Debt collection is a strategic activity for companies. It is vital to keep the number and amount of unpaid invoices as low as possible, so as not to create a cash flow gap or even tension. The company’s financial health, and therefore its long-term survival, depend on it.
However, the debt collection process can be complex and time-consuming for employees who have to manage it manually. So, there are 8 signs that it’s time for your company to opt for debt collection automation. We’ll tell you how to identify them, and explain the concrete benefits of an automated debt collection solution.
Why is automating debt collection becoming a priority for companies?
Automated debt collection is a must for effective management of delinquent receivables. Indeed, given the importance of the debt collection process for a company, it cannot afford to overlook the need to optimize its processes in this area.
To guarantee their long-term survival, companies need to ensure they remain competitive by adopting the right tools to boost their sales and financial management performance. However, with a significant increase in unpaid receivables due to the current economic climate, companies need to keep a tight rein on their cash flow.
What’s more, good management of overdue receivables guarantees a significant reduction in cash shortfalls due to incoming flows. This is all the more important as it has been proven that responsiveness is the key to rapid debt collection.
These major challenges for the company are not compatible with manual management of debt collection, which means longer processing times, errors, lack of follow-up on files, and the absence of dashboards updated in real time.
What are the signs that it’s time to switch to debt collection automation?
If you’re wondering whether it’s the right time for your company to switch to debt collection automation, here are the 8 signs that should alert you:
- an increase in the volume of receivables to be processed ;
- a lack of visibility on the status of receivables and inefficient follow-up;
- difficulties in prioritizing collection actions;
- recurrent late payments and complex management of reminders;
- frequent errors in the processing of receivables and payments;
- difficulties in meeting collection deadlines and generating reliable reports;
- the absence of up-to-date, real-time data;
- coordination problems with other departments, in particular with the sales department and the CFO.
What are the advantages of automated debt collection?
To remedy these problems, you can set up an automated debt collection process.
Firstly, automating debt collection saves time and increases productivity. Such a process eliminates time-consuming, repetitive tasks, allowing teams to concentrate on more complex collection actions.
Teams have real-time visibility of the status of files, and in particular of recorded payments, thus avoiding inappropriate reminder errors or errors in calculating the total amount due, for example. As a result, automated debt collection helps to optimize customer relations. This is all the more true, as collection actions can be customized according to customer profile. This means you can plan different scenarios depending on the customer’s outstanding balance, the duration of the relationship, etc.
All this contributes to an increase in the collection rate, since reminders are more effective.
On the other hand, automating debt collection makes it easier to prioritize collection actions. Teams can easily identify the files with the biggest outstanding debts or the oldest unpaid invoices. This enables them to take the appropriate collection action to avoid invoices becoming time-barred, and thus generating losses for the company.
In addition, automating the debt collection process facilitates coordination between different departments. For example, the sales representative in charge of a customer whose invoice has fallen into arrears receives a notification. He or she can then contact the customer to understand the reasons for the late payment, and take the situation into account when negotiating payment terms for the next contract.
Finally, automating debt collection gives you access to data that is updated in real time. The dashboard and the key performance indicators it displays are reliable and reflect the company’s reality at any given moment. This enables both CFOs and managers to make the right decisions.
Would you like to take the step towards automation? DIMO Software is the publisher of the CashOnTime debt collection automation solution, which frees your teams from time-consuming tasks. Discover the features that will enable you to take your debt collection to the next level!
Comment se préparer à l’automatisation du recouvrement ?
To facilitate change management and the implementation of automated collections, it is advisable to :
- appoint and build a project team ;
- assess the company’s needs and resources for an effective transition ;
- identify available solutions ;
- choose the right collection software for your needs;
- train the accounting team and sales staff in the new tools and processes.
Conclusion
Many companies are facing an upsurge in unpaid invoices, and must adapt to the growing complexity of reminders. Automating this process with debt collection software saves time, improves the accuracy of actions, and allows you to monitor files in real time. However, for debt collection automation to be a success, it is important to be well prepared when implementing the chosen collection solution.
