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Why AR Automation Software Eliminates the Need for Collection Calls

Published on 5 min read

In this blog, you'll learn:

  • What collection calls are
  • How AR automation and collection software can improve the collection process
  • Why it's time to eliminate collection calls
  • And more!
AR professional sits with a headset and frowns, overwhelmed by the amount of collection calls they need to make

Every business needs positive cash flow to thrive. That starts with accounts receivable (AR) and your ability to reliably collect payments on time. Many companies turn to collection calls to ensure they’re paid on time, but is this really the best approach?

Read on to learn why AR automation is the solution you need to eliminate the need for collection calls and keep your business in the black.

What are collection calls?

In most companies, it’s the responsibility of the AR department to ensure that payments are received in a timely manner. In general, once a debt goes between 30 and 90 days beyond its due date, the AR team will begin making collection calls to attempt to resolve the outstanding payment. A recent report from Dun & Bradstreet and the Credit Research Foundation found that in some industries, as many as 60% of accounts are more than 90 days overdue, so these AR teams are taking on a lot of extra work.

Typically, a traditional, manual collections process is extremely tedious and labor-intensive. It starts with the AR team pulling a list of delinquent accounts. These accounts are sorted by priority and then distributed to team members who will make calls to each customer. In these initial calls, AR team members remind customers that their accounts are past due and instruct them to pay immediately to avoid late fees and further escalation. Next, a staff member will call the customer to follow up on the debt and attempt to resolve it over the phone. If these calls go unanswered, the debt may be sold to a third-party collections agency once it reaches the 120-day past-due mark.

This collection process takes a lot of time and still may not resolve outstanding debts. In fact, a study published in 2017 found that small business owners spend 1.3 days per month chasing down late payments. And on average, most companies are forced to write off about 1.5% of their outstanding receivables as bad debt, meaning they never get paid at all.

Debt collection calls are never fun, and nobody appreciates making or receiving them. They’re stressful for AR staff, but even more so for customers. Collection calls create a frustrating experience for the customer, and often lead to a negative image of the collector, no matter how justified the collections process may be.

Because they create a negative customer experience and can undermine a company’s reputation, businesses should attempt to resolve debts in a more positive way. Rather than creating an “us vs. you” message, why not collaborate with customers to resolve outstanding payments? Automated collections services help businesses maintain positive customer relationships and make things easier for staff members.

How automated collections software can help

Collection calls are difficult and can become confrontational if not handled properly. You may encounter excuses, embarrassment, confusion, and frustration. This is stressful for both the customer and the AR team member, and should be avoided if possible.

Fortunately, AR automation software can eliminate the need for collection calls by allowing you to communicate and collaborate with your customers over the cloud. By transferring tedious administrative tasks off of your AR professionals and onto technology, you can create a less stressful and ultimately more productive work environment. This means failed collection calls and manual touch points no longer need to define your teams. There are many ways automated accounts receivable collections software can help make this process simple and pain-free.

Versapay’s accounts receivable automation software offers a collaborative collections experience. We arm your team with the information they need to understand where each account stands in the payment process. We can also create automated notifications to gently remind customers of upcoming due dates or past-due invoices. We can even let customers contact your team directly through a cloud-based payment portal to resolve any issues that are holding up payment. This alone can eliminate a great deal of confusion, miscommunication, and frustration.

Top benefits of eliminating collection calls with AR automation

When you make collection calls a thing of the past, your business will see several benefits. These include:

  • Fewer problems relating to human error in the invoicing process — When invoices are generated by software, there’s less chance of math errors or other mistakes creeping into the documentation.
  • Accelerated cash flow — The old method of invoicing often took up to 10 days for a single invoice to be processed. This led to a 30-day turnaround time for each payment. By contrast, Versapay users see a 25% increase in payment speed.
  • Less stress for your AR team and more time for them to spend on more strategic work — When your team isn’t busy making collection calls, they can be better allocated to more fulfilling work.
  • Real-time visibility into customer payment habits and account status — AR software can give you real-time insights into how and when online payments are made and settled.
  • Better customer experiences — Nobody wants to receive a collection call. Maintain a good relationship with customers through collaborative AR processes.

Why it’s time to eliminate collection calls and invest in AR automation software

As our world continues to become more digitized, it’s vital that businesses offer digital solutions for common customer touchpoints such as collaborative collections through payment portals. AR collections software makes the process easier for customers and easier for your AR team. It also gives you important data to help you determine which customers should receive additional credit and which should be more closely monitored.

Contact us today to discuss how you can stop making collection calls and instead offer your customers a friendly and optimized payment experience.

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