Optimizing Cash Flow with AI in Accounts Receivable Using Chat GPT

Optimizing your accounts receivable collections process is critical for ensuring a steady cash flow in today’s fast-paced business world. Accounts receivable teams can leverage AI-powered tools, like Chat GPT, to revolutionize how they handle collections. At first glance, a chatbot might not seem valuable for finance teams, but good communication is the foundation of an effective dunning strategy. 

Companies rely on dunning notices to prompt timely payments and boost cash flow. So, is Chat GPT a valuable addition to your accounts receivable team?

Using AI in Collections and Accounts Receivable

Generative AI is only one type of artificial intelligence (AI), and although we see applications of Chat GPT for finance, there are other broader AI applications specifically for collections and accounts receivable as a whole.

These include:

• Predictive analytics. AI and machine learning can analyze vast amounts of customer data to forecast customer behavior such as predicting delays in customer payment, assessing credit risks and identifying payment trends to optimize collections workflows.

• Evaluate and improve team performance. AI and machine learning can analyze the performance of your collections team, both on an individual and team level by collecting data on collections performance such as DSO, A/R days, collections rate. AI can also deliver insights that help improve performance.
• Cash application. Match invoices, credits, and payments with quotes and sales orders automatically using advanced AI algorithms to ensure the correct amounts are being processed (i.e. automatic reconciliation) with near 100% accuracy.
• Personalized collections strategies. Generative AI tools such as Chat GPT can personalize dunning emails at scale, including first, follow-up and payment reminders and even warnings of legal intent for accounts that are 90 days delinquent.
• Intelligent prioritization of invoices. Prioritize collections according to customers that pose the highest risk and value so that you can optimize collections and quickly see the effect on your cash flow. This can be especially helpful in maximizing recovery and minimizing bad debt.

Using Chat GPT for Finance

Chat GPT uses advanced machine-learning and language-processing techniques to render text in a conversational tone. Much of the generative AI focus is on text, especially in business.

ChatGPT can also assist financial professionals in:

• Generating reports. Chat GPT can process company data over a specific period of time that includes various KPIs for the purpose of analyzing company performance, such as quarterly reviews. In accounts receivable, its A/R performance metrics reports can include DSO, best possible DSO, average days delinquent and collections effectiveness index (CEI).
• Automate aspects of customer service. Financial professionals can ask Chat GPT any question, it can gather vast amounts of information and respond conversationally. It can quickly answer questions related to revenue and expenses, budgeting and forecasting.

The Benefits of Using Chat GPT for A/R Collections Dunning Emails

Dunning strategies are only as effective as the content of emails and the timing of distributions. The accounts receivable team can use AI to simulate outcomes for each notice as the intensity climbs with ongoing delinquency. Some workers might master the use of AI well enough to use it for handling demanding clients and complex disputes. These use cases have three direct benefits for any business.

Increased Efficiency

The collections team can combine Chat GPT in finance with advanced A/R software to automate the dunning strategy process. This can range from email generation to follow-up responses. Accounting teams can save resources, such as by reducing overtime and its associated costs. Automating financial processes also reduces human errors that could lead to costly mistakes like miscommunication or missed deadlines.

Improved Cash Flow

Using AI for collections and dunning emails can help businesses get paid faster. AI-generated email notices can be highly personalized, producing highly personalized messages that will resonate and get a high response rate. Chat GPT and AI-powered automation can also optimize the timing of collections emails to ensure customers receive them when they are most likely to be effective.

Simplified Communication

Accounting teams often communicate using industry jargon that other professionals might not understand. Workers can use Chat GPT to instantly convert more detailed reports, emails, or materials into layperson’s terms. Finance workers can do this before distributing information, or other workers can do this themselves when the material arrives.

How Chat GPT Can Help Personalize and Optimize Your Dunning Emails

Generative AI is one of the most innovative technologies in the world today. It has revolutionized how businesses communicate with their customers, allowing them to create personalized content at scale. What does this mean for your dunning emails?

Personalization

Using Chat GPT for collection emails helps accounting teams generate personalized communications that show the recipient they understand the problem and take it seriously. This ensures that borrowers receive tailored messages that resonate with them and make payment deadlines more likely to be met. Advanced chatbots can tailor emails to each customer, including their language, tone, level of detail, and other factors.

Language Generation

Chat GPT can generate email content with personalized language and tone. AI-generated emails can convey the urgency of payment without being too aggressive or confrontational. This is especially useful when accounts receivable teams have run out of patience with demanding clients and must respond promptly. Using AI to create dunning email templates can also ensure standardized communications, so customers do not feel personally attacked even when receiving urgent prompts.

Optimization

Optimization is another crucial factor to consider when crafting dunning emails templates. Artificial intelligence helps companies optimize their human assets to focus on the more critical aspects of collections, such as negotiations and disputes. Chat GPT can automate the dunning process, which helps streamline customer communication and keep track of payment deadlines. You can even ask Chat GPT the best time to send notices to get favorable responses.

