If you are managing a business, you might wonder how would I maintain the perfect cash flow. Are people paying off too much of their debt is a good thing? Or asking people to pay money when they don’t have any? Both of them may negatively impact your business. Keeping a right amount of credit with your customer may be a good thing after all. It will empower them to run their business without worrying you about paying right back as soon as they purchase from you. But after all, you need to get your money back. But when to ask for the payment is the right question.

Not so long ago, the economist had a conception that humans are rational animals, exhibiting and making a rational economic decision leading to optimal financial management. The Nobel laureate Richard Thaler challenged this by introducing Nudge Theory. According to Thaler, you can influence the behavior and decision making of people by using non-enforced but indirect suggestion. This concept is exploited to make people decide while still providing a choice not to comply with such. This concept has seen tremendous success with proven result.




The famous example of it is the etching of the image of a housefly into the men’s room urinals at Amsterdam’s airport to improve the aim. This theory has been applied to increase the subscription into the pension fund, and many other public welfare programs run by governments. Also, it has been successfully employed to increase saving by private companies. All of these designed in a manner that is in the interest of consumer/customer. But sadly there are examples of exploitation that are not in the consumer best interest.


If you have to use nudge theory to optimize your cash inflow, you need to design your nudge strategy. Before planning a strategy, one needs to keep two factors in mind.

  1. The objective should be to reduce the choices given to the customer and a better default choice.
  2. Keep the customer well being in mind and respect the freedom of choice.

The choice architecture deals with first of points mentioned above. The choice architect is responsible for designing the strategy. Let us take a plunge into how to be a “Choice Architect.”

The Choice Architecture

One of the most important designs in choice architecture is to design the default option. The default option should be a ‘path of least resistance.’ Now, the question is to ask, what would be the ‘path of least resistance’ to our customer? And what is feasible to do? If I had to think about the ‘path of least resistance,’ certain strategy comes to my mind. Those options would be

  1. Ask the customer to set up/subscribe to an automated bill clearance system that periodically credits minimum amount payable(let us say 40% of the outstanding amount) from the customer bank account.
  2. Ask the customer to pay X amount that customer is comfortable to spend on a regular basis. The duration of payment and amount X can be figured out from the customer’s payment history, and other customers behavior similar to the customer in question.


To have an option ‘1’ setup, you need to have a right set of software tools that integrate the automatic payment and customer is comfortable in using such system. The success of this will significantly depend on the type of customer you have and the type of product you are selling. For example, this may work great for electronic loan payment but may fail to work in other cases such as payments from a wholesaler/distributor.  

If it is difficult to get the first option working, then the second option will help to get a predictable cash inflow. To have a useful ‘option 2’ implemented, you need to have the prior history of payments from customers. From the history of customer payments and some analysis, one can decide when is the right time, what should be the right amount, should you provide offers, etc.? This is where platforms like Datoin is helpful in crunching the payment history of customers, applying predictive models, applying collaborative filtering, etc. We have an App Template built to do just that.

Once you decide to go for option ‘2’ implementation, you need to design your communication strategy with your customer. The approach on a broad level will include,

  1. What is the content of the message; will it include offers, discounts, is it time-based pressurization tactics, etc.?
  2. When should that message be delivered? Ten days before customer’s payment cycle, two days before customer’s payment cycle, or after the regular payment cycle, etc

Once you have your default choice is finalized, you can design few other sets of choices that customer can take when they are ready to pay. These set of options need to be highly relevant to customers and enticing. The Datoin platform can suggest these limited choices based on customer behavior and your current goal of cash inflow.

In summary, most people tend to have a pattern in what they do. Positive reinforcement makes that more rigid. By analyzing the payment habit of your customer and making them pay at their convenience, and on a regular interval can make the cash inflow more predictable. Influencing the customer behavior by right nudges and offers can change slowly towards the desired level of overall cash inflow. Datoin’s Account Receivable Automation help you to employ these techniques and optimize your cash flow. It not only uses nudge theory, but also you can do an automatic assignment of accounts to agents, gain insight into to cash flow, do the impact analysis of your nudge strategy, cash inflow prediction, control and meet your inflow goals, and set up intelligent alerts. And not to mention all of these are designed to have a better relationship with your customers.