The Power of AI for Finance Teams: Leveraging Data Analytics for Effective Collections Automation in Accounting

For finance teams, the ability to use data analytics for efficient collections automation is growing more and more alluring. The management of accounts receivable (A/R) processes within organizations has undergone a radical change thanks to the use of AI-powered tools like Tesorio over the last few years. Data analysis processes that were previously labor-intensive and dependent on spreadsheets can now be carried out automatically by those skilled in using AI.

Automating manual tasks, identifying and prioritizing accounts for collections, and increasing overall collection efficiency are a few tasks that AI and automated data analysis can relieve you of.

In today’s article we’ll cover some specific examples for leveraging data analytics for effective collections automation in accounting.

1. Why Data Analytics for Effective Collections Automation in Accounting Matters

Collections are not to be overlooked as a potential lever to drive financial stability and maintain cash flow. Traditionally, collections processes have been manual and time-consuming, often resulting in delays, inefficiencies, and poor customer experiences.

Imagine the typical collections process: a myriad of paper trails, mounds of data to sort through, and countless hours spent determining which accounts need to be prioritized. This process is not only tedious but can also lead to errors and oversights.

Data analytics and AI technologies, however, could be the 10x opportunity for efficiency gain that your finance team has been looking for. Who doesn’t want to find a pocket of untapped opportunity for additional cash flow?

Finance teams can streamline their collections processes, identify high-priority accounts, and improve overall collections performance.

If you don’t have a solution in place yet, you may want to consider Tesorio. We are proud to say that we consistently rank as one of the top solutions for treasury and A/R automation on G2. Features include advanced AI-driven tools that enable finance teams to automate collections campaigns and tasks. This automation allows teams to focus on high-value interactions with customers, rather than spending valuable time on manual and repetitive tasks.

2. How Data Analytics Can Help Identify and Prioritize Accounts for Collections

One of the key benefits of leveraging data analytics for collections automation is the ability to identify and prioritize accounts that require immediate attention. With Tesorio's AI-powered algorithms, finance teams can analyze historical payment behaviors, customer predictive analytics, and team workload to differentiate between good and bad payers.

Michael Renner (former Senior AR & Collections Manager at Veeva) said that “Tesorio has reduced time spent on lower priority accounts from 25% of the week to less than two hours per week.”

This differentiation enables teams to allocate their resources effectively and focus on collecting from high-risk or high-value accounts.

Additionally, data analytics gives financial teams insights into customer payment trends and patterns, enabling them to spot accounts that are at risk of going past due. Teams can reduce bad debt and enhance collection results by proactively handling these accounts.

3. The Advantages of Using Data Analytics to Automate Collections Processes

For finance teams, automation of collections processes has a number of advantages, including:

Improved Efficiency (aka getting more done in less time):

Automating collections tasks with data analytics reduces the need for manual intervention, resulting in increased efficiency (or getting more done in less time). Tesorio's automated workflow tools make it simple to share customer and invoice information, customer notes, and communications with other team members.

Enhanced Customer Experience (ie, happier customers):

Keep in mind that your customers are also people. Tesorio's automated collections processes enable you to personalize your communications and give your customers a better experience, building stronger bonds and increasing customer retention. Finance teams can provide a better customer experience by using personalized email templates and automated triggers.

Accurate Data Analysis

You've probably already noticed that incorrect data leads to incorrect decisions.

Data analytics allows finance teams to make sense of their accounts receivable data in real-time. Tesorio's proprietary machine learning algorithms provide accurate predictions of expected collections, down to the invoice level, empowering teams to make informed decisions and take proactive actions.

Streamlined Cash Application

You'd be surprised at how much smoother things go when your systems talk to each other. By integrating with your existing ERP and financial systems, Tesorio enables a seamless cash application process. It unifies cash data from all your disparate systems and aggregates it into a single, intuitive platform.

4. Strategies for Implementing Data Analytics for Collections Automation

Implementing data analytics for collections automation requires careful planning and execution. Here are some strategies to consider:

Complete Needs Analysis:

Before implementing data analytics solutions, finance teams should conduct a thorough needs analysis to determine the specific requirements of their organization. This analysis should consider key parameters, such as the metrics that govern the business, success criteria for accounts receivable, and areas for improvement within the collections process.

Identify and Eliminate Data Silos:

Data silos can hinder the effectiveness of data analytics. Finance teams must identify and eliminate data silos by consolidating information from disparate systems. Tesorio's software integrates cash data from various sources, providing a unified view of accounts receivable and enabling more accurate analysis.

Choose Software Partners That Prioritize Data Security:

Data security is of utmost importance when implementing data analytics solutions. With the rise of AI solutions companies often struggle to implement tools such as ChatGPT due to data security concerns. You can’t simply upload sensitive financial data to public AI tools. Finance teams are required to partner with software providers that prioritize data security, implementing robust encryption techniques and access control protocols. Tesorio was built by experts and made for the financial industry in compliance with CCPA, GDPR, and PCI DSS standards, and utilizing advanced data protection measures.

Automate in Order of Priority:

While automation is desirable, it is essential to prioritize automation based on the organization's needs and pain points. You may want to start by automating tasks that offer immediate benefits, such as bottlenecks in the collections process or repetitive manual tasks.

Leverage Advanced Automation Tools:

Not all automation tools are created equal. Finance teams should choose AI and machine learning-driven tools, like Tesorio, that offer comprehensive automation options. Tesorio's solutions go beyond simple invoicing automation, providing end-to-end automation of the collections process. Tesorio's advanced tools, such as predicted pay dates and automated AR and collections forecasting, can help your finance team work smarter, not harder.

5. Best Practices for Using Data Analytics to Improve Collections Processes

To maximize the benefits of data analytics for collections automation, finance teams should adhere to the following best practices:

Continuous Monitoring: Analyzing data is an ongoing process. Finance teams should look at and analyze data on a regular basis to spot trends, spot possible risks, and make decisions based on the data.

Customized Collection Strategies: Every customer and every business is different. Tesorio lets you make your own collection strategies based on things like the type of customer and how old the invoice is.

Resolve Payment Disputes Effectively: Payment disputes can cause payments to be late. With Tesorio, you can quickly find and solve problems, making sure that the payment process goes smoothly.

Foster Collaboration and Communication: Tesorio's collaborative workspaces make it easy for your team to share notes and gather data, which leads to better teamwork and communication. No more separate teams or information that gets lost.

6. How Data Analytics Can Help Reduce Time and Costs Associated with Collections

The longer it takes to collect payments, the more resources you spend. According to a report by Deloitte, companies can reduce their operating costs by up to 60% by automating their accounts receivable processes. For a company with an operating cost of $500,000, that’s a potential savings of up to $300,000. Furthermore, Victoria Vetrova, a Finance Manager at Currencycloud, reports that she now spends half a day focused solely on high priority clients, thanks to Tesorio. This not only saves time but also results in cost savings. It’s as they say— time is money.

Ai & Data Analytics is No Longer a Luxury

When every dollar counts, streamlining collections processes with AI and data analytics is no longer a luxury but a necessity.

By leveraging tools like Tesorio in finance, you can drive efficiencies, improve customer experiences, and ultimately boost your bottom line. Whether you're a small startup or a large corporation, it's time to tap into AI and data analytics for effective collections automation. Are you ready to unlock your cash flow potential with Tesorio?