70% of CFOs Are Automating Accounts Receivables, Payables to Increase Customer Lifetime Value

The pandemic’s disruption to the global economy has highlighted the value of keeping strategically engaged chief financial officers (CFOs) connected with their companies.

For starters, the pandemic accelerated digitization throughout corporate financial operations, speeding up payments and strengthening customer relationships. Digitizing payments is helping many organizations continue to operate smoothly, meeting customer demands despite the disruption while lowering operating costs.

That’s why most CFOs consider accounts receivable (AR) and accounts payable (AP) digitization as crucial to increasing the lifetime value of their customers. In fact, 70% of CFOs said they are digitizing AR/AP for that reason, according to The Strategic Role Of The CFO, a PYMNTS and Versapay collaboration.

Improving Customer Experience

In addition to digitizing AR/AP processes, more than half of the CFOs said they are making AR/AP more transparent (70%) and making AR/AP more efficient (61.5%). Other actions taken to boost the overall lifetime value of customers include securing customers’ financial information, making AR/AP more understandable, offering new payment terms, protecting customers’ financial privacy and educating about the importance of AR/AP.

Given the intense focus on enabling digital payments to ensure continuity during the pandemic, it is understandable that 96% of CFOs said the main reason they are digitizing AR/AP functions is to benefit customers and vendors. This goal outweighs other justifications, such as speeding up processing, saving costs and keeping up with competitors.

As companies heighten their focus on enhancing customer relationships, it makes sense for CFOs to use data to verify their progress in achieving this goal. More than half of the CFOs said they are tracking their company’s success in raising the overall lifetime value of customers using three metrics: AR turnover (82%); AP turnover (69%); and average cost of services (57%). Other metrics include average revenue per customer, inventory turnover, customer retention rate and customer acquisition cost.

Building Deeper Relationships With Key Clients

Having embarked on their AR/AP programs, the CFOs responding to the PYMNTS survey also said they found that digitizing payment functions to improve customer relationships has served as a stepping stone to more efficient customer interactions, accelerated the adoption of digital payments, increased the types of payments sent and received, and improved the efficiency and transparency of their AR/AP processes.

Eighteen months into the pandemic and its economic fallout, CFOs have seen enough to effectively navigate risks and position their organizations for success. Digitizing financial operations and processes has helped many organizations improve their efficiency, lower costs and transform their AR/AP operations.

Along the way, the most forward-thinking businesses have recognized that this digitization also put them in a better position to grow. Many CFOs said they expect that the improved customer experiences that digitized processes enable will help them build deeper long-term relationships with key clients. As this plays out, CFOs said they anticipate that more revenue will be generated throughout the life of these customer relationships.