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Collections Analytics
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How to Reduce Collection Calls With A/R Automation Software

Collections calls typically rely on a team of individuals, each responsible for his or her own accounts. Although the idea is for the collections teams to build a rapport with their customers, the approach is flawed. It seems counterintuitive, but automating the collection process to communicate as much information as possible regarding customer invoices ahead of time and relying on collection calls later in the customer lifecycle can drastically reduce the collection calls your business needs to make, saving time and resources.

Why Traditional Collection Calls are Inefficient

Like many other traditionally manual processes, collection calls are prone to human errors and inefficiencies. Errors can range from poor communication to invoice errors and payment disputes with customers, many of which could have been prevented with a more efficient process. Instead, these inefficiencies make it difficult to hire talented and loyal employees, damage customer relationships, and impact company growth. In addition, businesses may consume precious time and resources calling customers who are too busy to answer their phones or who strongly prefer to be contacted via another method, such as email.

Other inefficiencies of collections calls include:

  • They are resource-intensive. Collection calls require human staff, which can be difficult and costly to train and scale. It can also be difficult to hire experienced staff and engage them in meaningful work that is valuable to your team. Outsourcing collection calls may be less expensive, but it has other drawbacks, such as giving up control of a large part of the A/R process, difficulty anticipating future challenges, and inflexible contract terms.
  • They have the potential to elicit intense emotional reactions. Adds more stress. Since customers who are late in paying invoices may be facing financial hardship, their relationships with you may already be strained. Inappropriate reactions on the part of the customer or collector during a collections call may make the situation worse.
  • They deliver poor visibility into customer information. Aggregating data from collections calls is challenging and doesn’t offer a holistic view into the customer’s present financial situation. A collector’s access to customer data is typically limited as it exists in separate silos, such as emails, spreadsheets, phone calls and/or ERP platforms, making it difficult for them to gain insight into specific circumstances and tailor a payment plan to each customer.
  • They are reactive rather than proactive. A/R teams typically only escalate collections once they see that invoices are late, not as a method of consistently reminding customers about the terms or dates for payment. This reactive approach, combined with the potential for intense emotions and lack of insight into the customer experience, make for negative associations with collections calls and a bad customer experience.
  • They are unable to measure or track performance. Collection calls typically cannot be tracked or measured, as they are performed by different team members using different processes. There is also no standardized method for measuring performance across the collections team, making it difficult to decide whether or not the collections of particular accounts are effective.

The Benefits of A/R Automation

Due to the inefficiencies presented by accounts receivable collection calls, many businesses have turned to accounts receivable automation solutions to reduce their reliance on these calls.  Having a more efficient process helps to reduce the costs of manually sending invoices, detect discrepancies or issues with invoices in advance, and minimize outstanding debt.

Other benefits of A/R automation include:

  • A standardized and streamlined process. Streamlining the collections process allows you to quickly and efficiently process tasks such as the sending of payment reminders, tracking of payments, and matching of payments to invoices. By reducing manual errors and inefficient collections processes, it allows your team to focus their resources on other tasks. More efficient processes also means that invoices will be paid faster, increasing your cash flow so that you can use it for a potential investment or other growth opportunity.
  • An enhanced customer experience. By eliminating the potential to trigger emotional reactions to the collections experience, A/R automation can help function as a calm partner in building a positive customer experience. It can ensure communication is clear and efficient, giving the customer important information such as the invoice amount, payment options, schedule, delivery date and purchase order in the invoice so that all of the data is available and in the same place. This can eliminate frustration, misunderstandings and reduce late payments. A/R automation also maintains customer relationships in-house while eliminating the traditional inefficiencies of a collections team.
  • Centralized customer data in one place. Rather than having customer data across multiple platforms and points, centralized data offers the ability for analysis and the discovery of behavioral patterns. This information can be applied to enable more efficient collections of customers in similar situations in the future. For example, the dunning process can be automatically adjusted to segment customers with a high level of credit risk, offering better payment terms and more flexibility to those with a better credit history.
  • The ability to track and measure performance. Centralized data is also crucial for tracking performance of collections, whether on an individual or team basis. KPIs and metrics such as DSO, collection rate, aging buckets and collection rate trend analysis can be defined and determined beforehand to standardize the measurement of performance of your collections teams. You can also use it to determine which members of your collections team are performing above expectation, and which may need additional training to enhance their performance.
  • They protect the data security and privacy of your customers. Third parties can present your company with challenges with regards to your customer’s data privacy. With an A/R invoice-to-cash management platform, however, you’ll keep your customer’s information in-house so you won’t have these privacy concerns.

How Gaviti’s A/R Automation Software Offers a Proactive Approach to Collections

Gaviti’s invoice-to-cash A/R management platform gives businesses a streamlined approach to collections along with advanced collections analytics, an enhanced payments experience and a single view of your A/R from a centralized place. Its collections analytics provides KPIs both for individual members and the entire collections team to deliver a more accurate picture of your A/R performance, with metrics such as customer risk, total A/R, collections rate, and more. Its streamlined approach to collections, including automated dunning processes, payment reminders and escalations and the routing of disputes and deduction to the appropriate stakeholders, offers a proactive approach to A/R collections with better communications to improve the customer experience.

By centralizing data in one place, the platform integrates data from its other modules to deliver greater visibility into your entire A/R process, including the cash application, credit management and monitoring and disputes and deduction management process. For example, it can automate payment reconciliation, matching incoming invoices to payments, and it can deliver alerts to collections teams in real-time about customers with increased credit risk. It also documents an audit trail of all disputes and deductions for any future analysis or audits. With all of these benefits, it’s no surprise that increasing numbers of collections teams are able to successfully reduce accounts receivable collections calls and improve their A/R process with accounts receivable automation solutions.

Want to learn more about how you can accelerate your cash flow with an automated A/R process? Speak to a Specialist to see how Gaviti works.

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