How Generative AI is Transforming Intelligent Collections and Revolutionising Receivables
The order-to-cash (O2C) process, encompassing everything from order processing to receivables collection, is critical for an organisation’s financial health. For large enterprises, especially in sectors with thousands of daily transactions, managing accounts receivable can be a daunting challenge. Traditionally, this process was handled manually, with finance teams relying on monthly reports and retrospective analyses. This often led to delayed responses, late payments, and missed opportunities for optimisation. However, the advent of generative AI has introduced a new era of efficiency and accuracy. By leveraging the power of AI, companies are transforming the O2C process and redefining how receivables are managed. “In 2017, this was a very descriptive and diagnostic-heavy process,” said Prathmesh Thergaonkar, Director, Finance Analytics at Fractal. “People used to look at end-of-month Excel reports and KPIs to analyse what was happening.” This retrospective approach meant that delays and issues were often missed until it was too late to address them effectively. “As the technology landscape evolves, so must the receivables management process,” Thergaonkar noted. Fractal’s Generative AI Breakthrough This is where Fractal’s latest innovation comes into place—the Intelligent Collections Management (ICM) accelerator for Accounts Receivable (AR) analytics. Designed to revolutionise the O2C process, ICM shifts the paradigm from traditional month-end reporting to real-time actionable insights. ICM stands out with its predictive-first approach, setting it apart from conventional AR analytics tools that rely on retrospective month-end reporting. By leveraging advanced ML algorithms, ICM delivers real-time predictions and insights. This enables businesses to forecast cash flows with unprecedented accuracy, identify potential payment defaults before they happen, and proactively manage collections efforts. With these predictive capabilities, organisations can optimise cash flow and enhance financial stability by taking timely actions. Comprehensive KPI Framework ICM’s analytical framework is robust, encompassing four KPIs—descriptive, diagnostic, predictive, and prescriptive. Descriptive KPIs: These provide insights into current and historical performance metrics such as ageing reports, days sales outstanding (DSO), and collection efficiency. This data visualisation helps users quickly assess the health of their AR portfolio. Diagnostic KPIs: These metrics identify the root causes of issues like payment delays or disputes. By analysing trends in dispute reasons or deduction categories, users can address recurring problems at their source. Predictive KPIs: ICM excels in predictive analytics, forecasting future payment behaviours, highlighting accounts at risk of delinquency, and estimating the likelihood of dispute resolutions. These insights enable users to prioritise efforts and allocate resources more effectively. Prescriptive KPIs: Beyond prediction, ICM offers prescriptive recommendations, suggesting next-best actions to improve collections, resolve disputes, and reduce revenue leakage based on historical data and current conditions. Seamless Data Integration & User-Centric Design One of ICM’s standout features is its ability to integrate data from various sources, including ERP systems, local databases, planning tools, SharePoint, and Excel. This comprehensive data aggregation ensures access to a single source of truth, eliminating data silos and fostering cross-departmental collaboration. By harmonising data from different systems, ICM not only enhances analytics accuracy but also simplifies the user experience, allowing seamless navigation and exploration of insights. ICM’s design caters to various user personas, from CXOs to analysts, with an intuitive interface that offers extensive slicing and dicing capabilities. Users can drill down into the most granular levels of data, whether seeking high-level summaries or detailed transaction-level insights. Customisable dashboards and reports allow users to focus on the metrics that matter most, while interactive visualisations make interpreting complex data straightforward. Comprehensive Coverage of O2C Areas ICM addresses all critical areas of the O2C process, including collections, deductions, leakage, disputes, and credit management, ensuring a holistic view of AR and enabling proactive issue resolution. Collections: ICM optimises collections by prioritising accounts based on risk profile and payment history, streamlining the process with automated reminders and follow-ups, reducing DSO, and improving cash flow. Deductions:  The tool leverages machine learning to categorise deductions, enabling users to understand underlying causes and take corrective actions. With Generative AI, it efficiently charges back invalid low-value deductions, helping minimise future occurrences and improve customer negotiations. Leakage: ICM detects potential revenue leakage points, such as uncollected invoices or unauthorised discounts, allowing users to recover lost revenue and prevent future leakage. Disputes: ICM accelerates dispute resolution by predicting the likelihood of successful outcomes and providing recommendations for effective resolution, reducing time and effort and enhancing customer satisfaction. Credit Management: ICM helps users manage credit risk by evaluating customer creditworthiness and recommending dynamic credit limits, ensuring businesses extend credit to reliable customers while minimising bad debt risk. Real-Time Insights and Autonomous Finance ICM features a generative AI layer that enhances decision-making with real-time responses, combining graphical representations and business commentary. This AI-driven assistant provides forecasts, next-best actions, and contextual insights, driving efficiency across the board. Be it predicting payment dates or analysing dispute impacts on cash flow, the AI assistant delivers actionable intelligence that enhances user productivity. ICM’s ultimate vision is to drive the O2C process towards an autonomous finance state, where human intervention becomes optional. Its advanced analytics and AI capabilities enable the tool to handle most decision-making processes independently, based on internal and external data. By automating routine tasks and providing intelligent insights, ICM frees finance professionals to focus on strategic initiatives, improving efficiency and empowering organisations to achieve greater agility and resilience.
Designed to revolutionise the O2C process, Fractal’s ICM shifts the paradigm from traditional month-end reporting to real-time actionable insights.
By leveraging the power of AI, companies are transforming the O2C process and redefining how receivables are managed.
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Mohit writes about AI in simple, explainable, and often funny words. He's especially passionate about chatting with those building AI for Bharat, with the occasional detour into AGI.