The distribution industry has been faced with numerous challenges—from the lasting impact of the pandemic to unprecedented supply chain disruptions and persistent staffing shortages. Recent research from Billtrust found that 82% of contracting business owners are at least somewhat concerned about the economic outlook and its impact on their businesses over the next 6-12 months. While this sentiment is likely shared by many distributors, the truth is that there are things they can do to better navigate the murky waters ahead. One of those things is adopting the transformative power of artificial intelligence (AI) to drive efficiency and safeguard their financial health. Here’s how:
Alleviating Staffing Shortages
The plumbing industry has been unable to escape the wrath of the staffing challenges that have dominated headlines these past few years. In fact, when The National Homebuilder’s Association looked into the matter recently, they found a 55% shortage of plumbers available for work. But it’s important to remember that this scarcity doesn’t just affect organizations’ hunt for skilled laborers. It leaves their entire business vulnerable—including the financial side of their operations.
Indeed, these monumental labor challenges have left an indelible mark on finance and accounting departments across the industry. Working within smaller teams while battling severe economic uncertainty, they have been tasked with preserving their organization’s financial health with far fewer human resources than in years’ past.
Like most job functions, however, finance teams have taken solace in the power of AI to help them achieve their goals despite the severity of the pressure they’re under. It’s enabled them to say goodbye to those manual tasks that have for years taken up too much of their time and cost them too much money. Automation, for example, has completely revolutionized how companies send and receive invoices. More and more businesses are adopting digital invoicing and shifting away from print—a move which is not only liberating accounting teams from frustrating and repetitive tasks but can actually save them hundreds of thousands of dollars per year.
Meanwhile, AI is also helping companies identify patterns and trends in their financial data. This gives them valuable insights into their financial performance and enables them to make more informed decisions. By reducing the time and effort required for financial management, AI can free up distributors to focus on their core business, providing high-quality products and great service to their customers. Overall, integrating AI into financial processes can help distributors work more efficiently and effectively, making the most of their resources and driving growth.
Addressing the Flood of Delayed Payments
Maintaining a steady cash flow is the lifeline of any business, and receiving payments on time is essential for achieving that goal. However, with pandemic-induced disruptions and changing consumer behaviors, businesses are finding it increasingly challenging to collect payments on time. The same Billtrust research mentioned above found a staggering 81% of contracting organizations have reported a surge in delayed payments, with nearly half of them calling it a “significant” increase. In such an environment, businesses cannot afford to rely on traditional methods of payments and collections.
This is where AI can make a real difference for distributors by revolutionizing their order-to-cash process and payment systems. By automating the creation and delivery of invoices, AI not only reduces the potential for errors but also ensures timely deliveries. Additionally, AI can help finance teams to identify customers who are at risk of defaulting and develop personalized payment plans that work for both parties.
By proactively engaging with at-risk customers, finance teams can not only reduce the risk of delayed payments but also build stronger and sustainable relationships with them. With AI-powered financial processes, distributors can take control of their cash flow and thrive in a challenging economic climate.
Upleveling the Customer Experience
While AI can help combat the deluge of delayed payments, the reality is that in this environment, they are simply inevitable. However, with automation and machine learning, collections can reach out to customers at exactly the right time and avoid unnecessarily friction-filled interactions that are more likely to occur the longer a payment is outstanding. These tools can also create prescribed payment policies, which can queue up the next steps and all relevant account details for team members.
As customers continue to face a variety of challenges, the importance of human relationships has never been more apparent. As such, the need to execute the process in a considerate, human way is also more important. With the efficiencies afforded by AI, collections professionals can take a more human approach that leads to a more personalized experience, something which has become the norm.
Another way AI helps distributors improve customer experience is by scaling customer communications and analyzing customer data to identify patterns in behavior. This enables them to anticipate customer needs and proactively offer personalized recommendations and solutions—ultimately contributing to the overall quality of the organization’s customer experience. With faster and more accurate responses to inquiries and orders, customers will be more satisfied and likely to return, ultimately driving increased revenue and growth.
AI is no longer just a buzzword but a tool that distributors must embrace to stay competitive and thrive in today’s market. By utilizing AI-powered software, distributors can unclog their end-to-end order-to-cash process, drive efficiency and ultimately pave a path toward success in the months and years ahead.