if they only receive it via postal mail.

Because many of these buyers are usually on the go, they also want to pay on mobile devices. Automation is meant to inspire customers to pay while still making the process personalized.

Using Automation for Connecting With Customers

You may not typically think of applying automation to accounts receivable after using manual methods for years. After manually sending emailed payment reminders, dunning letters in the postal mail or even faxed invoices, you may feel that automation is an overly impersonal method.

This just isn’t true. When you apply personalized messages to payment reminders, such as indicating advantages to the customer if they pay early, customers can be quite receptive. By sending automated message to customers you can stay on top of more post-sale collection interactions without losing the personal touch.

Self-service options for your customers are another strong point in automation. In addition to allowing customers to make payments, you provide the ability for customers to proactively engage with your collections team. Your customers can work with your collections team to send and ask questions, apply credits, view their account information and terms, view account statements, dispute invoices, or sign up for autopay.

Freedom to Customize Invoices

To make the collections process work on a new level, it’s going to require more than just providing the basics. You need to add customization options to your self-service process, including allowing the customer to customize their invoices. Doing so gives power back to the buyer to choose a format they prefer to help them better understand what they buy and what they pay.

Giving freedom to your business customers like this benefits them, though it also benefits you since you’re cutting costs of sending out paper mailings. Plus, you’re reinforcing your branding by customizing self-service interfaces.

More so, you’re streamlining the way you communicate with those who buy from you. Don’t forget about the analytics you’ll have available to help you understand what your buyers want. Now you can continually evolve the way buyers prefer paying their bills.

Contact us at Esker, Inc. to learn about our document process automation services. We invite you to read end your customer journey on a high note with an effective collections management strategy in detail to finally revise your collections system.


How Can Automation Help Your Order to Cash Cycle? Maximizing Cost Savings and Processing Efficiency

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order to cash

Your order to cash cycle is something you’ve recently realized is too complicated lately due to continual dependence on paper-based systems. We’ve recently written about the struggles related to O2C cycles when using manual processes. Much of the latter results in too much paper reliance, as well as manual data entry from the sales order to accounts receivable.

All of this is a huge risk when dealing with hundreds or thousands of clients orders. Just one mistake could end up violating regulations or putting your reputation on the line.

Order entry or billing system errors could also increase downtime in trying to find a paper trail. Since your paper-based systems may scatter data in different places, it’s going to become a challenge tracking down everything you need to amend an error.

Reducing Operational Costs

Have you thought about how much you spend on paper alone if still using a paper-based system? Many reports say it costs $20 just to file a document in an aging file folder or cabinet. Costs magnify further for a misfiled document, or to recreate the lost file.

These numbers don’t include supplying paper for your company, which involves constant storage and replacement throughout the year.

Why bury yourself like this? You have the ability to digitize documents, plus automate accounts receivable and collections management.

Changing over to a new method isn’t going to drain time when using the right automation software. Once you start using automated features, you’ll see how far it goes in reducing stress for your office staff.

Freeing Up Staff Time

One stress your staff probably cites is not having enough time for more valuable tasks. Doing document processing manually doesn’t help. It may even involve having to work nights (and emptying the coffee machine) just to get things done.

You shouldn’t add layers of burden on your staff when they have enough on their minds. Automation helps process documents without them entering it manually or finding a place for physical storage.

Staff can finally free up their time to take care of other tasks to keep your business successful. They’ll also have more control over their jobs when needing to find information in a hurry.

More Transparency for Budgetary Insight

With automation processes storing all your documentation in one place, you’ll be able to archive this information easily. When you need complete transparency on a particular document or transaction, you’ll have details available to assure accuracy. As such, you’ll catch discrepancies before they spread like a virus.

Clients might call you about a particular transaction with demands to know the details. Automation places everyone on the same page so there aren’t any arguments. On a management level, this streamlines how everyone in your company accesses information for more clarity.

Providing Analytics for More O2C Transparency

Through the order processing cycle, you want more than just extracting and archiving capability. An automation program brings analytics and an audit trail so you scope out information in real-time.

With access to this 24/7, you’ll know exactly what’s going on with each order, including the status. Using analytics is imperative to help you determine what’s working well to tweak things for future order processing.

Adding a Customer Portal

Since your business should always place the customer first, an automated customer portal lets them take more control of their orders. Since automation already allows you to send payment reminders to them, adding a portal lets them find a place to make payments.

While there, they’ll have access to automated invoice data, credits, or supporting documents. Don’t forget to let them ask questions in the portal to avoid any confusion. Just be sure to answer as quickly as possible.

Check out this resource to help your business be proactive about finding a solution that’s efficient and scalable. This white paper is designed to assist Customer Service Managers, Finance professionals, Executive Managers, Business Analysts and IT professional in the mid-market that can no longer afford to not do anything about their growing manual processes and the challenges that they create.

CTA_O2C_Mid_Market_WP_600x200

When Customer Service Errors Impact Billing And Collections

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billing and collections

When there’s an error in order entry, it can wreak havoc on your billing and collections team. If one of your customer service representatives makes a mistake, it can disrupt your supply chain, increase returns and complaints, and delay payment. Although customer service may seem a world away from accounts receivable, your organization needs them to work together like a well-oiled machine. Eliminating manual errors at the order step will eliminate unnecessary complications in getting paid.

A miss-entered order creates a cascade of effects on the supply chain:

  • Incorrect tax
  • Incorrect shipping address
  • Wrong material numbers
  • Validation discrepancies

These problems can snowball if they’re not identified early in the fulfillment process, creating potential conflicts with state revenue and regulatory agencies and weak spots in inventory management.

Incorrect order entry has immediate, unpleasant effects on your customers. Not only will you see an increase in returns, with the associated costs of shipping and re-stocking, but your brand reputation will suffer. Dissatisfied customers will be quick to offer negative feedback and reviews, which may dampen future sales. Goods shipped in error may never sell, creating a backlog of waste that must be stored or disposed of. Re-shipping corrected orders increases your costs and creates delays for your customers.

A mistake in order entry doesn’t just annoy customers and jam up your supply chain, it creates problems with payment. Your invoicing process depends on the validity of billing addresses, contact information and credit card/purchase order/account numbers. If these are entered manually and incorrectly, you may not be able to collect payment on your order.

Even if your accounts receivable team is in a different city than your customer service team, you need an integrated, automated system that prevents manual entry errors and allows you to track the progress of an order from start to finish. Such an Order To Cash (OTC) system has 8 primary components, each of which can be customized to fit your organization’s needs.

