Benchmarking AR Metrics with AI Tools

AI is transforming how businesses track and improve accounts receivable (AR) performance. By automating data processing, providing real-time analytics, and delivering predictive insights, AI tools help businesses reduce payment delays and manage cash flow effectively.

Key Takeaways:

• Top Metrics to Monitor:

  • Days Sales Outstanding (DSO): Aim for 30-50 days.

  • Collection Effectiveness Index (CEI): Target 80-90%.

  • Average Days Delinquent (ADD): Keep it under 15 days.

  • Bad Debt to Sales Ratio: Stay below 2%.

  • Invoice Processing Time: Less than 24 hours.

• Must-Have AI Features:

  • Automated collections, real-time analytics, and multi-channel communication.

  • Payment plan management for flexibility.

  • Seamless integration with billing systems.

• Benefits:

  • Save up to 14 hours weekly.

  • Boost collection rates by 50%.

  • Improve recovery rates by up to 30%.

Quick Setup Steps:

1. Prepare AR data (invoices, customer info, payment history).

2. Connect AI tools like Tennis Finance to your systems.

3. Automate workflows and set monitoring parameters.

AI simplifies AR benchmarking, making it easier to track performance, identify risks, and improve strategies. Tools like Tennis Finance help businesses scale efficiently while maintaining security and compliance.

Benchmarking Your AR Metrics

Selecting AI Tools for AR Benchmarking

Key Features to Look For

AI-powered platforms bring essential tools to simplify accounts receivable (AR) processes. Here's a breakdown of must-have features:

These features provide a strong foundation for efficient and scalable AR operations.

Tools That Grow With You

Tennis Finance is designed to grow alongside your business, catering to industries like SaaS, lending, and SMBs. The platform offers:

• Custom Workflows: Adjust collection strategies for different customer groups.

• Seamless Integrations: Connect effortlessly with your current financial tools.

• Scalable Processing: Handle increasing transaction volumes without slowing down.

• Brand Alignment: Keep your company's tone consistent in all communications.

This flexibility ensures businesses can keep AR processes efficient, even as they scale.

"Tennis makes follow-ups seamless and effective. We not only save tons of time but are also seeing better collection rates." – Soham Sen, CEO and Co-Founder @Vaya

Prioritizing Security and Compliance

Protecting financial data is non-negotiable when choosing an AR tool. Here's what to look for:

Data Protection

• End-to-end encryption for all transactions

• Routine security audits

• Secure, redundant cloud storage

• Role-based access to sensitive information

Compliance Standards

• SOC 2 certification for data security

• GDPR compliance for handling personal data

• PCI DSS standards for safe payment processing

• Continuous compliance monitoring

Research highlights that AI-driven collection systems can boost collection rates by 50% and improve recovery rates by up to 30% when implemented effectively.

Starting AR Benchmarking with AI

Setting AR Goals

Start by setting SMART AR goals that align with your business objectives. Focus on these two key performance indicators:

These targets leverage AI capabilities to improve efficiency.

Prepare Your Data

Getting your data ready is critical for accurate AI analysis. Organize your accounts receivable (AR) data into these categories:

• Invoice Details: Include payment terms, amounts, and due dates.

• Customer Information: Add contact details and payment history.

• Collection Activities: Document past communication and outcomes.

• Payment Data: Record transaction details and preferred payment methods.

Make sure your data is clean, standardized, and well-structured before integrating it with AI tools. This ensures better insights and smoother automation.

Setting Up AI Benchmarking

Once your data is ready, you can activate your AI system. The setup process is quick and user-friendly:

1. Connect Your Data Sources
   

   Link your invoicing system to Tennis Finance for instant access to both historical and real-time AR data.

2. Configure Automated Workflows
   

   Create automated collection processes using multi-channel communication options.

3. Establish Monitoring Parameters
   

   Define the metrics you’ll track and set reporting intervals.

The platform tracks your performance in real time, comparing it against your benchmarks. This allows you to spot trends and fine-tune strategies for better results. Regular monitoring ensures you’re always improving.

