Digitizing AR Addresses Economic Instability


To sustain their operations, businesses have more than their fair share of challenges to confront. With a recession imminent, climbing interest rates, supply chain disruptions, and a turbulent global climate, business executives have many AR issues to address, along with just keeping enough cash on hand.


Digitizing AR Would Address One of Executives’ Biggest Concerns About Economic Instability

PaymentsJournal Digitizing AR Would Address One of Executives’ Biggest Concerns About Economic Instability

To get an in-depth look at what executives are struggling with, Versapay surveyed 1,000 C-level executives to uncover their biggest concerns on the current economic climate as well as how the customer experience directly affects the bottom line. Here are the findings.

“We did a survey of a thousand C-suite executives from medium to large-sized companies,” said Nancy Sansom, Chief Commercial Officer at Versapay. “The number one concern across the board was supply chain disruption. The top concern for CFOs is inflation. Second to that is rising interest rates, and then labor shortages.”

Sansom added, “We put out two reports, one is the state of digitization in B2B [business-to-business] finance, and the other is the impact of customer experience on B2B payments. For inflation, finance teams are under pressure to increase cash flow and speed up the invoice-to-cash cycle. AR [accounts receivable] teams haven’t been prioritized from a technological perspective. So the digitization of finance and AR teams are the last priority in the organization, yet they have an impact on customer experience.”

Without the proper tools, such as the latest technology that can automate these processes, outdated systems are sure to cause an interruption in cash flow, thereby impacting the customer experience.

“The other theme of these reports is that customer experience is top of mind,” said Sansom, “because we all know that it is easier and cheaper to keep a customer than to acquire a new one. In a downturn, you really want to be keeping your customers happy so that you can retain them.”

Poor Processes Can Lead to Poor Customer Experiences

Accounts receivable seem to have fallen into an obscure, back-office category, with not much in the way of optimizing its processes, an out-of-sight, out-of-mind, hidden operation.

“Companies think of accounts receivable as back office,” Sansom said. “But every customer interaction is important and AR teams really do touch the customer, especially when something goes wrong, and that’s when tensions can be heightened.”

She continued, “A couple of interesting stats … 73% of all C-suite executives that we surveyed said that the invoice-to-cash process can negatively impact customer experience. Nearly nine in ten CEOs said the organization lost revenue due to confusion or conflicts, and 85% said their company got paid less than owed due to a miscommunication in the invoice-to-cash process. There’s a loss of money, opportunity cost, time spent, and it frustrates customers. It’s important that we don’t just think of it [accounts receivable] as back office and think about how we can improve that experience so that customers will be happy and pay faster.”

B2B customers are not much different from business-to-consumer (B2C) customers, as they also desire a fast, safe, and seamless payments experience.

“What we find in our research is that happy customers are kept happy by reducing friction in these processes,” said Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The solution is not only to implement the latest technological tools, but to also incorporate the human element of collaboration.

“Some [companies] think about the customer experience side but most don’t,” said Sansom. “Most come to us and are just thinking about automation. They end up shooting themselves in the foot, because as they automate the process, they remove the human element. What we show our prospects is that there is a better way. You can automate, but you can also improve the customer experience by collaborating. Why wouldn’t we collaborate on an invoice issue, or goods that are damaged? They haven’t connected the dots on what’s possible with technology to automate while improving the customer experience.”

“Most people don’t want to think of one or two days of DSO [days sales outstanding] as being a positive experience,” said Murphy. “Given the competitive nature of and the importance of cash flow these days, the ability to reduce DSO by one day, two days, three days is important.”

“A lot of times the customer or the buyer needs to trust you,” said Sansom. “If you provide full visibility into all of your statements versus statements that are outdated, you have no visibility real-time. That doesn’t create trust with your customer, but if you create trust by having full visibility and giving them great tools to pay the way they want to pay, they might be more willing to set it up on autopay. Think about what that does to your DSO if you get some nice percentage of your customers just auto-paying and then it’s predictable and can really speed up that payment process. But first you need the trust, the transparency, and visibility into their account.”

How Executives Are Improving Customer Experience Amid Inflation and Other Economic Concerns

Executives should seek out holistic solutions to enhance and optimize their current payment processes.

“They come to us looking for efficiency,” said Sansom. “One of the terms we use at Versapay is something called the AR disconnect. That’s the gap between buyers and suppliers or AR teams and AP [accounts payable] teams. We try to solve that gap. If they’re just thinking about themselves and their own processes, they’re going to do the opposite of what they’re trying to do. It’s about adopting collaboration tools.”

“As you digitize these processes and receivables, you’ve got a lot more data to play with,” said Murphy. “You can utilize machine learning to improve the algorithms and improve processes and further reduce DSL, or at least have flexibility to make better decisions. It’s an important part that people tend to discount.”

“Our cash application solution can take all these checks from lockboxes and the machine learning can figure out where to apply it to,” said Sansom. “When it can’t, it can let a human come in and give it some guidance. Then it can remember it from that point forward. With that kind of automation, you can get to 95% automated. For the 5% that you can’t figure out, that’s where you have the collaboration. If you don’t have the collaboration, then that 5% can really take up your whole team’s time. The combination of the two is where the magic happens.”

“Customers are not only happier, but they can take some resources and apply them to more profitable ends of the business,” said Murphy.

“Either our customers say, ‘I was able to eliminate contractors, I was able to let my call center focus on other customer service issues and not invoice issues,’ that’s been a really great experience that our customers have had,” said Sansom.

Filling in the Gaps in Accounts Receivable Digitization

Collaboration, along with automation, is the best solution to ensure that your business can deliver the best customer experience.

“At Versapay, we have AR automation, which is a relatively new category so we can talk about initial efforts,” said Sansom. “We have AR automation, collaboration tools like Slack and Salesforce, plus a B2B-optimized payment network. You put those three together and now you can deliver a great customer experience while getting those automation benefits. Companies are ready to digitize in their finance area. They’re now realizing how important that is, especially with cash being so critical right now. Also speeding up payments and improving DSL.”

Sansom added, “Our software is called Versapay Collaborative AR. It’s a platform that brings together the buyers and sellers. It has great tools for the actual customer. You can let one buyer manage multiple supplier relationships with that one tool. It’s a network that brings more value to them, the more suppliers they use it for.”

“Fifty percent of invoice disputes are actually caused by human errors in the payment process,” said Sansom. “Forty-one percent of the execs that we surveyed said human communication breakdowns and relationship issues are top causes for disputes. This is where people need to collaborate. Sometimes you need to pull in [the] salesperson who sold the product. Maybe there was a misunderstanding or an expectation about what was sold. In a collaborative environment, you can pull in whoever you need, keep a record of all that. That’s where that disconnect can get resolved by communicating and fixing those issues.”


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