  1. Order Management.
    This module allows customers to place orders through a variety of channels (fax, email, online catalog, etc) into a single queue for processing, eliminating duplicates or order loss.
  2. Credit Management.
    A robust credit-checking protocol allows you to check customers’ credit as orders are placed as well as when they ship, protecting your business against fraud and lost revenue.
  3. Order Processing.
    Once orders are received and queue, your team can rely on automated processes to identify duplicates, flag discrepancies and validate product, quantity, address and payment before shipping.
  4. Shipping/Fulfillment.
    This component validates item numbers against your inventory systems, ensuring agile stocking and logistics and accurate reconciliation.
  5. Invoicing.
    Instead of the time-consuming, error-prone process of manual invoicing, a robust OTC system allows customers to receive invoices on paper or online including electronic signatures and built-in compliance with international payment regulations.
  6. Accounts Receivable.
    Following payment, your OTC system will place an entry automatically in the general ledger.
  7. Collections.
    Detailed order tracking allows you to customize your collections practices on aging accounts depending on your relationship with the customer. You can use different contact strategies for specific groups of accounts and tailor your outreach to individual customers.
  8. Reporting.
    This component gives you the capacity to collect and analyze data from all OTC components using a variety of pre-populated and customized reports.

If manual orders are creating problems across your supply chain and revenue cycles, your organization may benefit from automating these processes using an OTC system.  Are you ready to learn more about the specifics of these systems and how they can support your business? Let us know, and we’ll work with you to design a customized, flexible solution that meets your organization’s needs.

Trends & Developments in the E-Invoicing Market

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Interview with Bruno Koch, Billentis

What is the status quo and which trends do you see in the e-invoicing market?
As a market analyst, I have monitored the worldwide market for close to 20 years. The development around the world is relatively different, but worldwide, over 90% of invoices are still paper-based. In Europe and in the U.S. however, the average volume of paper invoices is around 70%. The other 30% are e-invoices exchanged mainly as PDF invoices and, to a minor extent, via EDI.

The private sector has always been ahead of the public sector in terms of e-invoice exchanges. We see an adoption rate of 10-15% in the private sector versus 5% in the public sector. The private industry has always been the driver for e-invoicing or any kind of innovation. Typically, larger companies have pushed their trading partners towards e-invoicing. All of these trading partners have different requirements, some want ANSI, others EDIFACT, XML, CSV, etc. The reality today, and I’m sure for the next f ive years, is that multi-format, multi-channel environments are required to practice e-invoicing.

Governments are now entering the e-invoicing market, primarily on the inbound side. The public sector is responsible for 60-80% of all procurements in a country, which means that they also receive a huge amount of invoices. In order to efficiently process their invoices, governments are increasingly pushing their suppliers to send them e-invoices. The U.S. government already mandates e-invoices and they are in the final phase of mandating all suppliers as of 2018. 2018 is also a milestone year in Europe: all governments must be prepared to receive e-invoices. This is already a requirement for all public sector agencies today, but some countries have gone one step further — 30 European countries already require suppliers to send them e-invoices.

Do you see the legal requirements for B2G E-Invoicing having an effect on the B2B Market?
I expect to see a positive impact from all these business to government initiatives in the private sector. The reason behind is the relevance of the public sector. In most countries between 45-65% of all companies are suppliers to the public sector. If a public sector is mandating e-invoicing, more than half of businesses are affected by that. Therefore, I’m very happy that the public sector is going this way.

What would you recommend to companies and governmental organizations? What needs to be considered during the launch of an e-invoicing project?
Unfortunately, most businesses start using e-invoices unintentionally. It’s not a proactive approach with a strategy or objective. For that reason, one of my key recommendations to start an e-invoicing project is to change from a reactive to a proactive approach. For very small companies with low invoice volumes, a real project is not required. Meaning that they can typically just register on a web portal, or install a piece of client software on a computer and get started. But for mid- to large- size companies, it is highly recommended to begin with a very structured project. Anywhere up to seven departments in a company can be affected by an e-invoicing project. For a successful project implementation, these departments have to be brought into the loop at an early stage and support the project. Often these larger companies are international. They have cross-border invoices and invoicing becomes a multinational project from day one. It can take 12-18 months for a large company to go live. That is, if they are ready to move to e-invoicing. That is a key prerequisite.

E-invoicing only works if all trading partners, at least a large proportion of them, also support e-invoicing. Companies need to understand the structure, the capabilities and the limits of its trading partners. Only in that case is it possible to prepare everything internally to on-board a high number of trading partners within a short time period. If a company has a good understanding of the structure of its suppliers and what they are able to do, it is key to communicate with them at least twice as much as they think they should.

What long-term trends do you see in the next five years?
It’s not easy to predict the future, but I have good information on some countries that are ahead in a certain discipline. I also have a good sense as to which developments will also take part in other countries. Overall, I believe e-invoicing volumes will grow each year for the next five years: 15% in Europe, 20% in North America and 25% in Asia. I foresee very strong growth rates.

Today we have too many image-based PDF invoices in the game. Typically 70-75% of all paperless invoices are image-based PDFs and this will no longer be sufficient in the future. The market will become more demanding. In addition to these image-based PDFs, the market is demanding structured data, either as a parallel file or embedded into a PDF.

What I also see is development beyond just e-invoicing. Purchase orders, sales orders, order acknowledgments and confirmations have to be included in the digital process chain, as well as the entire procurement cycle, including resources and catalogs.

Finally, tax authorities will become more and more influential. In an increasing number of countries they will mandate that market participants exchange only e-invoices. This is already the case in Latin America, Asia, Southern Europe and more countries will soon be affected by such mandates.

Motivating Customer Payment via a Payer Rating System

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Unfortunately, getting customers to pay their invoices (and on time) can be a challenge. There’s no sure-fire way to get them to pay every time, on time —but there are ways to motivate them.

One way is by using a tool incorporated in Esker’s Collections Management solution: payer rating. In some ways, it’s similar to a credit score, but much more transparent in the way it is calculated. By adding the total days past due for all paid invoices and then dividing that by the total number of paid invoices, the average days late is calculated, and thus, a payer rating. Customers are then categorized based on their average days late from best to worst: excellent, good, fair and poor.

payer rating

 

Right about now you may be thinking “How is that motivating for customers?”

Companies have the option of displaying that payer rating within automated payment reminder emails, painting a clearer picture for customers on their payment history performance. Some customers may not even realize that they have a bad track record, leaving them bewildered by their status. But that’s not a bad thing!

