How Automation Can Help Credit Teams

Check out this podcast, hosted by the National Association of Credit Management (NACM) and featuring a guest from BlackLine as they discuss using automation to bridge the gap when there are staffing shortages.

Cindy Jacobson, a former credit manager turned senior solutions consultant with BlackLine, spent the bulk of her career managing order-to-cash and serving as a director of credit. She understands the challenges of today’s credit and finance teams.

In this installment of NACM’s podcast “Extra Credit,” Cindy explains that manual processes are at the root of many of those challenges. Timely invoice delivery and customer payment receipt are both areas that can be negatively affected by slow traditional processes.

In addition, companies often deal with volume fluctuations. For many teams, payments can be processed manually, but suddenly one week, you're inundated, and it slows everything down. Accurately applying payments to invoices at the invoice level in a timely manner is critical because it impacts your collection activities as well.

Cindy notes that everybody does collections, but the question is: are you contacting everybody that needs to be? In a manual world, there’s a good chance you’re dealing with delays in dispute resolution.

On top of all that, there are month-end activities!

Cindy explains, “When I think about the reporting I used to do at the end of the month to provide an assessment of AR and explain: where we're at, where our challenges are, what our DSO is and why it looks that way, and what customers are a potential risk … that can take hours of data mining in a manual world.

When I think about workload challenges, all those manual tasks add up. We were always expected to do more with less. Most organizations run on a lean team anyway, and when you lose staff, it just makes it even harder. There are a lot of things you touch in AR, and I don't think people realize how many areas that department is responsible for.”

When you're in a manual process world, you’re already inefficient. Staffing shortages can make that inefficiency even worse. You become more inefficient because you're asking folks to step in, pitch in, and do things they may not have done before.

When you have a staffing shortage, you're increasing the overall workloads of employees you do have. They're not going to be able to get larger workloads done in the same amount of time. One of the issues with manual processes is individual employees possess a lot of institutional knowledge. They've got a lot of valuable insights and expertise in their heads that you can't easily replace. If someone retires or moves to a new company, you run the risk of your remaining staff suffering burnout. They're already stressed out, and you’ve added more to their plates, which can lead to MORE burnout and turnover! Combined, this can all negatively affect morale.

What can you do? Let’s talk about some solutions.

Employees are looking for a place where they can have a decent work-life balance. The lack of balance has become a leading cause of turnover when employees live in manual, mundane processes. They don’t have a chance to advance their careers.

When you leverage automation, you will increase your team's capacity. You're taking all that mindless, mundane work out of their hands, and that gives them the opportunity to increase their skillset because they're going to work on other higher value-added activities. And that's really important, especially when you look at the younger workforce. They're very tech-savvy, and they don't want to work for an organization that they perceive as living in the ‘stone age.’

Employees want to feel like they're contributing value to the company they work for and that they're working in a place that will try to advance their careers and provide them with the necessary tools to do that. In a profession like B2B credit, we want the next generation to be excited to become credit managers! We need to use these new tools to make credit management more exciting.

There's a lot that can be automated in the cycle, such as sending customer invoices. I can remember when we would print out hard-copy invoices, collate, and mail them. It was all manual. Now you can automate that whole invoice process and send invoices via email to the customer. You can even make it easier for your customers to self-service their accounts. Then you can absolutely drive automation in the allocation of the payment processing itself to decrease errors. With automation, you can reduce the manual effort of that piece alone by up to 85%. So you’re really adding a lot of capacity back to the team that's responsible for getting those funds applied.

Automation can also help reduce manual collection processes; for example, you could utilize some collection automation to create a collector's work list. Collectors in the manual world spend a lot of their time just trying to determine ‘who do I contact today?’ They spend time trying to determine whose credit they should assess to see if the credit limit needs to be changed and whether that's an increase or a decrease. If you apply automation and put some risk policies in place, you can let the solution look at customer payment behavior, sales values, all of that information, and bring that to the forefront. Let it tell you where you should be focusing on risk. There are lots of areas where you can drive automation.

Be sure to listen to the whole podcast (it’s about 12 minutes long), and then check out this whitepaper to learn how to raise the bar in AR with BlackLine’s solutions.