AI Improves Customer Payment Prediction

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Technology that can understand, analyze, and learn from vast amounts of data, better known as artificial intelligence (AI), is infiltrating countless industries, from healthcare to banking and everything in between. According to software analytics giant SAS, the term artificial intelligence dates back to 1956, and it predicts that AI will continue to increase transparency and remove bias in decision making, in addition to taking big data and turning it into valuable business insights. For instance, AI now makes it possible to transform many business functions that traditionally required countless human resources and work hours to complete with less-than-perfect results into automated and seamless processes with a very high degree of accuracy. This includes many finance functions. But AI can do more than revolutionize cash flow performance, automate invoices, and customize dunning campaigns. It can also help you more precisely predict when your customers are going to pay you. This makes the typically reactive collections process a much more proactive effort that helps you achieve a free cash flow positive state, the point where your cash inflows exceed the outflows required to run it. How exactly does AI help predict when a customer is going to pay you? Let’s take a look.

AI Analyzes the Customer's History

A long-time AR staff person probably has some idea of your customers’ payment patterns simply because of how long they’ve been invoicing and collecting from them, but their prediction ability is ultimately limited by the amount of information they can humanly process, as well as by their own conscious or subconscious biases. AI-embedded technology can quickly and objectively scan, analyze, and parse the entirety of any customer’s historical record to reveal specific and useful details such as:

  • Their average days to pay an invoice
  • The longest it ever took them to pay you
  • The shortest amount of time they ever paid you
  • The months or seasons where they pay faster or slower

AI Identifies Key Payment Influences

In addition, AI-embedded AR tools can identify the key factors that influence when a customer pays you, including their:

  • Typical AP run dates
  • Invoice amounts
  • Payment approval process
  • Fiscal calendar
  • Seasonal business changes

AI Alerts You to Changing Patterns

Moreover, digital finance tools that use AI technology can alert you to new or emerging behaviors or patterns that could affect the customer’s future payment activity, including things like:

  • An unexpected slowdown or uptick in customer orders
  • A new person in charge of the customer’s purchasing or accounts payable
  • A sudden or sustained delay in payment that is unusual for the customer
  • A significant change in customer order type that could indicate an evolving business model

Ready to Incorporate AI into Your AR Processes?

Once you’re routinely able to more accurately predict when your customers will pay you, your business gains a much better understanding of its current and expected cash flow position. In turn, that means you can make more informed capital decisions to help you grow. Contact us today to see how Tesorio’s Accounts Receivable platform can instill that kind of powerful payment predictability into your collections process.