Collections will never be the most beloved part of a business’ payment lifecycle – because in an ideal world, they wouldn’t exist, and buyers would pay suppliers on time in full without variance. But in the real world, collections are a recurring part of suppliers’ existence. Ninety percent of businesses report late payments, and the standard methodology of “throwing bodies at it” is not exactly the most efficient way to handle the problem, Billtrust CEO Flint Lane told Karen Webster.
The human touch is part of the solution, Lane told Webster, and always will be – there is something to be said for a person reaching out and bugging a slow payer directly. But retaining a large collections staff to sift through accounts that need payment, using a variety of esoteric methods to induce buyers to pay, is neither a good nor efficient solution – a situation for which Billtrust’s clients would like a remedy.
Which is why today (April 16), alongside their announced acquisition of Second Phase, the firm is announcing the rollout of Billtrust Collections, a new set of tools enabling accounts receivable departments to automate and digitize their collections processes.
In the current system, in which firms are employing around a dozen collectors working from a punch list, there isn’t really a lot of structured guidance for the workers.
“They are all kind of doing their own thing and using their own techniques,” Lane said. “The application we’re giving them can both prompt them to give this customer this message at this moment in time, and creates a way to share best practices with peers across the industry.”
The system, he noted, inserts software into the process to better understand and sort the list, instead of sending agents out with a printout to start “banging the phones.” This is a more targeted approach to tracking down funds, and in some cases can head off collections issues before they start. It can be as simple as the system emailing payment reminders to a certain subset of customers seven days before the bill is due, to greatly increase the likelihood of a timely payment. Or the system can tell employees to pursue the collections list based on previous payment patterns.
“Every collections solution is based on patterns at that company the customer is paying,” Lane said. “We have patterns across B2B customers, so if a consumer is looking like a high credit risk, we can accelerate the collections efforts across many of our customers. We can give our customers a hint that this one is looking suspect and they might want to get on it.”
The system is designed to help make collectors more efficient, bring in cash faster and, perhaps most importantly, reduce bad debt write-offs.
Adding collections to their suite of skills, Lane noted, is part of their bigger vision for taking on B2B payments from order to cash to collections. This announcement covers the collections end, he added, while their Second Phase acquisition was intended to bulk up their offerings on the order side of things.
Putting Pain Points in a Basket
In Billtrust’s nearly two decades in business, Lane told Webster, they have learned a lot about what their customers want – and a lot about what they don’t want. And what persistently leads the list of undesirables for their clients is having to spend a lot of time and IT talent trying to get many separate technical solutions to work in harmony.
“Our customers don’t want to use their IT resources to stitch together third-party solutions,” Lane noted, which is why the firm has focused on end-to-end functions since its launch – though they have admittedly expanded the definition of what that means over time.
And while they are adding on collections at the end of the process, Lane pointed out that today’s acquisition was about adding function at the beginning of the ordering phase. “(The order-to-cash process) includes order, credit, invoicing, payments, cash-up and collections – and we are mysteriously absent on the order phase of the order to cash process.”
The firm’s acquisition of Second Phase allows Billtrust to enter that arena, with their specialty in building wholesale distribution sites. “They’ve developed this really cool web commerce site that allows our customers to build kits, which are collections of things that go together, like recommended purchases,” Lane said. “People think of eCommerce as shifting some spend from offline to online. But what is far more interesting is how to increase the amount of purchases by offering a web commerce experience, (and) increase basket size. That is the kind of question Amazon is asking.”
Moreover, Lane told Webster, a third of their clients were already using this product, making it clear that it is something they already wanted – they just weren’t buying it from Billtrust.
Billtrust’s goal, he noted, is the same it has always been: to enable the digital transformation of order-to-cash. The scope of that digitization is growing, and the company’s goal is to continue expanding its starting points and endpoints outward to match that increasing scope.