B2B Payments

How AR-Client Relationships Can Build Cash Flow Predictability

Although it’s a back-office function often plagued with loads of friction points, the accounts receivable (AR) department rarely gets the attention it deserves from digital transformation initiatives.

According to SurePayd Chief Operations Officer Karen Stephen, even organizations touting their digitization progress can fall victim to this lapse.

“AR seems to be one of the parts of the business that gets left behind,” Stephen recently told PYMNTS. “You have a lot of businesses talking about being a leader in digital transformation, and their AR department is still working off of spreadsheets.”

But with work-from-home mandates amid the coronavirus pandemic, AR digitization can no longer be left on the back-burner.

Unfortunately for those firms that procrastinated the cloud migration of AR processes, the current business climate has added a few extra hurdles to the digitization process as professionals struggle to overcome silos that separate them from their coworkers.

Luckily, according to Stephen, today presents a unique opportunity for organizations to, in a way, “clean house” — take stock of their current operations, optimize what’s working and rethink what isn’t. In the AR department, undergoing this transformation can not only automate many mundane workflows, but it also presents a chance for businesses to deepen their customer relationships.

Digitization Hurdles, Multiplied

Undergoing digital transformation is not easy, which is likely why many businesses have held off from upgrading AR operations in the past. With employees working from home, however, migrating to the cloud is now imperative to enabling collections processes to continue when team members are not physically near each other to collaborate and exchange information.

It’s also more difficult than ever, however.

“They’re sending employees home with desktop computers and monitors covered in sticky notes,” said Stephen. “When you’re working off shared spreadsheets and sticky notes, trying to find a way to communicate across the city to your colleagues has been a challenge.”

The businesses that are suddenly thrust into the cloud migration environment may make some missteps as a result of a panicked, reactive approach to AR digitization. Stephen pointed to the importance of prioritizing security and data integration in this process, warning that while out-of-the-box solutions may enable AR teams to digitize more quickly, unless those solutions are able to connect to other back-office functions and ensure all departments are on the same page, the tool may ultimately cause more trouble down the road.

When approached strategically, however, the sudden need for cloud migration means AR teams can dig deep to optimize operations; that means everything from cleaning up data and updating contacts, to strategizing their technology procurement to ensure seamless connectivity.

Bringing Front-Office Skills To Back-Office AR

Compounding many of these challenges is the troubling trend of extended and delayed invoice payments resulting from the cash flow troubles plaguing so many businesses around the globe today.

Digitization of collections operations can help lower barriers for companies’ own customers to make payments, but as Stephen explained, perhaps more important is the human relationship element associated with AR.

In some ways, that element is just as transformational as cloud and automated technology can be for AR teams.

“People feel stress and [vulnerable] when it comes to their finances — businesses are the same way,” she said. “Businesses might be struggling now that maybe weren’t before. When all of a sudden, you’re getting phone calls and emails about why you haven’t paid, the way that that’s communicated can add a lot of stress.”

In a strategic mix of technology and human interaction, AR teams can wield the data analytics of past payment behavior to more quickly spot an anomaly when one client suddenly begins missing payments. Adopting automated technologies like support for auto-pay, as well as self-service portals for clients to be able to access their own invoice and account information without the need to call into an AR department, are also valuable ways to ease payer friction.

Those tools, combined with the human element of a “light touch” in the form of empathetic messages at the end of bill payment reminders, for instance, and the willingness to work with customers to develop payment plans, can all have a profound impact on AR’s ability to keep the cash flowing, Stephen said.

For suppliers, that means a higher level of predictability as to when payments will come in, as well as deepened customer loyalty as a result of a better client experience.

In this regard, it’s key for AR teams to not only embrace automation, but to use the time saved through the technology they adopt to become more strategically focused on the role interpersonal skills play in B2B relationships and cash flows.

“If you can be gracious, and human, and empathetic, you build a customer for life,” said Stephen. “It’s about bringing front-office skills to the back office.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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