5 Ways Generative AI is Transforming (AR) Account Receivable

In today’s fast-paced business environment, organizations are constantly seeking innovative solutions to streamline their operations and improve efficiency. One area that holds immense potential for transformation is accounts receivables (AR). Traditionally, AR processes have been manual, time-consuming, and prone to errors. However, with the advent of generative artificial intelligence (AI), there is a significant opportunity to revolutionize how businesses manage their AR functions. Many CFOs are focused on digital transformation of financial processes including accounts receivable.

Quoting Gartner on CFOs Interest in GenAI

Leading digital transformation efforts in the finance function is the top area CFOs are focused on in 2024, according to a recent survey by Gartner, Inc.

The survey of 185 CFOs, conducted through September and October 2023, revealed that improving finance metrics, insights and storytelling, leading change management efforts, and optimizing costs were also priorities that over 70% of CFOs considered to be critical to their success.

“The focus on transformation efforts aligns with the increased interest in GenAI and other disruptive technologies. This also speaks to the role the CFO plays in evaluating and aligning investment in these transformative technologies, both in finance and across the enterprise,” said Marko Horvat, vice president, research in the Gartner Finance practice. led that improving finance metrics, insights and storytelling, leading change management efforts, and optimizing costs were also priorities that over 70% of CFOs considered to be critical to their success (see Figure 1).

“The focus on transformation efforts aligns with the increased interest in GenAI and other disruptive technologies. This also speaks to the role the CFO plays in evaluating and aligning investment in these transformative technologies, both in finance and across the enterprise,” said Marko Horvat, vice president, research in the Gartner Finance practice.

So if you are focused on finance transformation with AI, here are five ways generative AI is transforming accounts receivables:

• Automated Cash Application Generative AI can be utilized to automate the processing of customer payments, remittances coming in email, customer AP Portals and other channels, open invoices from ERPs, matching process from receipt to reconciliation. By leveraging GenAI and natural language processing (NLP) capabilities, AI algorithms can extract relevant data from remittances and invoices, such as payment details, invoice numbers, amounts and many fields, with a high degree of accuracy. This automation reduces the need for manual data entry, minimizing errors and accelerating the invoice-to-cash cycle.
• Real-time Accurate Cash Flow Forecasting Generative AI algorithms can analyze historical payment data, customer behavior patterns, and market trends to predict future cash flows more accurately. By forecasting cash inflows, businesses can optimize their working capital management, identify potential cash flow gaps, and take proactive measures to mitigate risks. This predictive capability empowers organizations to make data-driven decisions and maintain financial stability.
• Personalized Collections Strategies and Correspondence Generative AI enables businesses to develop personalized collections strategies and letters tailored to individual customer preferences and payment behaviors. By analyzing vast amounts of customer data, including communication history, payment patterns, and credit risk profiles, AI algorithms can recommend the most effective collection approaches for each debtor. GenAI can prepare personalized reminder letters for each customer. Whether it’s sending reminders, offering discounts, or negotiating payment plans, personalized collections strategies enhance debtor engagement and increase the likelihood of timely payments.
• Enhanced Customer Payments Experience Generative AI can elevate the customer experience by providing seamless and personalized interactions throughout the AR process. AI-powered assistants can handle customer inquiries, resolve payment disputes, and provide real-time updates on account status. Additionally, AI-driven recommendation engines can suggest relevant products or services based on customer purchase history, fostering cross-selling opportunities and strengthening customer relationships.
• Efficient Deductions and Claims Processing Generative AI can significantly improve deduction management processes by automating the identification, analysis, and resolution of deduction discrepancies. Through intelligent document processing of claims documents and with advanced pattern recognition and data analysis on deductions data, AI algorithms can swiftly identify and categorize deductions, such as pricing discrepancies, promotional allowances, or compliance issues. Additionally, generative AI can analyze historical deduction data to uncover underlying trends and root causes, enabling proactive resolution and prevention of future deductions.

In conclusion, generative AI is revolutionizing accounts receivables by automating manual tasks, improving cash flow forecasting, personalizing collections strategies, driving efficient deductions processing, and elevating the overall customer experience. By embracing AI-powered solutions, like Emagia Autonomous Finance Platform for Order-to-Cash, businesses can unlock new levels of efficiency, accuracy, and agility in managing their AR functions, ultimately driving greater financial performance and competitiveness in the marketplace. GenAI based pre-trained copilots for accounts receivable operations such as Emagia’s Gia or Microsoft’s copilot can boost productivity and drive effiency in AR operations.

Reimagine AR for faster, bolder and smarter operations with Gen AI.