There Are No Days Off for Winning Working Capital Programs

Running a business is challenging, and it isn’t getting any easier.

For most firms operating within today’s modern ecosystem, competition is only a click away — and this rapid evolution of competitive convenience and cost can eat away at what were once considered long-standing commercial relationships.

Still, there’s no reason that business processes and commercial transactions can’t get the “consumer treatment” themselves or provide it for their commercial partners.

No reason, of course, except for the glut of paper-based processes and manual workflows gumming up the gears of the B2B economy.

By some estimates, 62% percent of companies use cash to pay for commercial goods and services, a shocking number considering the benefits digital payments offer to both sides of the transaction.

And as purchasing experiences across the spectrum become increasingly streamlined, now could be the right time for businesses to reimagine and modernize their accounts payable (AP) and accounts receivable (AR) processes, particularly with current market conditions pushing firms of all shapes and sizes to improve their cash flow by any means possible.

Often, these means include accepting innovative payment vehicles and personalizing payment terms across digital channels by leveraging historical transaction data.

Read also: Turning Accounts Receivable Into a Competitive Advantage

Activating the Payments Opportunity Within Commercial Transactions

Savvy firms are increasingly reaping the benefits of automated solutions that help turn their AP and AR workflows into B2B growth engines by driving loyalty through a smoother and more repeatable engagement experience.

“We have an environment where consumers are growing ever more digital, but then when we get to business purchases, everyone is back to cash and checks,” Judith McGuire, senior vice president of global products at Discover® Global Network, told PYMNTS in July. There is a great opportunity to “take that consumer experience of digital payments and move it into commercial payments.”

Businesses that still rely on paper processes tend to force their way of operating onto their buyers and partners, bogging down commercial transactions with legacy frictions, opacity, extended delays and more frequent manual intervention.

The B2B firms that will be around tomorrow are already gravitating toward enterprises that foster a better transaction experience beyond cost.

“Complexities bottlenecking current [B2B] processes are typically around payment terms and pricing negotiation, invoice management, and spending according to budget and terms, [as well as] making the payments themselves, and reconciliation with your back office,” Herman Man, chief product officer at Bluevine, told PYMNTS in August.

Solving for these complexities represents a change-the-game opportunity for firms that get it right.

“Once you go digital, there’s a lot of extra metadata that’s flowing between the systems, so you’re no longer sitting and doing reconciliation and closing the books manually because you already know what the invoice was, what the fees were, whether the payment was or was not settled,” Karandeep Anand, chief product officer at Brex, said to PYMNTS last month. “All of this is very quickly captured without human input. And that’s important because accounting teams just can’t keep scaling. You can’t keep having humans constantly in the process to pay out, track the payments, reconcile them. It very quickly becomes very error-prone.”

See also: Why Old Accounts Receivable Systems Cost Firms New Business

Harnessing AP/AR Efficiencies for Future Growth

“I’m pretty sure AR programs aren’t the thing that business leaders wake up in the morning thinking about … but AR programs can be a competitive advantage,” Ben Lamm, chief operating officer at Capital One’s Trade Credit Business, told PYMNTS in August.

“The typical in-house AR program runs the same way it has for the last 20 or 30 years — same tools, same processes, sometimes even the same people,” Lamm added. “It’s an outdated legacy program. It’s manual and clunky, not just for the merchant, but also for their customers.”

He said firms can leverage automation to help with faster and cheaper payments, while incorporating high-touch human expertise and service that drives forward the “better” in the experience.

And as customer experience along the commercial payments occasion increasingly becomes a battleground for companies competing for sale, getting the faster, cheaper and better questions down can pay off for the firms that do it right.

PYMNTS research found that 64% of CFOs say they “definitely need” more automation for their AR processes.

Maybe this will be the year they get it.

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