6 Accounts Receivable Trends for 2023

Interest rates have skyrocketed from almost free to a high “new normal.” This has profound implications for businesses that borrow for working capital needs since most loans have floating rates.

Your customers are looking to optimize their cash flow and working capital, and the quickest and easiest way is by adjusting their accounts payable cycles. For example, if they have been paying you in 40 days, flipping a switch to 44 instantly improves their cash position and reduces yours.

Accounts receivable automation, strategies, and tactics are the best ways to combat this trend.

Many businesses – especially chain retailers – will further tighten order scrutiny, increasing deductions and chargebacks for compliance violations, shipping errors, trade promotion bill backs, etc.

This impacts cash flow and your profits. For example, a deduction increase of 1.5% of revenues will reduce your bottom line by 15% if your present net profit is 9%.

Again, automating your accounts receivable and collection processes combats these tactics. As a leading provider of Receivables automation software and services, we wanted to share the following important trends we see for the coming year.

1. More Data Mining

All companies are focused on better understanding their customers’ needs, requirements and “hot buttons” to better service them.  Data mining can uncover customer trends, profitability and growth potential.

Your goal is to identify those customers that are highly profitable and pose the greatest opportunity for growth. You can get some of that data from records of daily routine customer facing activities such as O2C.

Deduction analysis on specific customers can provide useful information such as servicing costs, profitability and growth potential

2. Higher Data Security

Concerns are continuing to grow regarding protecting sensitive information including customer and employee personal data. Fraud is rising, and all employees must be aware of this issue.

This is especially important for customer-facing employees who manage large volumes of emails and text messages. Continuous training is required to battle these threats.

3. A Focus on Credit Quality

Credit Quality is a serious consideration, since many leveraged businesses face a double whammy of challenges: a massive increase in loan-carrying costs and a business slowdown and potential recession. This requires deeper credit risk analysis than has been required in recent years. You can keep an eye on trends by looking at the pricing for Credit Default Swaps and A/R Puts offered by JP Morgan and others.

4. Improved Customer Connections

It’s important to make it easier for companies to do business with you.  Receivables teams are involved with accepting payments from customers, reminding them about due dates and credit limits, and resolving invoice disputes. Your teams must provide a good experience through all these touchpoints.

Also, your customers want to conduct more business electronically. They would prefer to access documents such as invoices, statements, shipping records online, and to make payments and dispute charges that way as well.

Suppliers that achieve this can reduce operating costs and improve customer engagement.

5. Better Staff Skills and Engagement

The days of employees handling routine technical activity are coming to an end. Roles are quickly moving away from transactional activities to more strategic activities. Staff are being trained to draw upon data from numerous sources.

You need to upscale skills and train continuously to keep employees engaged.

6. Automated Collections

Advanced receivables and collection software can quickly improve your collections, by automating strategies based on customer risk and histories. Software features such as autonomous dunning and robotics replace routine tasks to free up staff for more critical responsibilities. This is especially important in an environment where experienced staff is hard to find and train.

If your customers are smaller businesses like contractors and SMEs, consider integrated, automated payments like credit cards, e-checks. This functionality can be incorporated directly into collection emails and will typically produce payments without telephone follow-up.

Final Thoughts

Businesses constantly look for opportunities to improve productivity, remove process blockages, and better serve customers. Management needs to continue a mindset within the organization for “What’s next?” and “How can we do this better?”

Automation solutions are more easily implementable than ever, with advanced features like AI, robotics, and customizable workflows. As your company navigates these trends, remember that we can help optimize your receivables process with Carixa automation software or services.

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