Managing accounts receivable (AR) struggles in a remote working environment is not without its challenges, but automation has helped companies blunt the impact and keep their cash flow steady, says Quora CEO Adam D’Angelo. In the Working Capital Playbook, D’Angelo explains how AR automation and digital payments have become key to transitioning to remote operations with minimal disruption.
Multinational businesses face complex accounts receivable (AR) management challenges in their B2B operations.
The constantly evolving payments space means finance departments must manage new technologies alongside maintaining legacy processes for consumers — many of whom still pay with older methods — all while watching their margins.
One of the biggest AR headaches for leading question-and-answer website Quora is payments management for customers who opt for traditional invoicing, Founder and CEO Adam D’Angelo told PYMNTS during an interview. Other pain points include manual steps in the invoicing process, nonautomated payments, and even customers who continue to pay by paper check.
D’Angelo said that the company’s AR process does not appear to require major changes or overhauls in the short to medium term, thanks to standardized procedures and automation put in place before the pandemic. Some challenges remain, however, especially when it comes to B2B digital payments.
B2B Digital Payments Remain a Pain
D’Angelo said that approximately 60% of Quora’s revenue is settled via credit card, greatly increasing efficiency. Accounts can be automatically suspended if payments do not clear, which can prevent excessive overspending.
“Credit card customers are billed in real time based on threshold billing methodology,” he explained. “Risk of non-collection is low and minimized this way.”
The other 40% of the company’s revenues come through traditional invoicing, where the potential for more headaches primarily occurs. D’Angelo said that most customers use B2B digital payments such as ACH transfers when paying their invoices, and while this is a welcome improvement over older methods like paper checks, it is far from a cure-all. Manual steps in the invoicing process leave space for delays, errors and other issues that can disrupt cash flows and require human intervention.
“In general, the messaging is that [B2B digital payments] speeds up payment windows and reduces late and inaccurate payments,” D’Angelo explained. “For the most part, it seems like this is half true, as it makes payments more timely once initiated. But [it] doesn’t really do much to speed up internal approvals and cash flow management by the customer.”
Five percent of Quora’s invoice customers, meanwhile, still pay by paper check. The shift to working from home has made receiving and depositing physical checks a particularly inefficient process for many employees, however, and the company is trying to move these customers to digital payments
Billing and Collections Platform Helps Streamline Operations
Quora leverages an enterprise resource planning (ERP) system to power its billing and collections platform, allowing the company to set up streamlined invoicing for clients worldwide. The system automates basic client-side processes such as collections emails and subsequent follow-ups for past due accounts, and it also provides useful analytics for analyzing revenue.
Quora also automatically receives weekly reports that its sales team can review. Team members can then proactively follow up with customers that have overdue balances and avoid account suspensions — key to helping the company retain its business. Such processes still involve a significant amount of human labor, however, and many companies found that they were severely affected during the shift to remote work over the past year.
D’Angelo said that Quora managed to avoid many remote work-driven AR complications because it had already emphasized streamlining and automating its workflows prior to the global health crisis. This decision has allowed the company to continue its operations despite the numerous challenges arising from pandemic-related safety measures and requirements.
Enabling a smooth transition from in-office AR processes to procedures that allow employees to conduct their tasks from home has been a game-changer for B2B firms during the past 19 months. B2B operations are sure to confront their share of AR challenges in the future, but businesses that have weathered the pandemic have doubtlessly discovered the importance of having robust, flexible AR systems in place.
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