In a recent call with a company, they spoke to us about their experience including payer ratings in their payment reminder emails. Soon after they had begun to include them, they received a call from a customer shocked at their “poor payer” rating. The customer didn’t understand why they had received that rating, but once it was explained, vowed to improve to “excellent payer” status.

Nobody likes hearing that they aren’t doing well. When they see that they have a less than satisfactory rating, it motivates them to do better.

Just think about it: You open an email with your account statement enclosed and you see above it that you have been given a “poor payer” rating. Would you be satisfied with that? Competition is extremely motivating, and although the competition is oneself in this case, it doesn’t diminish that motivation.

Give people something to strive for when it comes to making their payments and you’ll likely be pleased with the outcome!

[Infographic] A Brief History of Payment Methods

7 Strategies to Reduce DSO and Improve Cash Flow

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Days Sales Outstanding (DSO) is a common measure for how long it takes a company to collect on an invoice. The goal is to simply have the lowest DSO possible and quickly recover payment on accounts receivable (AR). A high DSO value means it takes a company a lot longer to collect and could lead to cash flow problems due to the longer time between the sale and the time the payment is received.

DSO is calculated using the following formula:

DSO = (AR balance / Credit sales) x Number of days in that period

For example, if your net credit sales (sales that aren’t paid immediately) are $950,000 and your AR balance is $125,000 for a year-long period, it takes you an average of 48 days to collect from your customers. If you have 30-day payment terms, this number means you need to speed up the rate at which you receive payment.

DSO = ($125,000 / $950,000) × 365 days = 48

A high DSO has a tremendous impact on cash flow and revenue and can prohibit you from investing in your company’s growth. Reducing DSO, even slightly, can go a long way toward improving financial health. There are several strategies to reduce DSO and improve an organization’s cash flow, such as:

  1. Make it easier for your customer to do business with you
    Offering multiple payment methods — such as credit cards and automatic payments, or an online option for customers to view invoices and statements — provides greater flexibility for the customer and improved cash flow for you. Are you making it easy for your customers to pay and communicate with you? Check out Esker’s payment portal.
  1. Stricter credit approval
    Are you performing credit evaluations on all new customers? Are your credit terms appropriate and followed by your sales department? Does your customer service department flag new orders that do not have a completed credit app? Do you have a procedure in place for updating credit information on a regular basis?
  1. Invoicing 
    Are your invoices accurate and sent out on time? Are payment terms and due dates clearly written on invoices and any other communication sent out to the customer? Have billing addresses and accounts payable email addresses verified before bills are sent out? Do you provide incentives for early pay? Are you sending out automated payment reminders?
  1. Receivables management strategy
    Do you consistently follow up on customer disputes and late payments? Are you measuring performance against goals? Do you regularly review aging reports? Are you reporting on collections forecasting? Do you have an understanding as to why customers are paying late (e.g., invoice discrepancies, product issues, etc.)?
  1. Collections
    Do you have a collections process in place? Do employees have the tools they need to prioritize, call and email collection efforts? Are they well trained? Do they have enough time to follow up on all past-due accounts? Are they able to efficiently keep sales and customer service in the loop on disputed invoices?
  1. Incentives
    Are you offering discounts? Do you offer incentives to customers to receive quicker payments, such as early payment discounts? For example, you could offer a discount for paying within a week or 10 days when your payment terms are net 30. This discount can be easily offset by speeding up cash flow, savings on loan fees and better discounts from creditors.
  1. Customer purge
    No one wants to walk away from a customer, but do you know which customers are routinely inconsistent, unresponsive or continually paying invoices late despite offering outstanding services? Has your company considered dropping bad customers from your business list? DSO increases are often driven by a few large customers. Has your collection staff worked closely with those customers to understand what is driving the slippage?

DSO is the most widely used measurement utilized by credit and AR professionals to analyze the success of their collection efforts. The more quickly you collect , the better your cash flow situation will be … and a small improvement in DSO can go a long way!

How Technology Plays a Role in Order-to-Cash Success

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order-to-cash

Whether its customers calling in about late shipments or your warehouse accidentally shipping incorrect items, sales order disputes can impact customer satisfaction. Order disputes can arise as a result of several different situations, such as:

  • Price variations of the goods that appear on the order vs. the invoice
  • Sales tax and shipping costs inaccuracies
  • Keystroke errors from manually entering orders
  • Differences in the terms of sale on the PO and the invoice

As a consequence, payment delays occur because customer service teams have to reprocess the orders and exceptions. Customer service is strapped for time as it is, and it’s challenging to take the time needed to adequately review all customer purchase orders for accuracy before processing.

Unfortunately, inaccurate orders result in inaccurate customer billing. If customer service had the time to manually review orders line by line for accuracy, there would be any number of exceptions found (e.g., PO with the wrong price or unacceptable terms and conditions of sale). No matter the exception so begins the tedious task of rejecting or reprocessing the order. Emails back and forth, requests made for an updated order to be re-sent, inventory put on hold, credits applied, verification for price adjustments … and this can go on and on for weeks.

Getting orders entered right the first time shortens the timeline to billing. By streamlining your entire procedure for customer communication, order processing, invoicing, and collecting payment for an order you’ll speed up cash flow, cut costs and serve your customers better in the long run. So, where is this Utopia found?

In the world of inbound customer sales order automation. From having visibility of all received sales orders into a single queue (by email, EDI, fax orders) to automatically extracting data from the document (e.g., customer name, PO number, ship to address, quantity, etc.) and comparing the data against information stored in your ERP, automation provides customer service a streamlined approach to approve orders or handle exceptions.

Technology like sales order automation has a role to play in implementing best-in-class strategies for order-to-cash (O2C) success. No need to avoid new technology from fear of costs, effort or change — these investments are necessary to remain competitive. Order automation can be implemented at a reasonable cost for companies processing as few as 500 orders a month and scalable to handle over 500,000. Speeding up the overall O2C process means speeding up your cash flow, reducing costs and running your business more efficiently overall.

Efficient O2C processes play a large role in the customer experience and company success —  unfortunately, they can be a challenge to attain when you have different teams working towards different goals. Download your copy of this eBook to start creating a positive customer experience with a proactive solution.


Are Stone Age AR Processes Costing You Customers?

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If your organization still manages accounts receivable (AR) the same way it did 20 years ago, there’s a good chance it’s operating well below peak efficiency and profitability.

Your company could be missing out on important opportunities to improve customer relationships and cash flow!

