Introduction

Accounts Receivable Management (ARM) is a $20 billion industry that consists of collection agencies, debt buyers, and clients (creditors) who issue and sell debt. Third-party agencies work on past-due accounts on either a commission basis or with a debt buyer who purchases it for pennies on the dollar. The margins are very thin, and there are constant lawsuits threatening their existence. Despite the challenges, the industry is filled with some of the kindest and most dedicated people. They care deeply about their clients, the creditors, their team, and the end debtors.

One quote that stuck with me from an industry veteran is that their product is the one thing nobody wants to buy: paying a debt. The industry has been slow to adopt new technologies, but with AI coming so rapidly, it will completely reshape the future of accounts receivable. Below are five ways the ARM industry will change with AI automation for collections.

1. AI Automation for First-Party Account Recovery

When an account becomes past due, banks, fintechs, or even hospitals often handle recovery internally through a mix of manual efforts and automated messaging. This process, known as first-party collections, is usually designed to maintain a good relationship with the debtor while recovering payments.

However, traditional methods rely heavily on outdated systems, manual tracking, and disorganized negotiations. AI-powered tools like Eleven Labs and Vapi can enable businesses to create AI virtual agents. These agents can tap into knowledge bases to engage debtors to negotiate payments and track outcomes, but they are surface-level and need deep programming to work with loan management systems or payment processors. Tennis Finance allows users to seamlessly stitch these tools together to create automated workflows that are optimized for efficiency and engagement. The beauty of AI comes when you have the right guardrails, data, and systems connected to fulfill tasks.

2. AI for Better Automated Account Enrichment

When accounts remain unpaid for 60 to 90 days, original creditors often write them off as losses but mostly transfer them to third-party agencies or sell them to debt buyers. These buyers, in turn, work with specific agencies to maximize collections on portfolios.

The challenge for both debt buyers and agencies lies in assessing which accounts are worth pursuing. AI tools can solve this by bringing any type of account enrichment to their assessment. Now anyone can quickly verify when a business with a past-due loan last filed their corporate taxes, or when a person was last active on social media. Consider this: with the recent Open Banking laws passed by the CFPB, imagine how much data will be able to be used to understand which accounts are active, dormant, and more likely to pay. It will be a complete game-changer.

3. AI Automation for Account Reconciliation and Client Portals

Reconciliation and reporting have long been pain points for the ARM industry. Client expectations for detailed, transparent updates often require manual, time-consuming processes. For example, what if a hospital patient makes a payment to the original lender, but it has already been passed off to the third-party agency? This occurs now, but things such as insurance updates and the like get lost in the mix. Typically, payments get made to the agency and then have to be remitted back to the original creditor. It is an accounting nightmare.

AI will be able to auto-reconcile outstanding balances across multiple systems to truly understand what is owed. A large majority of data between clients and agencies is passed back via daily data dumps. I have a feeling AI will set up APIs to fix these issues.

4. AI Training and Real-Time Human Assistance

While AI will automate a significant portion of texts, calls, and routine recovery processes, humans will remain an essential part of collections. AI is not a replacement for people—it’s a tool to make them more effective.

• AI-Assisted Training: AI will be able to coach and train agents by analyzing interactions, identifying areas for improvement, and simulating real-life debtor scenarios. This ensures agents are better prepared and continuously improving.

• Collaboration and Oversight Assistance: Music is actually better when you have mistakes and humanize it to make it not so pitch-perfect. Customer service and consumer interactions will also appreciate this versus a perfect robotic answer (in some cases). Rather than replacing agents, AI will help real people stay on track and provide guidance and answers for the end goal. This hybrid approach will become the industry norm, balancing automation with the right amount of human touch.

5. AI Campaign Optimization, Dynamic Propensity to Pay, and Smart Audiences

The biggest concern shared in the industry and the billion-dollar question is: How do you know if you are working the right account in the right way?

For example, let’s say you have a 65-year-old who is not very organized and just changed banks and credit cards because they moved states. What if they have a past-due bill they didn’t even know about? They are going to be very different to work with compared to a 23-year-old crypto trader who loves gaming. By combining smart enrichment and AI workflow templates, you will automatically be able to understand how to engage with different types of audiences in the best way. Not only will you have the most effective messaging and communication channel, but you will also have the optimal AI voice or messaging agent to help them get their bill resolved. The virtual AI agent will be spun up based of the consumer data and match ideal tone and voice. There will also be a look-back AI to improve every campaign and understand what works and what didn’t. This portion is a little further away as AI still struggles to truly understand how it can improve itself on its own but will get there.

Why AI in Collections Is Inevitable

AI promises to reshape the ARM industry by making collections smarter, faster, and more efficient. From first-party account recovery to predictive analytics, chatbots, and AI-driven oversight, this tech is going to forever change how bills and loans get paid.

While automation will dominate much of the process, human agents will continue to play indispensable roles, ensuring the industry adapts without losing its human core.