How do you deal with late payments and the potential for bad debt? As an AdTech company, it’s a question that is vital to your success. Market research reveals that it’s a significant problem for the AdTech industry, with monthly bad debt rates reaching as high as 10-15%. That’s a staggering amount of money pulled right out of your cash flow.
Make Informed Credit Decisions
A frequent challenge expressed by AdTech agencies is difficulty evaluating customer credit information. Without the right data, it’s virtually impossible to make accurate decisions about how and when to offer credit, greatly increasing the chance of bad debt.
Quadient AR’s Advanced Credit module provides the tools needed to mitigate credit risk and drive more reliable sales. The software eliminates the need for external credit checks with built-in tools that provide real-time analysis. By pulling agency data from Creditsafe and Dun & Bradstreet and combining it with payor data in the platform, you can build customer scorecards that give you a 360-degree view of creditworthiness.
A common contributor to credit issues is data siloes. When accounts receivable is unable to share relevant information with sales, it becomes more difficult for sales to make informed decisions about credit.
By providing comprehensive credit analysis on a customer, accounts receivable teams can help sales say “yes” to more customers, meeting them where they are to ensure the best possible terms for their situation are offered.
Customers’ credit information is organized and displayed on cloud-based dashboards that can be accessed across the business. In addition, because there is no charge for extra user licenses, anyone who needs access to the data can have it. This allows AR and sales to coordinate so that strategic decisions about extending credit can be made from the beginning of the sales process.
Anticipate and Head Off Late Payments
Quadient AR also reduces late payments and bad debt by using artificial intelligence and machine learning to study past payment behaviors and make predictions about future behavior. Predictions are up to 94% accurate, meaning firms can consistently spot problems before they occur. When potential late payments are identified, the technology also provides an estimation of when payment is most likely to be received.
“An account that is 90 days past due has a 69.6% chance of being paid. After six months, the probability rate drops to 52.1%, and after one year of delinquency, the chance of collecting payment falls to 22.8%” – Dun & Bradstreet
With this information, your accounts receivable team can identify accounts that are at the most risk of bad debt and focus on strategically approaching the collection process to ensure payment. By using real-time data, the software is also able to recognize deviations in payment behavior, which may indicate a change in a customer’s circumstances.
Through identifying these instances, AR teams can work closely with customers to establish solutions that are mutually beneficial. Not only does this decrease the chance of write-offs and bad debt. It also helps increase customer satisfaction. By demonstrating that you are aware of the challenges your customers may be facing and willing to work with them, you increase customer loyalty and the long-term value of the account.
Increase Cash Flow with Better Communication
Frequently, AdTech companies face a challenge when attempting to communicate with customers. This can start at the very beginning of the process when invoices are prepared and sent. Complex parent/child relationships make it difficult to determine where an invoice and follow-ups should be delivered to. As a result, invoices are often sent to a subsidiary that doesn’t have the authority to submit payment.
Quadient AR solves this by displaying subsidiary relationships on a customer’s account page, making it easy to identify where communications should be sent. Customizable communication workflows and templates allow your AR team to automate invoice delivery and follow-up messages using your customer’s preferred communication method, whether that’s via email, or even physical postal mail.
The platform’s customer self-service portal facilitates better communication by allowing customers to see their open invoices, current account status, and other vital account information. From the portal, they can make payments, a promise to pay, and even ask questions about invoices and raise disputes. The questions and disputes are then assessed by the software and routed to the appropriate employee for a quick resolution.
Eliminate Bad Debt and Lower DSO
Using the tools provided by Quadient AR not only reduces incidences of bad debt. It also accelerates collections by 34%. That means that you don’t just write off less invoices. You also lower DSO and increase cash flow!
“We have satisfied customers as well as happier employees. Improved efficiency and communications makes for a stronger relationship.” – Mehmet Shaw, Director of Finance, StackAdapt