Not sure where to start? Determine whether your company’s AR processes are keeping up with the times – and supporting a modern, satisfying customer experience by taking the quiz: Are Stone Age AR Processes Costing You Customers?

Don’t be scared – You’re not alone! Comment or share your results for a complementary AR process audit from Esker.

3 Lessons the NBA Can Teach Collections Management About Analytics and the Art of Working Smarter, Not Harder

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Exactly one week ago, the National Basketball Association (NBA) tipped off its 72nd season. The league is in a good place. It just had, arguably, its most interesting offseason to date. Young, marketable and uber-talented stars are everywhere. And it’s never been more universally popular.

Still, the NBA is not for everyone.

Trust me. As someone who’s loved the league and the sport itself since childhood, I can say with absolute confidence that the NBA doesn’t just have stubborn factions of non-fans out there — it has true-blue haters.

Case in point: When the question, “Do you watch the NBA?” comes up, a terse “Yes” or “No” would do just fine. However, in my experience, there’s roughly a 50/50 chance that this line of inquiry will lead to an impassioned list of Reasons I Don’t Watch being rattled off.

Shoot, I’ve heard them so many times I might know the list better than the naysayers do:

  • They’re primadonnas who don’t play any defense!
  • The college game is way more entertaining!
  • The referees NEVER call traveling!
  • They whine at every whistle!

Aww yeah, that’s the good stuff. Pure, unfiltered NBA animus.

But I’m not here to convince anyone to watch the NBA who doesn’t care to. More so, I can even admit that perhaps there’s a sliver of truth to those tired grievances (maybe more than a sliver).

The point is, you can dislike the NBA and still learn something from it — especially if your job has anything to do with accounts receivable (AR) or collections management. As unlikely as it sounds, it’s my opinion that today’s NBA teams have a lot of valuable lessons to teach collections management about analytics and the art of working smarter, not harder. Three of them to be exact:

Lesson #1: Define value through data.

In the not-so-distant past, determining an NBA player’s value was based on visceral impression — what’s often referred to as “the eye test.” Watch the game and the best players will reveal themselves, or so the theory goes. Rudimentary per-game statistics (e.g., points, rebounds, etc.) were the only accepted metrics used to support a player’s abstractly defined “value.”

The NBA of today is vastly different. Coaches and front-office execs have largely abandoned the go-with-your-gut mentality for an analytics-driven strategy that drills down into player performance at the micro-level with the aim of quantifying the impact of each action. PER, WS/48, BPM and OffRtg are just some of the new statistical models being used to shed light on qualities that were previously intangible. As a result, players defined as “all-purpose” or “versatile” are now deemed more valuable than, say, “volume scorers” — players who score a lot of points but often do so with inefficient shot selection and/or at the expense of defensive effort.

AR departments haven’t been as eager to jump on the analytics bandwagon. Besides metrics like DSO and Amount Written Off, most teams don’t have a strategic way to gauge performance on an individual or process-based level as accurately as the NBA does. But they could. And it doesn’t have to be overly complex to make an impact. Using an automated collections management solution, for example, financial execs can easily measure KPIs like:

  • Response Time (e.g., # of requests, average response time, etc.)
  • Invoice Received
  • Automated Reminders (e.g., new invoices created, emails sent, etc.)
  • Collection Calls (e.g., # of calls made, # of calls made on time, etc.)
  • Root-Cause Analysis
  • Collections Goal

Lesson #2: Don’t overthink your next competitive advantage.

The most drastic and noticeable change that’s resulted from the NBA’s analytics era has been the proliferation of the three-point shot. Although the three-pointer has been part of the NBA game since the 1979-1980 season, its stigma as a high-risk/high-reward gimmick meant that, for a long time, only a handful of players with exceptional shooting range even attempted it in the course of a game.

Turn on the NBA today and you’ll quickly notice that, not only are three-pointers a more central element of the game, they’re arguably the most important part. In just five years (2012-2017) there’s been nearly a 50% increase in the number of three-pointers taken per game. Why? The NBA data-heads did the math: Even though a three-pointer has a lower chance of going in, on average, it still leads to more total points than taking a two-point shot. Golden State Warriors guard, Steph Curry, has taken this new-school mindset to the extreme with three-point statistics that are, almost literally, off the chart.

What does this have to do with collections management? Three-pointers have been around for decades; despite this, smart NBA teams turned it into a transformational competitive advantage. With automation, collections management teams have a similar, often under-utilized tool at their disposal. If the goal is to get paid faster and drive repeat sales, few technologies have shown the ability to do this as effectively thanks to automation’s ability to:

  • Reduce DSO and invoice disputes
  • Increase staff productivity
  • Lower transaction, finance and admin costs
  • Enhance visibility and forecasting
  • Improve staff and customer satisfaction

Lesson #3: Repurpose talent to be more strategic.

See that rather large man hanging from the helpless rim? That’s none other than Big Daddy Diesel himself, Shaquille O’Neal. For roughly two decades, Shaq was the quintessential NBA center — impressive in size and unstoppable in the paint. However, in today’s NBA, the Shaq archetype doesn’t really exist. And it’s no accident.

By the time Shaq retired from basketball in 2011, the gears of NBA analytics were already in motion. Thanks to a greater emphasis on the three-point shot and player versatility, having a traditional “big man” clogging up the lane was no longer a necessity; it became a disadvantage. Thus, the center evolved from being a player primarily relied on for his size to someone expected to be leaner, rangier and more multi-dimensional.

Similarly, automation within AR processes is a catalyst for enhancing individual and team performance. Often times, the fear is that people will be replaced by technology but this is almost never the case. Billing and collections is something that can’t (and shouldn’t) be fully automated. By eliminating tedious and low-value collections tasks, staff can be repurposed to spend more time on key accounts and new customers. It’s a benefit that Esker customer, Crescent Parts and Equipment, discovered firsthand.

Don’t fight the future …

The last thing anyone wants to be is that rigid purist, fist shaking in the air, clamoring about “the way it ought to be” versus the way it actually is. Ask ex-Lakers coach Byron Scott. Ask Charles Barkley. Ask Phil Jackson. There’s plenty of proof, in the NBA world, at least, that the future is something worth fighting for, not against.

It bears repeating: The NBA is not for everyone. Furthermore, AR automation might not be the right fit for every business, either. But hopefully these lessons show that, when approached smartly, the embrace of modern strategies and technologies is a critical component to creating your next competitive advantage.

