B2B Payments

Disrupting The AR Department With Machine Learning


When a company doesn't pay a supplier when it's supposed to, it can be next to impossible to collect that money. Accounts receivable processes were designed to keep the bill collecting organized, but today, with B2B payment terms expanding longer and longer, AR has risen, out of necessity, into a more strategic part of the enterprise.

For companies large and small today, the first step in strategizing the AR department was to digitize and automate: offer electronic invoices, support electronic payments and enable automated process management. But Anthony Venus and Eugene Vyborov, CEO and CTO, respectively, of AR solutions provider YayPay, say that accounts receivable is ready to take the next step in technological advancement.

"Tons of companies are heading over 100 days sales outstanding, which is a huge number, to be honest," Vyborov said. "They have huge amounts of money stuck in accounts receivables."

"Late payments are certainly a problem in the U.S.," added Venus. "And the smaller you are, the worse it gets."

That pattern could be for a couple reasons. For the Fortune 1000 companies, Venus said, these firms get paid in about 30 days, and the smaller the business gets, the longer those payment terms stretch. Larger companies have greater bargaining power, the CEO explained — that's for sure. But they also have the resources to invest in advanced AR systems that can make that part of their business into one that helps the bottom line.

"They really understand the value of working capital," Venus noted of the largest corporations.

For smaller businesses, the options to strategize AR are often limited. Regulators in the U.S. have introduced some measures to try to encourage companies to pay their suppliers on time. But, Venus said, the effort "doesn't seem to really flow through."

The executives said they are trying to make YayPay a company that can hand some of the smaller businesses in the market the power that the largest corporations have to strategize AR.

Yes, that largely means automation of processes like invoice management and reconciliation. But Vyborov said it goes further: AR has the potential to accelerate payment terms for suppliers through technologies like artificial intelligence and machine learning.

For instance, machine-learning technology can not only identify when a corporate client needs to be nudged about an invoice that's due, but it can also identify the best way a company should be contacted — by phone or email, for example — and the best method a supplier should use to collect payment through analysis of customer behavior data.

It can also automate many of the manual tasks that AR professionals currently spend time on, like responding to basic emails from clients asking about things like payment details. Software has the power to recognize those questions and automatically reply, he said, enabling the human workers in the AR department to spend more time on more important tasks.

Vyborov also highlighted the ability for this technology to aggregate data from these processes and offer CFOs and controllers a visual of their AR operations, including how their average DSO has decreased over time and other patterns of the collections process.

The executives said their latest updates to YayPay were based on feedback from CFOs, controllers and focus groups.

"It's about usability," Venus said of the latest changes. The AR workflow, he added, needs to incorporate into existing ERP and CRM systems. In fact, many of those technologies can help guide the development of an accounts receivable strategy.

"We've been borrowing some of the science behind sales and marketing." Venus noted.

As more companies try to hold onto that float and extend their payment terms as long as possible, suppliers need to get more crafty with how they pursue unpaid bills. For smaller, mid-market firms, even a 25 percent reduction in average DSO can mean millions of dollars added in the bank, so the stakes are high. And while automation may enable AR professionals to get more time to track down unpaid invoices, other disruptive technologies, like machine learning and AI, can empower these professionals with the data and strategies they need to be most successful.

After all, for suppliers, making a sale is only half the challenge.

"The job doesn't finish when the sales gong rings," Venus said. "When it rings, the job for the finance department just begins."



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

Click to comment