Improving AR with AI Data

Reading AI Reports

AI benchmarking reports provide essential details about AR performance. Pay attention to these key metrics:

Use these metrics to fine-tune your AR strategy effectively.

When reviewing AI reports, focus on:

• Spotting trends in payment behavior across different customer groups

• Keeping an eye on AI-generated risk scores for accounts needing immediate action

• Comparing current data with your benchmarks

• Assessing how well your collection strategies are working

Making Changes Based on Data

Turn your report findings into actionable improvements right away.

1. Optimize Payment Terms: If customers tend to pay in 15 days instead of 30, consider offering early payment discounts to improve cash flow.

2. Enhance Collection Strategies:

   • Timing: Focus on when customers are most likely to respond.

   • Channel: Use the most effective communication methods.

   • Message: Personalize messages based on customer payment history.

   • Frequency: Adjust follow-up schedules based on what works best.

3. Automate Risk Management:

   • Automatically flag accounts with risk scores above 70% and take preventive action.

   • Develop workflows tailored to different risk levels.

4. Refine Benchmarks:

   • Review and update targets quarterly to reflect changing performance.

   • Set higher goals for metrics that are performing well.

   • Adjust benchmarks for underperforming areas to make them more achievable.

   • Compare your progress with industry standards.

These focused updates can help you overcome common challenges in benchmarking and improve your AR processes.

Solving Common AI Benchmarking Problems

Maintaining Data Quality

Low-quality data can throw off accounts receivable (AR) benchmarking results. Here's how to tackle common data issues:

To ensure your data remains reliable for AI benchmarking:

• Standardize Data Entry: Set clear rules for invoice data input, apply automated validation for payment terms, and enforce uniform customer naming.

• Conduct Regular Audits: Check data completeness monthly, look for unusual payment patterns, and verify AI insights against original data.

• Clean Historical Records: Properly archive resolved disputes, update customer credit details quarterly, and remove outdated payment terms.

These steps help create a solid foundation for accurate AI benchmarking.

Getting Teams to Use AI Tools

Once your data is in good shape, the next challenge is getting your team to embrace AI tools effectively.

Training and Support

• Host focused training sessions tailored to AR tasks.

• Provide simple, actionable guides for AI benchmarking.

• Assign an AI "champion" for ongoing team support.

Process Integration

• Start small by applying AI to just one metric.

• Incorporate AI checks into current workflows.

• Emphasize the benefits of real-time reporting.

Performance Monitoring

• Track how often team members use the tools.

• Measure time saved by automating manual tasks.

• Log improvements in benchmarking accuracy.

1. Set Clear Expectations

Outline specific goals for AI adoption, like regularly reviewing benchmarking reports and adjusting collection strategies based on AI insights.

2. Reward Progress

Celebrate team members who effectively leverage AI tools to enhance AR metrics. Share success stories to inspire others.

3. Address Concerns Early

Create a feedback channel where team members can discuss challenges with AI tools. Quickly address issues to minimize resistance.

Conclusion

Main Points

Data highlights notable efficiency improvements:

• Save 14 hours per week with automated collections.

• Increase collection rates by 50% using AI-driven communications.

• Speed up invoice payments by 2x with AI tools.

• Boost recovery rates by up to 30% through AI automation.

AI-powered benchmarks turn manual accounts receivable (AR) tasks into streamlined, efficient processes. A solution like Tennis Finance builds on these results to further enhance AR operations.

How Tennis Finance Helps

Tennis Finance transforms AR workflows by leveraging the power of AI. The platform tackles common AR challenges by:

• Automating payment follow-ups across multiple channels.

• Ensuring brand consistency in every communication.

• Providing actionable insights into collection performance.

• Simplifying the entire AR process.

These tools not only improve recovery rates but also significantly reduce manual workload.

Related Blog Posts

• 5 Key Metrics to Track AR Collection Performance

• How AI Powers Embedded Finance in AR

• How AI Powers Real-Time Cash Flow Notifications

• AI Tools for Payment Terms Forecasting