Is a Collections Forecasting Tool on Your Holiday Wish List?

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collections forecasting tool

Year end is right around the corner — do you have the ability to estimate the collectability of accounts receivable for the remainder of 2017? If not, you may want to put a collections forecasting tool on the holiday wish list from your CFO.

Accurate collections forecasting is more important than ever in understanding where your company is financially. Businesses are investing thousands of dollars in forecasting tools that help grasp sales pipeline, expense management and budget. Yet, despite such investments in technology, the forecasting of collections often gets put on the backburner with a claim that it’s just too difficult to capture.

Sure, there’s no crystal ball that can predict which customers will pay or won’t, but there are definitely things you can do to make sure your collections forecast is as accurate and helpful as possible, as well as have tools to capture and report on it. Improving the measurement of collections can make a huge difference, including:

  • Increased accuracy of budgeting and profitability predictions
  • Actionable data for credit and collections managers for collector evaluations
  • Greater call prioritization efficiency for collectors

The traditional method of estimating collections has been to look at a group of large accounts and estimate collection percentages by aging groups of receivables. That’s a lot of time and a lot of data! These are two essential data points that need to be automatically captured for the most accurate collections forecast:

  • Days Sales Outstanding (DSO) — The average time that receivables are outstanding. Using this measure, you might find that your average days to collect is 70. Thus, you could use this average to project receivables collections:

Ending Total Receivables x Number of Days in Period Analyzed
Credit Sales for Period Analyzed

  • Promise to Pay — Transparency with what was communicated during collection communication in regards to Promise to Pay (e.g. what invoices, how much, when, etc.) is crucial. Details such as reason for lateness, dispute specifics, partial pay plan, and amount of promised payment are all crucial reporting elements of any collections strategy, but companies often have difficulty capturing this data, which impacts collections results and customer service.

If you don’t have an easy way to capture DSO and Promise to Pay details, collections forecasting becomes too challenging and, ultimately, you can’t get a handle on cash flow. By staying on top of your cash projections with tools like automated collections management, you can better understand where your business is headed financially. Having data that is automatically aggregated and displayed, giving businesses the ability to uncover late payment trends, Promise to Pays, recurring issues, and spotting underlying problems is crucial to providing an accurate collections forecast.

Why Finance Leaders Should Kill Spreadsheets

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Capturing and handling data from accounting solutions to ERP systems has certainly evolved. We’ve moved from information viewed on printed pages to cloud-based business intelligence (BI) tools.  With new ways of processing information faster and with greater visibility, why in the world are so many executives still using Excel spreadsheets to manage critical accounts receivable (AR) and collections management data?

Mining information from different systems stored in various areas (such as an Excel-based aging report, collections call notes, ERP open invoice information, and cash application systems, just to name a few) is still exported, sliced and diced, and often manually compiled and pushed into a report. Then accounting has to dig into their email inbox, or navigate the share drive like Ferdinand Magellan, to gather the spreadsheets. It’s an upgrade over paper or not reporting at all, but still restrictive and does not provide immediate, actionable intelligence that today’s businesses need to remain nimble. While important data points that, once collected, deliver actionable BI, gaps in information exist that systems typically don’t capture (e.g., why customers are paying late, disputes or deductions, etc.)

Lack of visibility in AR and collections management is particularly apparent when managing:

  • Past due customers. A collector may receive a promise-to-pay, but the customer didn’t live up to their promise, and no follow up notes or reasons were captured. All the while, that customer continues to order product. Now you have capital tied up in the open AR, along with additional product being produced or procured from the supply chain.
  • Collections forecasting. Without the ability to easily uncover and report on late payment trends, recurring issues, and spot underlying problems, an accurate collections forecast is near impossible.

Accounts receivable automation maximizes ERP and other business application investments you’ve made by combining data from all systems to populate dashboards and centralize workflow. Introducing automated processes with algorithmic rules and strategies helps eliminate tedious tasks and allows you to focus on things that make a greater impact. No more spending countless hours capturing data from multiple solutions and putting findings in a spreadsheet.

Automation helps you prioritize activities and aggregate data — giving you the insight to perform pertinent tasks immediately. Details can be shared with your customers, making them self-sufficient, creating a greater user experience and providing immediate, automatic collaboration. And guess what? You get paid faster and avoid costly write-off or risk!

8 Accounts Receivable Management Strategies That Might Just Get You Promoted

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Despite what a lot of accounts receivable (AR) leaders may still believe, “We have an ERP/accounting system” is not a viable credit and collections management strategy. Not in 2018, anyway.

Other departments (sales, marketing and accounts payable to name a few) have been more open to adopting complementary digitized solutions that provide added value beyond the traditional systems. It’s no great wonder why: They’ve proven to be effective tools for maximizing time, money and resources while creating a more transparent and collaborative work environment.

Nevertheless, AR appears content to settle for the status quo. Manual invoice delivery. Using sticky notes and spreadsheets for post-sale collections. No real analytical analysis. To put it in style terms, AR is out here in 2018 still rocking a mullet and mustache — and not in some hip ironic way, either.

Want to be the savior your behind-the-times AR department so rightly deserves? Here are 8 simple and sensible strategies that will get your team on the path to improved AR performance and maybe, just maybe, lead to a well-deserved promotion in the process.

Strategy #1: Greet technology as a friend.

Contrary to what’s commonly believed, automation is not some technological wrecking ball designed to wipe out and replace all of your existing people, processes and technology. AR can’t and shouldn’t be fully automated. The idea is to automate what should be automated.

Think of today’s best-in-class AR solutions more like a highly specialized team member. Except, this employee not only helps you get paid faster, keep costs down and improve customer relationships, it doesn’t take any time off. If that’s not an idea to get behind, I don’t know what is.

Strategy #2: Think beyond DSO.

Using metrics to improve performance is not a new or radical concept. But in AR, besides “DSO” and “Amount written off” the data analysis pool is laughably shallow. AR departments that find ways to go beyond DSO are able to effectively track performance, hold their teams accountable, and ultimately get the results they desire.

Want specific examples of these key metrics? Download the eBook found at the end of this blog post.

Strategy #3: Make e-invoicing a priority.

Switching to e-invoicing is in everyone’s best interests — both company and customers alike. It’s just a matter of creating a specific plan to facilitate the transition to e-invoicing. This can include strategies as simple as:

  • Setting defined goals (e.g., increasing e-invoice delivery via email by 20% over four months)
  • Collecting accounts payable (AP) email addresses from all new customers
  • Reaching out to existing customers in order to convert them from paper to email

Strategy #4: Confirm invoice receipts.

