From Reactive to Proactive — Transform Your A/R Operations with Proactive Collection Solutions

Is your accounts receivable (A/R) organization overwhelmed by overdue payments?

Traditional A/R processes and collection methods can often be time-consuming, error-prone and lead to delays in payment acceptance, processing and posting. By transitioning from traditional reactive collection methods and receivable processes to modernized A/R solutions that leverage proactive automation, your organization will be able to streamline and accelerate collections efforts and payment processing operations.

With proactive collections solutions, your A/R organization is able to leverage back-office receivable automation technology to limit, and in some cases, completely prevent, missed and late payment issues before they arise. This exciting functionality allows your business to shift the focus from merely reacting to overdue payments to actively preventing them, making the entire A/R lifecycle more streamlined and efficient.

What is Proactive Collections?

Proactive collections is a module within an A/R automation platform that allows your internal receivable staff to analyze A/R aging and more efficiently influence the timing of incoming payments to reduce the amount of late/outstanding payments across your business.

With a proactive collections solution, your business is able to take a forward-thinking approach to managing the A/R lifecycle by anticipating and addressing potential payment delays before they become problematic. Instead of reacting to late payments, businesses using a proactive collections module can prevent them through timely communication, automation and customer payment convenience.

Based on real-time aging reports, proactive collections solutions automatically alerts customers of new invoices, and sends payment reminders before and after the payment due date until the payment is settled.

Email notifications can be tailored to each customer based on their progress through the A/R lifecycle. At each stage, a convenient hyperlink can be embedded into the email to take customers to a secure online payment portal to make a payment on their account, or to one or multiple outstanding invoices.

With configurable email notifications, advanced reporting tools and seamless integration with your existing back-office systems, a proactive collections module empowers businesses to take control of their cash flow.

Key Components of Proactive Collections

1. Real-time Aging Reports — Real-time aging reports allow businesses to monitor outstanding invoices and identify potential payment issues across customers. These reports provide a comprehensive overview of unpaid invoices, enabling businesses to prioritize follow-up actions based on the severity of the delinquency. Once payment has been made on an overdue invoice, that item is removed to ensure additional notifications are not delivered for invoices that have successfully been paid.
2. Personalized Payment Reminders — Proactive collections allows for configurable payment reminders to be sent out to customers that include invoice details and a payment link for convenient access to an online payment portal.
3. Contactless Online Payments — Make it easy for customers to settle their outstanding invoices by delivering convenient, contactless online payment options. Via the hyperlink embedded within the reminder email, customers can access the online payment portal whenever and wherever they want.

Benefits of Proactive Collections

One of the most significant benefits of utilizing a proactive collections module is improved cash flow. Timely reminders and automated notifications across the complete A/R lifecycle encourage customers to pay on time, which minimizes the occurrence of overdue invoices. This proactive approach reduces financial strain on a business, and provides a more predictable revenue stream — enabling better financial planning and stability.

Proactive collections solutions help to streamline the A/R lifecycle — significantly improving operational efficiency. Automated notifications and payment reminders help to reduce the need for manual follow-ups from internal staff, freeing up valuable time to focus on higher value functions such as exception handling and severely past due accounts.

Days sales outstanding (DSO) is a critical metric for businesses to keep track of the average number of days that it takes to collect payments from their customers. With a proactive collections module, your business is able to reduce the amount of days an invoice is unpaid.

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By anticipating payment delays and addressing them before they become problematic, proactive collections solutions can help to improve cash flow, boost operational efficiency, reduce DSO, and ultimately, help to streamline and automate back-office A/R operations. Don’t let delinquency derail your business, embrace proactive collections today.

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1.  PYMNTS Report | Tapping AI's Potential for AR Optimization, November 2023