Until recently, BillingTree was forced to incrementally build out its services based on current company performance. But a new investment from private equity firm Parthenon Capital Partners has led to a recapitalization of the billing and payments company. According to BillingTree VP of Marketing Dave Yohe, that recapitalization puts the firm ahead of its revenue cycle, now able to add more staff and roll out more products more quickly.
With 2016 coming to a close, Yohe spoke with PYMNTS about what areas of billing and accounts receivable BillingTree has its eyes on for the year ahead and where the company will be allocating some of its newfound investment.
The way U.S. businesses approach accounts receivable and billing is changing, according to Yohe, with companies now exploring how subscription, recurring and incremental billing can aid their cash flow.
“I see the U.S. economy gravitating more towards installment plans with initial upfront payments,” he said, adding that this can be particularly useful among health care providers. The first few payments, generally made on time and in full, are often enough to cover the cost of goods.
“So, in the scenario where someone ends up defaulting on the last few payments, it’s cutting into your profits, of course, but you’re not out on the cost of goods,” the executive explained.
Automated payment structures can boost corporate cash flow management and allow businesses like health care providers an alternative to the traditional format: Large invoice balances sit on the books, are sent to collections and, ultimately, could be written off as a loss.
“That’s where I think the mindset behind installment and recurring payments is changing,” Yohe added.
Expecting Electronic Payments
With Same Day ACH now in play, Yohe said businesses will come to expect faster, electronic payments in how they pay and get paid. Faster payments initiatives, he said, “will really accelerate the B2B payments space.”
It’s likely to lead to a new normal, again, offering an alternative to the traditional B2B payments method: writing out a paper check, having it be released by a controller and managing cash flow with a “the check’s in the mail” mentality.
And while electronic B2B payment options will increase, Yohe added that there is also likely to be a shift in mindset among corporates that understand the cost of an electronic payment is worth the efficiency, speed and security.
“Would you rather have the money in hand at a slight extra cost or be waiting and checking the mail every day to see if the check came in?” he asked. “Understanding credit card rates versus not knowing where the check is will outweigh a lot of the initial concerns.”
ACH, he added, will likely remove some of the barriers corporates face when seeking to migrate to electronic payments, but even with the cost of accepting commercial cards, the payment method is “better than the alternative, which is waiting and trusting that your customer is going to get around to writing the check,” he noted.
Today, Yohe said, corporates generally find it a pleasant surprise that they have the option to pay electronically. But looking ahead, they’ll come to expect that option.
According to Yohe, BillingTree doesn’t want to build software solutions, like CRM tools, from the ground up. Instead, the company sees opportunity in integrating its payment acceptance services into existing software. That’s where there’s a gap in the market today, the VP explained; credit unions, for instance, may have software to manage their loan portfolio and customer relations, “but they don’t have that many alternatives for accepting online payments.”
Investment from Parthenon can accelerate the time it takes to develop APIs that work seamlessly with existing software solutions, he added. In addition to building out new products and integrations, BillingTree will undoubtedly be focusing on compliance and payments security, the VP added.
The driver behind new product development is the understanding that someone, somewhere, has experienced every type of roadblock there is when it comes to accounts receivable and billing. Whether it’s a health care provider challenged with seeing the remaining $3,000 balance paid off or a property manager that needs to offer alternative methods of rent payment or a corporate supplier suddenly facing a cash crunch when a client’s check gets the bounce.
“You name it — there’s somebody who’s had a unique situation out there that’s required a different approach to settling funds in a compliant manner,” Yohe said. “We want to make sure there’s an opportunity to limit or eliminate fraud, stay compliant, prevent money laundering.”