“I never received the invoice.” How many times have you heard this from a late-paying customer? With the right AR automation solution in place, this problem disappears. Users can track invoices from beginning to end and know exactly when the document was received.

Taking it a step further, the solution gathers data that your team can also use to set up workflow rules. For example, your team could be altered to any unopened invoice (based on when it was sent, dollar amount, customer group, etc.) and reach out to the customer. Simple, easy and effective.

Strategy #5: Get a clear follow-up plan.

Most companies would love to contact their customers before 15-20 days past the due date. In reality, that’s a tough ask … especially in a manual environment that’s strewn with bottlenecks. Automated AR solutions have a better way of doing it. Their slick payment reminder capabilities ensure that friendly emails are sent out automatically to notify slow-paying customers. No human intervention necessary. No manual headaches or hassles.

Strategy #6: Focus on team efficiency.

It’s not uncommon for as much as one-third of an AR rep’s time to be spent on prioritizing contacts and searching for contact-related information. That’s a lot of time/money/production lost, my friends. Automated AR management solutions have an elegant solution to this problem — giving staff members a clear snapshot of their day via customized to-do lists. Not only will they know what to do and when to do it, managers are also aware, and can make decisions accordingly.

Strategy #7: Evolve with your customers.

You may have noticed that people nowadays seem to prefer interacting with small, glowing rectangles than actual human beings. Your customers are no different. Instead of speaking to a rep or getting put on hold, they would rather make an invoice payment or get a question answered online, often from their mobile device, and on their own time.

Self-service tools offered through automated AR solutions help customers do things like:

  • View invoice information online
  • Make payments electronically
  • Apply credits to open invoices
  • Sign up for auto-pay functionality
  • Get questions answered rapidly

Strategy #8: Use root-cause analysis.

How do problems like late payments, customer disputes and deductions happen in the first place? Good question. With an automated AR solution, you can finally get the answer. Users can identify, track and categorize the root causes of some of the most common payment-related issues, and over time, even help them pinpoint customer patterns as to help avoid them in the future.

Care to learn more about these 8 AR management strategies? Download the eBook, 8 Accounts Receivable Management Strategies to Make Your Process Best-in-Class. It goes over the same strategies covered here … just in a bit more detail. If you liked this blog post, you’ll love the eBook. Enjoy!

How Girl Scouts Can Help You Grow Your Business (No Excuses)

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I was at the grocery store a couple weeks back shopping for the necessities. After checkout, I headed for the exit and there was a table of Girl Scouts selling their cookies. Since I was a kid, there hasn’t been a year that has gone by that I haven’t bought some Thin Mints, Caramel Delights or another one of their fantastic cookies. Of course, they still come around and sell door to door, but grocery store stands have become a popular set up for their business. When you come to their table you can’t resist purchasing a box or two or three …

Unfortunately, with just $5 in cash in my wallet, I only purchased one box. This is not an uncommon occurrence, since I hardly ever have cash on me and usually pay for everything with a credit card. These days, it seems that just about every restaurant or business accepts credit cards as payment, with the exception of the rare business out there that still does not want to make the switch.

After purchasing my box of Caramel Delights, I thought to myself that if they accepted credit cards, I would have probably purchased multiple boxes. According to a 2014 report by Bankrate and Princeton Survey Research Associates International, 50% of Americans carry $20 or less every day, and 9% don’t carry cash at all.

A couple days later I ran across an online article about Girl Scouts who were accepting credit cards via the payment company Square. In the article, Square was excited about the opportunity, saying: “We love when sellers use Square in creative ways. As you can imagine, their customers are equally as excited that they don’t have to carry cash anymore.” A mother of a Girl Scout added: “I think 90% of people who weren’t carrying cash turned around and bought something when they heard we took credit cards.” Also in this article, there were a few Twitter users sharing their excitement:

  • “Girl Scouts take payment by Square now. The future is here and my account is devastated”
  • “Girl Scouts are hip now with the Square so they can force me to pay no matter what”
  • “Girl Scouts operating with Square is one of the better things that’s ever happened in the cookie game”

With this in mind, think about how you are currently accepting payments from your customers. Are you offering them a way to pay online? Giving your customers the option to pay securely on their own terms, just like the Girl Scouts did, makes you easier to do business with.

Automated Delivery of Customer Invoices to AP Portals

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Options for customer invoice delivery continue to modernize as companies experience the fruits of digital transformation. We have come a long way with invoice delivery methods — things are faster, easier and more cost-effective than ever before. In recent years, companies have been seeking efficiencies within accounts payable (AP) for the buyer, which led to the introduction of AP portals. Accounts payable portals continue to grow in popularity, so much that the U.S. Government, the largest buyer in North America, mandated that vendors must electronically submit invoices within one of their recognized portals by end of 2018. As more and more buyers transition to using AP networks to ease their own technology burdens, it shifts the problem squarely onto the supplier’s accounts receivable (AR) team.

Accommodating customers has been the key to many organization’s success, however, it can come at a cost and may not be an easy task. There are more than 250 complex AP networks used globally. New AP technology means that suppliers increasingly need to submit invoices directly into customers’ AP systems.  To manage this method, AR departments are often:

  • Manually entering each invoice using an online AP portal, one at a time — which is time consuming and resource draining
  • Hogging up already limited IT resources to build custom AP integrations with each system and provide ongoing support
  • Turning away business refusing to accommodate, impacting growth
  • Managing multiple invoice delivery channels, including delivery of statements and invoices via portal, postal mail, EDI, fax and email

Accounts payable networks and private corporate portals are not going away. There are real benefits to submitting invoices online, such as: visibility on payment status, cost savings by lowering or eliminating postal mailings and time savings of sending an email versus postal mail.

With the aid of Artificial Intelligence (AI)-driven technology, suppliers now have the option to automatically deliver invoices to portals — no longer requiring manual data entry or taxing the resources of AR staff. The repetitive processes of data entry and invoicing naturally lend themselves to automation. Artificial intelligence can help companies timely and efficiently post invoices to AP portals, without input from humans. Automation of invoice delivery into AP portals eliminates the burden, giving both parties the efficiencies they want and need.


Today’s a Good Day for Automation

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Most companies face a wait time receiving customer payments that could range anywhere from 30 to 90 days to even longer. Payment delays not only cause anxiety for the collections management team, but they impact your cash flow. The bottom line is simple — the more quickly you collect your accounts receivable (AR), the better your cash flow situation will be.

