Artificial intelligence (AI) is transforming accounts receivable and working capital management. Kevin Kimber, chief executive of Rimilia, a leading AI provider in the sector, explains the power of this new technology
Why do finance teams need AI?
Companies rely on finance teams to make critical decisions every day. Finance leaders are tasked with controlling costs, increasing cash flow and reducing risk. Since their largest asset on the balance sheet is debtors, they are evaluated by turning debtors into cash and working capital. They need to use their judgment to decide how much credit to offer customers, forecast if cash flow will get tight and spot late payers who struggle to settle debts. The fate of the company depends on it. But the data they need is elusive. A chief financial officer (CFO) at a large company needs to have access to data and the insights the data provides to make the right decisions. Ideally, they need to be able to manage the financial relationships, from sales and customer success to credit and collections. Here’s where AI comes in and what we refer to as financial relationship management (FRM). Solutions powered by AI can gather data from across a company, aggregate it and run analytics. The information AI provides can help a CFO spot trends, build insight to advise on credit and cash flow issues, and deliver information across the business. AI helps the business make better decisions.
Where can AI make the biggest impact?
Accounts receivable is the new frontier. Only 3 per cent of the market has achieved any automation. Yet AI can revolutionise the entire function. Organisations have been focused on the accounts payable area of their business and not on accounts receivable or how the function can bring cash into the organisation. Take something like extending credit to customers. A company must decide how much credit to extend to a new client. It’s not an easy call to make and creditworthiness changes over time. Finance needs to know if the client settles bills on time. Are they an early payer? How regularly do they order? AI can factor in all the information to build a detailed picture of each client. A dashboard can highlight valuable high-margin, low-risk clients, so credit can be extended. The value comes when this information is shared with customer success and sales teams, giving them the ability to make decisions to grow sales. There are so many ways AI solutions can help finance leaders with their key priorities of increasing cash flow and controlling costs. Accounts receivable is frankly the most exciting area of AI in finance right now.
Why can’t companies do it themselves with Excel and traditional tools?
It’s too complex. Finance teams simply lack the expertise to build financial models. Even automating simple processes requires specialist skills most companies don’t have. We see this all the time. Companies struggle with traditional tools, so they leave data in silos. Processes are still done manually. It’s disastrous. For example, the finance team may run a simple credit check on a potential client and decide to offer a line of £10,000. Later, they discover the client already has substantial debts with other parts of the business and is a credit risk. Only the power of AI and, really, FRM can bring these insights forward for business leaders to make empowered decisions.
What about mundane tasks?
AI is superb at eliminating boring jobs. Look at the environmental company Veolia. They automated the cash allocation process, resulting in a 75 per cent reduction in costs by not just replacing keystrokes with robotic process automation, but by using machine learning to eliminate tasks. This allowed people to focus on value-add tasks. A Deloitte survey found that 70 per cent of CFOs expect hiring to decrease over the next 12 months. Automation is essential for finance teams.
Companies that embrace AI have lower risk exposure, improved customer relations, control over their costs and increased cash flow
Can AI help other departments?
Absolutely. This is where the real value of AI and managing those financial relationships is proven. When the finance team is able to generate accurate data on a client, the sales team is empowered. Sales and customer success teams can make decisions to increase sales or even reduce credit terms to reduce risk. Sales teams can see at a glance whether a customer is a prompt payer, what their orders are like and whether they are growing basket sizes over time. The sales team can use this data to fine-tune sales terms; maybe offer more credit. If a client is increasingly paying late, maybe they can be moved on to direct debit. FRM is a powerful tool for growing sales in a competitive market.
How hard is it to implement AI?
Surprisingly easy. Rimilia has been around for a decade and we have experience in onboarding thousands of clients, from complex multinationals to fast-growing smaller firms. Deployment of our AI platform takes 90 to 180 days. Some companies do a “land and expand”, adopting in one region or division, proving it works and then expanding. Others go for a big-bang deployment. Return on investment begins as fast as six to eight weeks later as the AI begins learning.
How can companies get the most from an AI system?
Find a partner that can grow with you as your business needs grow and change. Rimilia, for example, offers three skillsets to clients. We were founded by finance professionals and so we have deep expertise in accounting. Our experts can help companies master concepts such as cash flow optimisation and financial metrics. Second, we are software-as-a-service specialists, so we can advise on software and integration. And third, we lead the industry in AI and machine learning. Our clients rely on us to keep them informed and up to date on the latest AI and machine learning technologies. Combine these three areas of excellence and the effect is huge. We can help you re-engineer your entire finance operations, raising the quality of decision-making and dramatically cutting costs. And we pride ourselves as a true partner as our clients move to AI solutions.
Are all sectors suitable?
Yes, naturally. We have clients such as Veolia in utilities, Travis Perkins in construction, PwC in professional services, TalkTalk in telecoms and ITV in entertainment. CFOs face the same basic questions. What is their bad debt provision and can it be reduced? How is the risk profile of clients changing over time? They all need the insights AI can provide.
Is AI the future of finance?
There is no question that AI is going to reshape finance. There’s no going back. Companies that embrace AI have lower risk exposure, improved customer relations, control over their costs and increased cash flow. AI is here. Companies that deploy AI are going to dominate their competition and, at Rimilia, we are delighted to play a part in their success stories. If you want to discover more, you can learn about FRM by downloading our white paper.
To find out more please visit www.rimilia.com/frm