The Role Of Chat GPT In Automating The Collections Process

A/R teams must review all possible use cases and determine which suits their needs best. These are some of the leading roles to consider:

• Email generation: Chat GPT for collections emails is a game-changer. It can generate first and follow-up emails, as well as payment reminders. This expedites the dunning process and ensures customers get all the necessary information on time.
• Templates for responses: Chat GPT can generate templates for replies to customer payment refusals or other disputes. This helps A/R teams respond quickly and accurately, reducing the risk of miscommunication and improving customer satisfaction.
• Formal warnings of legal intent: Chat GPT can create formal notices, such as a letter signaling a potential lawsuit for nonpayment. Managers should request review by an attorney, which costs less than asking attorneys to create a notice from scratch.

Examples of Integrating Chat GPT Into Existing Collections Processes

Chat GPT sounds great in theory, but how well does it handle real-life queries? We decided to test the system.

Prompt 1: Write a general collections email as part of a dunning strategy for a medium-sized business.

Subject: Reminder: Outstanding Payment on Invoice # [Insert Invoice Number]

Dear [Insert Customer Name],

I hope this email finds you well. This email is a friendly reminder that payment for the outstanding balance on invoice number [Insert Invoice Number] is now past due.

We understand that sometimes unexpected circumstances can arise, but we kindly ask that you prioritize settling your account with us as soon as possible. By doing so, we can continue to provide you with the products and services you rely on.

To make it easier for you to settle your account, we have included a summary of your account and invoice details below:

• Invoice number: [Insert Invoice Number]
• Invoice date: [Insert Invoice Date]
• Invoice amount: [Insert Invoice Amount]
• Outstanding balance: [Insert Outstanding Balance]
• Due date: [Insert Due Date]

We kindly ask that you take immediate action to settle this invoice. You can make payment using the following methods:

• Online payment: [Insert Payment Portal Link]
• Bank transfer: [Insert Bank Transfer Details]

If you have already made payment, please disregard this email. However, if you have any concerns regarding this invoice or require further assistance, please do not hesitate to contact us at [Insert Contact Details].

Thank you for your attention to this matter. We value your business and look forward to continuing our partnership with you.

Best regards,

[Insert Your Name]

[Insert Your Company Name]

Prompt 2: Write a brief personal collections email to a challenging customer who is 120 days past due. We are considering legal action.

Subject: Urgent: Outstanding Payment on Invoice # [Insert Invoice Number]

Dear [Insert Customer Name],

I am writing to you with concern regarding the outstanding balance on invoice number [Insert Invoice Number]. Despite our previous attempts to reach you, we have yet to receive payment for the amount owed, which is now over 120 days past due.

As you are aware, the payment terms for this invoice were [Insert Payment Terms]. Unfortunately, we cannot continue to tolerate this delay in payment and are now considering legal action to recover the amount owed. We value your business and hope to avoid taking legal action, but we must protect our company’s interests.

Please note that if we do not receive payment or hear from you by [Insert Deadline Date], we will have no choice but to pursue legal action. We strongly advise you to settle this matter immediately to avoid further escalation.

We understand that sometimes unexpected circumstances can arise, and we are willing to work with you to find a solution. If you require any assistance, please do not hesitate to contact us at [Insert Contact Details].

We hope to receive payment from you soon and avoid any further action.

Sincerely,

[Insert Your Name]

[Insert Your Company Name]

Prompt 3: Please create a template for a dunning email with a humorous tone with a funny subject line

Subject: You Don’t Want to be a “Debtor” of the Invoice #[Invoice Number] Club, Do You?

Dear [Customer Name],

Greets from the Invoice #[Invoice Number] Club! No, we’re not a secret society (or are we?), but we do have one thing in common – a payment that’s overdue.

Now, we know that you’re probably busy living your best life, but this little invoice needs some love too. So let’s make a plan to get it paid up and out of our hair.

You can make a payment online or give us a call at [Contact Information] to chat about it. We’re always up for a good conversation, even if it’s about money. 

Thanks for taking care of this and we look forward to see you around the club more often…in a good way of course!

Cheerse,

[Your Name]

[Your Company Name]

The Power of Combining Generative AI With Accounts Receivable Automation

Incorporating generative AI into your business can bring many benefits to the table, such as reduced labor costs and better cash flow. The trick is training your workers to use it well and providing creative freedom to test it in collections. Managers can achieve even more outstanding results by combining generative AI with automated A/R tools, such as Gaviti.

Our customers use AI to generate reports, evaluate team performance, and schedule dunning strategies. These and other tasks have earned them impressive results, such as lower DSOs and reduced default rates.

What will advanced artificial intelligence help your business achieve? Get started with Gaviti to find out.

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