Digitizing debt collection has become a must for companies wishing to optimize their customer debt collection process. Digitizing this process not only speeds up the collection process and reduces associated costs, but also anticipates risks and improves communication with debtor customers. Find out more about the challenges and benefits of digital debt collection.
Collection context
Managing customer risk, and consequently the debt collection process, is a major challenge for every company. Indeed, the efficiency of the process depends on :
- the company’s cash flow (management of incoming flows) ;
- the company’s financial and accounting management (potential losses and collection costs);
- the company’s reputation, and the preservation of its commercial relations with debtor customers.
As a result, optimizing debt collection is not just a matter of setting up a process that focuses primarily on the legal aspects, and the solutions offered by the law to obtain payment for unpaid debts. It’s a whole strategy that needs to be put in place. This includes drawing up a clear collection policy and raising awareness of the cash culture among our teams.
In addition, collection methods are evolving, to facilitate the actions of debt collectors and the strategic decision-making of the Chief Financial Officer (CFO). One of the major developments is the digitalization of debt collection, based in particular on the automation of actions, and the provision of dashboards updated in real time.
This raises the question of whether companies should continue with manual collection, or opt for automatic collection. This is why the benefits of digitalization in debt collection need to be studied.
What are the advantages of digital debt collection?
The first advantage of digital debt collection is the ability to automate customer reminders. In fact, this new approach enables you to set up reminders to be sent after a certain period of time has elapsed following the due date of an invoice. The more reactive you are in the event of late payment, the greater your chances of obtaining payment within a short timeframe. Ideal for optimizing your DSO.
What’s more, you also have the option of scheduling reminders a few days before the invoice is due, so that your customers don’t forget to make payment. A great way to reduce the risk of late payment.
Secondly, the digitization of collections enables you to monitor performance in real time. Thanks to dashboards, you can quickly and easily consult your KPIs (key performance indicators). DSO, collection rate, dispute rate, etc. Everything is just a click away. This gives you access to reliable data, so you can make the decisions you need to adjust your collection policy, and take corrective action if necessary.
Digitized debt collection also enables you to analyze your customers’ payment behavior, both globally and individually. This enables you to identify patterns and customer profiles, and thus segment your customer portfolio with a view to tailoring payment terms (particularly payment terms) and any reminders in the event of late payment.
It’s also an opportunity to set up an online payment platform to make it easier for customers to pay their invoices. The customer experience is a point not to be overlooked when optimizing this process, as it contributes to maintaining a good relationship with your customers. Indeed, by removing the friction points that can lead customers to delay payment, you increase your chances of seeing invoices paid on time. You also make it easier to pay overdue invoices.
What’s more, adopting such an approach facilitates collaboration between different teams within the company. Salespeople, accountants and debt collectors all have access to the up-to-date information they need, and can discuss the best strategy to adopt for each customer.
Collection software to digitize your processes
The main tool for digitalizing debt collection is, without doubt, collection software. This digital tool is a real asset for optimizing the collection process. It offers a number of advantages.
First and foremost, collection software such as CashOnTime offers a wide range of functions, including :
- automate your customer reminders;
- segmentation of customer profiles;
- customizable dashboards ;
- accounting lettering ;
- litigation follow-up ;
- etc.
It can also offer online payment to make it easier for your customers to pay their invoices. What’s more, it can link up with insurance risks.
So, implementing collection software is the ideal way to focus on managing receivables and disputes, and thus improve cash flow and business performance in this area.
Discover the features of our collection software.
What are the best practices for successful digitalization?
Finally, to ensure the successful implementation of digital debt collection within your company, you need to take care to :
- analyze your needs in advance, so you can choose the best solution for you;
- qualify your data to make your process more reliable ;
- involve the Information Systems Department (ISD) to ensure that the chosen solution is compatible with existing solutions;
- involve end-users, since they are the ones who will have to use the collection software on a daily basis;
- train teams to get to grips with the tool and get the most out of it.
Conclusion
Digitizing debt collection saves time and optimizes the collection process. In concrete terms, the implementation of debt collection software gives you greater control over the entire process, from sending out reminders to managing disputes and analyzing collection performance. All this, to help you manage your receivables and improve your company’s cash flow.