You have undoubtedly heard about or have automated certain business processes already. By automating wherever possible, you’re looking where you can leverage technology to compliment your existing ERP or finance solution, and reduce labor-intensive administrative tasks, thus operating much more efficiently in the process. AR automation transfers invoicing to a digital process, sets you up to receive multiple forms of payment, handles what is usually labor-intensive deductions, accurately applies cash, and captures and prioritizes collections efforts. In addition, AR automation allows you to:

  • Create customer invoices based on your company’s data or simply upload an ERP created file of invoice PDFs to send and track electronically or via postal mail
  • Send automated reminders for payment

Finally, AR automation also supports numerous types of collections strategies and is set up for internal collectors based on the collections rules and approach unique to your company.

The benefits of AR automation are numerous and impossible to ignore after you have experienced them firsthand. Here are the main reasons to consider implementing this year:

  1. Faster Payments
    If you’re accustomed to dealing with clients who tend to pay your invoices at their leisure, then you’re not alone. This is just one of many reasons to consider automating your AR processes as soon as possible. The enormous benefit of automation is that e-invoices are made available for customers to pay immediately. This eliminates delays in payment that might have previously been common. AR automation can help you speed up your invoicing so you get faster payment.
  1. Improved Customer Experience
    A benefit of AR automation is an enhanced customer experience. Your team is better able to focus on more strategic and detail-oriented tasks. When it comes to AR-related customer data, you know the more you can do to merge things for greater visibility, the better customer service you can provide. When it comes to inaccurate invoices or collections issues, AR automation technology allows you to quickly address any issues that may arise. By implementing technology in your AR processes, you are giving yourself a valuable tool that allows you to provide stronger customer service. Because of this enhanced customer experience, you can expect improved customer retention and a decrease in customer service-related problems.
  1. Cost Savings
    Studies have shown that e-invoicing saves approximately $8 per invoice sent. This cost reduction might come as a surprise. However, the decrease reflects cost savings in several areas, such as postage costs, manual handling of paper invoices, cost of paper, envelopes, and equipment used in the printing and posting process. By implementing invoice delivery automation, your company can cut costs where you never could before. In time, the sizeable cost savings will be worthwhile to leverage technology to your benefit.
  1. More Control & Visibility
    Another benefit of AR automation is the added control and visibility you and your team will gain. Invoicing and international e-invoice compliance, automated payment reminders, online customer payment, automatic cash application, collectors outreach and workflow, and capturing dispute reasons are just a few of the AR automation functions that allow real-time visibility and reporting. Improved visibility provides insight you and your team can act on.

You may still have reservations about making the switch. The manual processes you’ve always known feel comfortable and familiar. Change can sometimes be scary. Look at automation technology as something that can easily be adapted to your business needs. Opt for software that’s simple, intuitive and closely matches how you already do business. Consider automating your AR and collections process — it’s a more predictable and repetitive sequence of activities that provides benefits from end to end.

How Trek Bicycle Improved the Global Customer Experience with Automated Collections Management

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collections management trek

Trek Bicycle started out in 1976 with 5 people in a barn in Southern Wisconsin making bicycles. Today, it’s the largest bicycle company in the U.S. with 16 international distribution centers and 5,000 independent bicycle dealers around the world. Running a successful global operation means that important business processes, like collecting payments, should be as well organized and cost effective as possible. But when left alone without critique, these processes are often costly, complex, and unsustainable, which can negatively impact your customers and bottom line.

Trek needed a solution that would help it efficiently manage collections while serving its wide global base of customers. Andrew St. Clair, the Global Director of Financial Services at Trek, recognized a core problem in the process: “We didn’t have a standardized collections tool … everyday tasks, like sending reminder letters, were all done manually. We made it work, but there was no real consistency in our process. And with 60% of our business coming from abroad, it was crucial that we had a true global solution.”

An International Company Meets a Global Partnership

Trek turned to automation to solve their problems. In Esker, it found a collections management solution specifically designed to streamline global operations. The solution works similarly to how other departments use CRM software to manage critical workflow functions. Through a centralized digital interface, users can orchestrate post-sale collection interactions with greater ease, oversight and autonomy thanks to tools like payment reminder emails and rule-based task lists.

“The other credit and collections vendors we looked into didn’t have Esker’s global expertise,” Andrew explained. “One of the big benefits during implementation was how flexible Esker was. They worked with us to translate the interface into 14 different languages, engaged with our international partners on payment strategies, and even helped us in improving the look and feel of our statements. It was a true partnership.”

Today, Trek utilizes Esker in 18 offices worldwide. The company has seen a reduction in its Days Sales Outstanding (DSO) as its collections management process is faster and more user friendly for both staff and customers. Trek’s past-due percentage fell by 4% and it saw increased productivity among staff that lead to upward mobility within the company.

“The discipline that Esker drives in the credit and collections process is phenomenal,” said Andrew. “In my 20-plus years, it’s the best product I’ve ever used based on its simplicity and ease of navigating.”

To learn more about Trek and the results it experienced from improving on the collections management process, read their full case study here.

 

 

Stop Money From Slipping Through the Cracks: Making Collections Management Easy

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collections management

Positive cash flow is what keeps businesses running smoothly, leaving it up to collections management to turn money that’s owed into money in the bank. Sounds easy, right? Not so much.

Many AR departments continue to rely on manual methods in the collections process. From sticky note reminders about contacting a customer to enormous Excel spreadsheets containing customer information. If only there was a way to automate the parts that should be automated while giving your team a clear view of daily tasks, KPIs, and everything else they need to do their job efficiently.

That’s where Esker steps in. This video explains how a cloud-based automation solution connects with your current accounting system to help your collections management team work smarter, not harder. Check it out and let us know what you think in the comments below!

Top 3 Credit to Cash Automation Projects for 2019

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Finance leaders who are currently budgeting for automation projects and planning for transformational change in 2019 have an opportunity to make a significant impact based on the types of projects they undertake. Yet so many CFO’s and Controllers lack the necessary information to do so and struggle to make automation investment decisions within the credit to cash cycle. Top companies understand that it’s not about doing the most work, it’s about doing the most important work. Here are three projects that should make the short list in 2019:

Highest Impact – Least Resources

In collecting cash, it may seem like every project is a priority. The key is to consider what most have documented as having the greatest value with the least impact on accounting and IT resources: automated payment reminders. A function that is often manually done for most companies can quickly be set up to automatically generate fully customizable payment reminders based on delivery preferences at the company, customer group, or at the customer level. Messaging can be tailored based on level of severity (e.g., neutral tone within 30 days, stronger wording over 60 days, collections action over 120 days, etc.) Collectors can track delivery status and read-receipt status, as well as bounced emails. Automated payment reminders are a simple, yet completely underestimated collection tool. Read how automated payment reminders helped reduce manual duties at LinPepCo, significantly reduced their DSO, and virtually eliminated customers in the 90- day past-due category here.

