Supercharging Accounts Receivable with AI: Top Use Cases for Finance Teams

5 min

Artificial Intelligence (AI) is a game-changer for many careers, but financial teams are one of its greatest benefactors. Today, we’ll explore how AI is reshaping accounts receivable and the practical applications of AI that can empower finance teams to unlock success.

From predicting invoice delays to analyzing customer payment behavior, AI is a powerful tool. Let's uncover how it can empower your finance team to thrive.

The Importance of Efficient Accounts Receivable

Let's kick off by understanding the basics. What exactly is ‘accounts receivable’? In essence, it's the money that customers owe to a company for goods or services provided on credit. 

Common Challenges in Managing Receivables

  • Siloed Information: Managing invoices and customer details in isolation results in fragmented data, creating challenges in maintaining a cohesive and transparent financial overview.
  • Inconsistent Payment Patterns: Customers don't always adhere to payment schedules. This causes uncertainty and requires extra work from finance teams.
  • Delayed Cash Flow: When customers don’t pay on time, companies must find ways to do more with less. This creates unnecessary strain across the business. 

Impact of Delayed Payments on Cash Flow

Ever been stuck waiting for money owed? That's what happens when customers delay payments. This not only disrupts the smooth flow of cash but also affects the overall health of a business. Payments are the lifeblood of business, and delays can have a cascading effect on a company's operations.

AI in Finance – An Overview

Now, let's talk about AI, the new superhero of the financial world. It can reduce or even remove common challenges you face with accounts receivable. 

The Benefits of AI

  • Efficiency: Imagine a world where tedious manual tasks vanish. You can replace them with speedy AI algorithms.
  • Accuracy: Goodbye, human errors. AI can improve precision in handling financial data.
  • Predictive Analytics: Who needs a crystal ball when you have AI predicting future trends and behavior?
  • Data-Driven Decision-Making: No need to rely only on your gut feelings. AI can improve your decisions with real-time data and trends.

AI Use Case 1: Predicting Invoice Delays

What’s one of the most common issues in managing your accounts receivable? Invoice delays.

By including market conditions and indicators, AI is a compelling predictive tool. It can help finance teams anticipate and navigate payments. On top of that, AR automation can improve the entire process with end-to-end optimizations.

What Information AI Can Use to Make Receivables Predictions

  • Historical Payment Data: Past payment data can help you (or your AI tool) find common factors leading to delays. For example, payment timing and how often delays occurred.
  • Invoice Details: Diving into payment details like payment amounts, due dates, payment terms, and any discounts or penalties can help identify overall payment trends.
  • Seasonality: Businesses can have different payment cycles throughout the year. This can apply to different industries and regions as well. 
  • Customer Financials: When fed proper information, some AI systems can factor in external data related to customers’ financial health. This can include credit scores, financial statements, and other metrics.

AI Use Case 2: Predicting Customer Payment Behavior

Aside from predicting invoice delays, AI can analyze payment history to predict individual customer behavior. From assessing credit risks to suggesting early payment discounts, AI can become a compass for your finance team to make the most of your customer relationships.

Methods of Using AI to Analyze Payment History and Predict Future Behavior

  • Method 1: Assess customer credit risks by analyzing their financial history, payment behavior, and other relevant data. This will help your team make more informed credit decisions. In turn, you’ll minimize stress about customer payments becoming delinquent since you’ve already vetted their ability to pay their invoices. You can also maintain maximum credit limits to limit the exposure. 
  • Method 2: Identify opportunities for fast cash. If you’re looking to get more cash on hand, you may want to explore offering early payment discounts to customers. Use AI to analyze payment patterns to find customers with consistent early payments. This is a great starting point of customers who are most likely to take advantage of early payment discounts.

Additional AI Use Cases for Accounts Receivable Teams

Now let’s delve into other applications of AI for accounts receivable. From data analysis to strategic decisions, AI in accounts receivable holds untapped potential for your business operations.

Other Applications

  • Cash Application: Start by using AI to automate data capture from payment files, match remittances with customers, and close open receivables.
  • Implement AI-Driven Chatbots: Once you’ve introduced AI into AR, you can explore more use cases like virtual assistants. They can help you automate communication with customers regarding reminders, payment confirmations, and answering common queries.

Implementing AI in Your Finance Team

Implementing AI is not always a walk in the park, it requires a thoughtful strategy. Here are some guidelines to get you started:

  • Align your AI tools with the finance team and the company’s business goals.
  • Find a trusted partner with experience in the industry.
  • Make sure your tools have the flexibility to grow with your business.
  • Your AI tools should integrate with your general ledger and other financial systems.
  • Set up internal systems to manage and maintain the platform.
  • Ensure that the AI tools and partners adhere to data privacy and security standards.

Training Staff and Adapting to New Systems

  • Assess Current Skills and Training Needs: Start by evaluating the team's current skills and find areas that need improvement. Then plan your training to address any specific needs.
  • Create a Training Plan: Develop a clear plan that outlines training topics and goals. This roadmap should guide the team through the integration process.
  • Workshops or Webinars: Conduct workshops or webinars to provide hands-on experience and a flexible learning environment for your staff. Lean on your AI provider for assistance. 
  • Learning Resources and Blogs: Offer resources like documentation, video tutorials, and case studies to support continuous learning. This can encourage team members to enhance their skills at their own pace.

Final Thoughts: Supercharging AR With AI

AI’s growth over the last 18 months has been incredible. It brings us an opportunity to improve our workflows on both an individual and company-wide level. For finance teams in particular, AI can help with bookkeeping, financial management, accounts receivable, and much more. 

One key going forward is your selection of tools. And Centime has a leading AI-powered AR automation solution. Click the banner below to explore our AI-powered platform and learn how it can help you improve your efficiency and decision-making.

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