Turning B2B Buyers into Digital Payers
By Flint Lane, CEO of Billtrust
The notion of creating digital payers out of B2B buyers can be intimidating to corporations. But as many companies learned the hard way during the pandemic, steering their B2B buyers away from paper checks and other outmoded payment methods, although challenging, is necessary for survival.
Now, a new issue has arisen: postal delivery times are going to be even slower. New service standards for first-class mail, which started in October, lengthen the delivery time for about 30% of its volume. That means that paper checks traveling longer distances could take up to five days to arrive instead of the typical two or three days. Because the B2B sector has such a dramatic impact on the overall global economy with about $120 trillion in global commercial payments each year, far outpacing consumer payments, it’s time for corporations to up their game and commit to digital invoicing and payments and creating digital payers. And it starts with accounts receivable teams.
Accounts receivable is a corporation’s lifeblood. If companies don’t have cash, they can’t pay their bills and can’t operate. We hear a lot these days about the accounts payable side, and, arguably, they are ahead of their AR counterparts in adopting new automation technologies. But AP automation has been a mixed blessing. AP teams have happily pushed spend onto virtual credit cards to capture generous, high-margin interchange rebates. And many AP providers have eagerly helped with those transactions. Payables spend is being modified and turned into mini-profit centers which have been great for AP software vendors, banks and the companies themselves. This, however, creates significant complications for AR teams which are faced with dealing with inefficiencies delivering credit cards and payments, often through thousands of emails each month, creating a myriad of manual transactions and verifications that are simply too much for them to handle. Combined with a still-too-strong paper check presence and reliance on the U.S. mail, and you have the recipe for AR slowdowns and reduced cash flow.
The AR Transformation
The ultimate answer to creating digital payers is transforming AR from being consumed by manual tasks created by AP automation and a continued reliance on paper checks into an innovative and automated finance organization and center for developing buyers who pay electronically. Of course, accepting digital payments can be tricky. An AR team’s ability to accept digital payments requires modern processes, and that’s where some come up short. Recent research shows that 40% of AR teams don’t have the self-service capabilities their customers want, and over 50% lack real-time integrations with their ERP systems or automated integration with their customers’ AP portals. All of this slows productivity and cash flow and creates a poor customer experience. To truly succeed digitally while maximizing cash flow and getting paid faster requires a commitment to automation.
Customers always want to pay invoices their way, so offer them the digital channels they prefer, depending on their segment: SMBs generally prefer simplified and often mobile, pay-on-the-go experiences that mirror what they encounter as consumers. Mid-market buyers with AP teams are generally drawn to a self-service portal. Enterprise-level customers will already have digital payment programs which require technology to automate to avoid costly manual management and reconciliation. Next, analyze your customers – typically your largest-spending and most frequent buyers – to see which will have the most impact on your business by moving to electronic payments. From there, it’s a matter of targeted outreach to communicate the benefits of becoming a digital payer.
Delivering the “Complete Payment”
It’s a fact that businesses struggle with figuring out how to pay other businesses. If a buyer wants to pay a supplier, they have to go through a discovery process and either send them a check to their billing address, which is on the invoice, or contact them and ask for information like their bank account number, routing number and how they prefer to get remittance data. Imagine if that was the same process you used in your personal life. If you want to pay a friend, you certainly don’t ask them for their bank information. You pay them with Venmo or PayPal, services which act as both a directory and a money movement tool.
Today’s B2B payments networks are starting to see unprecedented adoption because they work the same way, allowing the AP side to seamlessly interact with the AR side with a middleware layer that does the translation along with full remittance. These “digital lockboxes” connect the financial services ecosystem – AP providers, banks, payments card issuers and ERPs – while leveraging automation and digitization technology to deliver a “complete payment” by capturing full remittance in addition to the payment itself. They also automate, capture and process the data from email and AP portals and format it to be compatible with an AR platform. Besides receiving payments faster, a payments network also allows suppliers to broadcast their payment preferences to AP platforms.
Future-Proofing Your Business
It’s time for corporations to fortify their businesses through an accounts receivable digital transformation. Not only does creating a new generation of B2B digital payers support CFOs and other financial professionals by allowing them to reliably maximize and forecast cash flow, it supports the remote workforce by reducing dependence on paper checks and the U.S. mail, helping to future-proof businesses as uncertain times continue.
Billtrust helps companies digitize accounts receivable, optimize payments and unleash their cash flow. Download the newest Billtrust white papers, “The State of Accounts Receivable: The Journey to Modernize” and “The State of Accounts Receivables Part Two: A Guide to Modernization” to get a better understanding of how B2B businesses are thinking about their digital transformation, pinpoint what a modern AR organization looks like and learn how you can assess your organization to determine your modernization stage.