Accounts Receivable

What Banks Need To Know About Corporates’ AR Digitization Journeys

What Banks Need To Know About AR Digitization

The coronavirus pandemic was an unanticipated disruption for every business, but for organizations that remain mired in paper, it became what Dave Robertson, managing director of payment advisory services at Deluxe, described as "the ultimate stress test."

"It really did challenge treasury groups and companies that were more manual and more reliant on paper," he recently told PYMNTS.


Now, months into the “new normal” of a remote workforce, organizations have accelerated their digitization roadmaps, with financial functions like accounts receivable (AR) taking precedence with modernization efforts and investments. Certainly, significant progress has been made, but the idea that a company will shift from paper-based to fully digital within a matter of a few weeks isn't necessarily realistic – even amid a global health crisis.

As Robertson explained, not only has COVID-19 revealed the importance of cloud-based, automated and remote-friendly financial workflows, it has also elevated the need for industry collaboration between businesses, FinTechs and banks, with data mining and integration capabilities now essential to easing friction in digital transactions.

A Gradual Process

The fallout from the global pandemic occurred almost overnight for organizations, which were suddenly struggling to ensure business continuity as professionals worked from home. While this jump-started digitization initiatives, Robertson emphasized that firms cannot expect modernization to occur so quickly.

"What Deluxe has found is a need for transitional services," he said. "The journey away from paper to digital, from manual to automated, is here to stay – and it's accelerated. But it won’t happen overnight: It has to happen gradually."

This is especially true for B2B organizations that have complex financial workflows due to discounting arrangements, promotional pricing and other factors impacting AR processes.

"The idea that you can just flip a switch and make that work perfectly, digitally – it doesn't happen," added Robertson.

With this realization, there is a vast opportunity for treasurers to wield their banking relationships to support a gradual digitization process. Yet financial institutions (FIs) must be deliberate in how they guide their corporate customers through the modernization process and offer products to support digitization.

This is made even more difficult due to the fact that banks must not only offer solutions like AR automation tools that can digitize workflows but must also support the adoption and integration of these solutions in a remote environment. Plus, Robertson said, any complexity in terms of product functionality or adoption will prove to be a significant roadblock for banks’ efforts to support business digitization.

Killing Friction With Data

As FIs develop their own contingency strategies and roadmaps to support corporates’ digitization, data mining and integration will play a vital role in reducing friction for business clients.

One of the biggest opportunities for banks in this arena is to embrace a customer-centric data mining strategy.

"Banks have incredibly rich forensic data on their customers," said Robertson, pointing to valuable information like clients' trading partners, payment channels and data from internal accounting and other systems. "With that, we've been able to help banks identify key opportunities to create value for their customers."

Once those opportunities have been identified, data is also essential to supporting an efficient product adoption strategy. Application programming interfaces (APIs) support the seamless integration of financial products like AR automation tools, even in a remote working environment. Robertson also highlighted the value of APIs in terms of flexibility, enabling FIs and FinTechs to retrofit and customize their solutions based on the unique needs of the end-user.

Data is also essential for banks and FinTechs to elevate their anti-fraud and security strategies for corporate clients. With security risks mounting as cyberattackers take advantage of vulnerabilities linked to business disruption and remote workers, Robertson noted that the opportunity to seamlessly embed security within solutions — and wield the power of artificial intelligence (AI) to more effectively identify potential threats like payments fraud — is on the rise, too.

Guiding B2B organizations toward a fully digital existence will continue to require patience, but through the collaboration of banks, FinTechs and their corporate customers, even the most complex financial flows like AR can be streamlined through automation. Data mining and integration will be essential to promoting a seamless transition, because according to Robertson, more organizations are waking up to the need for data connectivity in today's corporate environment.

"If you have a remote workforce, you really need a common data model," he said. "You need workflows that can be collaborative. And we've seen incredible demand for integrated receivables and more advanced receivables automation as a result of this."



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.