DIGITAL SOLUTIONS | 14 OCTOBER 2022

A Digital Solution for Collections
and Debtor Management

Absa-CIB-Author

Ernest Chikoto

Product Head: Receivables
(Cash Management), Absa Group

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How Absa’s Online Electronic Collections system solves the problem of collecting monies due, unpaid accounts and unmanaged arrears – quickly, efficiently and all on a single platform

One of the first things any entrepreneur learns is the difference between an invoice and a payment. Unpaid accounts can cripple a business – especially when cash flows are tight – yet many organisations struggle with a lack of intuitive and cost-effective systems to manage their collections processes and debtors books. That leaves them relying on third parties to take care of collections or waiting for customers to pay at their own discretion or borrowing money to funds their day-to-day operations – which is costly. As a result, many of those unpaid accounts slip through the cracks due to poor reconciliation practices.

A digital, centralised debtors database takes those pain points away, allowing debit order transactions to be processed quickly and accurately, while enabling seamless management of collections processes and debtors books.

Fully digitised system

Absa’s Online Electronic Collections system, for example, provides businesses with an efficient, enterable, cost-effective solution to manage their account receivables, collection books and arrears, says Ernest Chikoto, Product Head for Receivables (Cash Management) at Absa Group. “The system is fully digitised, with the collections and debtors book housed on the platform, making it seamless to collect monies due  to  ensure the business can operate efficiently.”

Being digital, the system also allows for the real-time viewing of the fate of collections. This, Chikoto says, has become a must-have as the banking world have evolved over time resulting in more efficient and quicker clearing processes.

“Officially, the clearing period for collections instructions in South Africa is still 96 hours,” he says. “With the progress that’s been made in financial services, we can receive responses from other banks about the fate of transactions within hours – and we communicate that to our clients immediately. Enabling them to kick-start the credit process is a key function of their business. Our ability to immediately inform our clients of how much money they will have at their disposal to meet their day-to-day obligations such as suppliers and utilities payments, is vital.”

Centralised management

By putting the collections process and digital certificates in a single, centralised space, platforms like Online Electronic Collections allow businesses to conveniently process high-volume mandate requests in a single batch from a .csv file with the peace of mind that cyber risk has been mitigated. Those batch transactions enable them to get the work done quicker and more accurately.

The DebiCheck function is a case in point, providing enough time (up to T+2, or Today Plus Two Days) for customers to accept mandates before they expire. “DebiCheck is very much in the detail of the transactions, making sure that our clients obtain prior approval and express consent from their customers before they run debit order transactions,” Chikoto explains. “We as the bank will store those mandate details on their behalf, which helps significantly. We’ve found that the risk of repudiation or dispute by the customer significantly drops compared with the previous world where this particular product was not available. We now have a full complement of products on the platform to make sure that our clients can protect their capital as well.”

The new digital system is also far more intuitive, Chikoto adds. “One of the big improvements is that the debtors book resides on the channel itself, which makes it a lot easier to manage and removes risk of data loss from the client. The management of arrears is also seamless.”

The Online Collections system creates a far more efficient collections process than in the past, where businesses would do manual entries – leading to delays and duplications. Now it’s all in one place, with the information available easily and timeously.

“Ultimately, our goal with Online Collections is to make sure that Absa’s clients maximise the revenue that’s due to them,” Chikoto concludes. “Online Collections enables our clients to fund their business – and to get back to doing business.”

Absa-CIB-Author
Ernest Chikoto

Product Head: Receivables (Cash Management), Absa Group

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