Proactive Collections Management
Predictive ML models identify late payment risk 7-14 days before invoice due date with automated personalized outreach, payment plan recommendations, and escalating dunning workflows to reduce past-due accounts.
Why This Matters
What It Is
Predictive ML models identify late payment risk 7-14 days before invoice due date with automated personalized outreach, payment plan recommendations, and escalating dunning workflows to reduce past-due accounts.
Current State vs Future State Comparison
Current State
(Traditional)1. Invoices sent via email with payment terms (Net 30). 2. No proactive follow-up before due date. 3. AR aging report reviewed weekly: identifies accounts 30+ days past due. 4. Collections team makes phone calls to past-due accounts (30+ days late). 5. Escalating collection calls at 60 days, 90 days past due. 6. Accounts sent to collections agency or written off after 120-180 days. 7. Recovery rate: 50-70% for past-due accounts.
Characteristics
- • SAP Collections Management
- • HighRadius
- • AR Workflow
- • Upflow
- • Invoiced
- • Excel
Pain Points
- ⚠ Manual Processes: Inefficiencies and errors due to reliance on manual follow-ups and spreadsheets.
- ⚠ Lack of Integration: Disconnected systems causing data silos and reducing visibility.
- ⚠ Inconsistent Policies: Lack of clear collection policies leading to missed payments.
- ⚠ Customer Relationship Risks: Aggressive collections harming customer goodwill.
- ⚠ Limited Predictive Capability: Traditional methods reacting to overdue payments rather than anticipating them.
- ⚠ Resource Constraints: Small teams struggling to manage large volumes of accounts without automation.
- ⚠ Scalability Issues: Spreadsheets limit scalability and real-time insights.
- ⚠ Dependence on Manual Intervention: High reliance on human input increases error rates and slows processes.
Future State
(Agentic)1. Proactive Collections Agent predicts late payment risk 7-14 days before invoice due date using ML model analyzing: past payment behavior, current financial health, seasonal patterns, invoice disputes, credit utilization. 2. Agent sends friendly proactive reminders: 'Invoice #12345 due in 5 days, click here to pay now or set up auto-pay'. 3. Agent personalizes outreach by customer risk profile: high-value strategic accounts get white-glove phone call, standard customers get email reminders, high-risk accounts get firm notices. 4. Agent escalates with dunning sequence: friendly reminder (due date -3 days), urgent notice (due date), firm notice (due date +7 days), phone call (due date +15 days), legal notice (due date +30 days). 5. Agent offers payment plans for customers in financial distress: installment options, partial payments to keep account current. 6. Agent tracks collection effectiveness: which messages drive payment, optimal reminder timing, response rates by customer segment.
Characteristics
- • Customer payment history and patterns (on-time vs late, early payers)
- • Invoice data (amount, due date, age, dispute status)
- • Customer financial health indicators (credit score, D&B updates)
- • Credit utilization and available credit
- • Seasonal payment patterns by customer and industry
- • Communication history (reminders sent, responses)
- • Payment plan history and success rates
- • Collections outcomes (paid, disputed, written off)
Benefits
- ✓ 40-60% reduction in past-due accounts through proactive reminders before due date
- ✓ 80-90% collection recovery rate vs 50-70% reactive approach
- ✓ Collections team time shifts from chasing overdue to strategic account management
- ✓ Customer relationships improved: proactive helpful reminders vs aggressive reactive dunning
- ✓ Payment plans offered early prevent accounts from becoming severely delinquent
- ✓ Predictive late payment alerts enable intervention 7-14 days early vs 30+ days reactive
- ✓ Personalized collections approach improves response rates 2-3x vs bulk emails
Is This Right for You?
This score is based on general applicability (industry fit, implementation complexity, and ROI potential). Use the Preferences button above to set your industry, role, and company profile for personalized matching.
Why this score:
- • Applicable across multiple industries
- • Moderate expected business value
- • Time to value: 3-6 months
- • (Score based on general applicability - set preferences for personalized matching)
You might benefit from Proactive Collections Management if:
- You're experiencing: Manual Processes: Inefficiencies and errors due to reliance on manual follow-ups and spreadsheets.
- You're experiencing: Lack of Integration: Disconnected systems causing data silos and reducing visibility.
- You're experiencing: Inconsistent Policies: Lack of clear collection policies leading to missed payments.
This may not be right for you if:
- Requires human oversight for critical decision points - not fully autonomous
Parent Capability
Credit & Payment Terms Management
Delivers instant credit decisions, proactive collections, and significant bad debt reduction through AI-powered scoring and dynamic risk management.
What to Do Next
Related Functions
Metadata
- Function ID
- function-proactive-collections-management