Customer Experience First

What will have the greatest and most immediate positive effect on customers? A project holding unlimited potential for customers and improving their customer experience? Simply, be easier to do business with. By providing a customer portal that gives them a place to view and pay their invoices, download their statements, apply credits, request a payment plan, sign up for autopay, dispute an invoice, communicate with your AR staff, and so forth is crucial to improved customer satisfaction. Providing your customers with a bunch of these self-serve options will reduce the need for your customers to contact you as much for their account management and billing needs, thus, giving your team much needed time back to focus on other aspects of collecting cash and managing your receivables. Learn how Trek utilized a global customer payment portal to reduce their DSO in this case study.

Compliance – External Functionality That Compliments Existing ERP Investment

There’s often a struggle between deciding upon new products and features verses the need to optimize existing technology to reduce costs and facilitate a greater return on your investment. It’s not always obvious which way to go. Sometimes the best strategy is to find a way to do a little of both. It’s easy to get carried away with all the great new automated processes out there, especially solutions that promote doing more things at once. I’m not sure that’s always the most cost effective or efficient route. E-invoicing customers, for example, is probably already set up in your ERP. However, e-invoices sent to customers outside of the US may not comply with local country regulations and requires being handled manually.

Every country has its own specifications in terms of formats, required fields and platforms by which e-invoices must be sent. Italy is the first European member state to mandate B2B e-invoicing as of January 1, 2019. Any company that does not comply with Italy’s requirements and does not issue e-invoices in the required format faces heavy sanctions. If you’re VAT registered in Italy and currently sending your customers invoices electronically, but have not automated the delivery, the reception or fiscal archiving of e-invoices in compliance with country regulations, the financial impact could be significant for you. You do not need to revamp your entire e-invoicing process. Maintain what works, but consider investigating e-invoice compliance requirements for doing business outside of the US, to supplement your invoice delivery process. For more information on Trends & Developments in the e-invoicing market, read this interview with Bruno Koch from Billentis.

With emerging technologies combining process automation, artificial intelligence, and data analytics – and all promising to generate significant efficiencies, cost reduction, and improved quality for businesses, no wonder it’s challenging for financial leaders to commit to digital transformation projects. However, if you’re ready to do what top companies do and have an unrelenting focus on efficiency – challenging what to stop doing, as well as what to automate, a good place to start in 2019 is automating payment reminders, providing a better experience through a customer portal, and compliment your existing e-invoice process to meet global B2G & B2B compliance.

RPA, AI and Machine learning – What’s the Difference? [Series]

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Many organizations focus on maximizing efficiencies of all processes in a business. Business executives, consultants and technical leaders are tasked to seek out technology advances to improve respective business processes.

There are a few technology options in particular that get a lot of attention. Though they are often confused as competing technologies, they are all different and provide different benefits and outcomes.  

The three main technology advances to help companies automate and streamline processes are robotic process automation (RPA), artificial intelligence (AI) and machine learning. Let’s dig into what they are, how they can help and where processes fall short.

Robotic Process Automation

Often seen as a stand-alone solution, RPA is a “robot” that is programed to push or pull information from one place to another. RPA has strong benefits for simple business processes because it can eliminate repetitive, manual steps. In short, if you can draw a virtual line from one point of a process to the other, RPA may be a good fit for it. An example of this would be: logging into a portal, downloading a document, then pushing the document to a folder for someone else to review. Sometimes, if the data is perfect, that data can be pushed reliably into a database/system of record after it has been downloaded by the RPA/robot.

There are even some cases where a robot can be programed to read the data it’s pulling and make a simple determination about where that information goes. These are often times referred to as “if statements.” “If statements” are variables that determine where information should go but not necessarily validate if that information is correct. Changes occur on either end of the process where the RPA identifies any weakness. What happens if login information for a portal expires or the process changes on the other end? Consider the downstream effects of these changes and ask yourself, “Are there some areas in my business that would benefit from a simple and effective automation process?”

Artificial Intelligence

AI is considered a technological “brain.” Often construed as a technology for extracting data, AI is really just a technology that assists in handling data and information. In other words, it’s a group of technologies and algorithms that help solutions make accurate decisions based on trends and past decisions. But not all AI is the same — some AI technologies are complex and others are rather simple. Overall, if a technology is helping to make a decision — without a user forcing or programing it to — it can be classified as artificial intelligence.

So, what is AI most useful for? Most experiences suggest that AI “decisioning” technologies are best used to cut down on time-consuming, manual tasks. AI mimics decisions that otherwise take additional time for humans to make. The ROI calculation is a simple equation. Here’s an example: if one step in a process takes 10 seconds to complete and is repeated 100 times per day, AI intervention can save 16.6 minutes a day on that single step. It’s easy to see how ROI can grow to be substantial as these seconds can turn into minutes (or even hours) of time savings. Complex processes seem to benefit the most from this technology.

Machine Learning

In its truest form, machine learning is a variation of robotics in which the solution is manually told what to do. These are forced or programmed decisions based on what a user recommends. Despite all the promises that technologies like RPA and AI make, there are still situations where specifically telling a solution how to handle a piece of an example is necessary. Think of this as the technology that will handle the “details” of a business process.

Let’s say, for instance, you have a customer that consistently changes a material number when placing an order. As a CSR, you know what the customer is trying to order, but the change happens far too often for the cognitive functions of AI to intervene. In this example, machine learning can step in and force the system to defer to the correct change — just as a human would do given a manual process.

Think about your business process and ask, “Is my process complex or is it simple? Does the business process have variables that require constant change? If changes aren’t corrected in a timely manner, will it negatively affect my customer or supplier relationships?” In answering these questions, you may be able to determine what technology is best for your business process.

When it comes to customers and suppliers, leveraging all of these technologies has proven to produce the best outcomes. Solutions tied to these areas of focus should be flexible and retain the ability to grow and change with a business. Customers and suppliers are arguably the lifelines within a business and should be treated with the utmost care.

Check back for part two of this blog post series as we dive into more detail on these technology advances.

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