How Buyers Answer ‘When Will I Get Paid?’ Comes Down to Leverage, Says Billtrust CFO

The buyer-supplier dynamic is undergoing a modern transformation.

“It really comes down to leverage,” Bob Purcell, CFO of B2B accounts receivable automation and digital payments platform Billtrust, told PYMNTS CEO Karen Webster in a recent discussion.

Particularly amid today’s ongoing macro challenges, optimal management of DPO (days payable outstanding) and DSO (days sales outstanding) can either make or break a business.

“Everyone is trying to leverage their situation: the buyers want to pay when they want to pay, how they want to pay, and the suppliers want to collect as quickly as possible,” Purcell said.

Speed to revenue and speed to cash flow are being put under new and accelerated pressure across all industries and businesses, he said.

Effective money in, money out management has always been “in” for finance leaders looking to sustain healthy and insulated cash flows.

“Getting that payment in is important [for suppliers], but depending on [buyers’] leverage it may be more important to keep the relationship dynamic right — and vice versa,” Purcell said.

That’s because given inflation across all business touch points, higher cost of credit, higher interest rates, and a tighter economic environment more broadly, customer acquisition cost is high.

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Creating Better Ways for Receivables to Be Collected and Posted

While “having very solid relationships of trust” in business partnerships is critical, Purcell also noted that businesses and finance teams still need to have a Plan B set up around critical relationships based on the nuance of their own particular leverage within the situation.

He added that buyers dependent on more sought-after products with a high switch cost and time investment tend to have little leverage and will pay quickly while rarely putting any additional friction into their relationships.

It’s a different story, he said, around products that aren’t quite commodities but are close — often sellers will be very flexible because they need to “earn the business to keep the business,” while certain buyers might “push the envelope” by not paying on time or asking to renegotiate their contract around more favorable payment terms.

Changing the game for suppliers, he said, are modern solutions like automated accounts payable (AP), accounts receivable (AR) platforms and next-generation digital invoicing tools.

Aging payables systems can turn regular interactions into headaches, while hamstringing businesses who need quick access to critical funds.

“If businesses are mailing invoices, or doing things the way they were done 10 years ago, they won’t get the speed to cash they want or need,” Purcell said. “But if you put automation in there and let technology do what it does best by providing buyers with multiple ways of paying how and when they want, while letting the technology drive the optionality with less manual effort, organizations can build stronger relationships and drive better business outcomes.”

He added that changing the B2B conversation from a purely transactional, “when will I get paid,” discussion into more of a flexible dialogue around “creative ways to pay,” both buyers and suppliers can focus more attention on driving business success rather than chasing down invoices.

“There’s more pressure around people wanting to collect as fast as possible, while buyers are trying to extend that wherever possible – sometimes waiting until they actually get requested for the money even though the invoice is already in their hands,” Purcell noted, highlighting the importance of establishing an ongoing, two-sided discussion around relationship needs.

Growing Tension in the B2B Payments Landscape

With liquidity being scarce and rates being high, he said there’s “just more tension in the system,” with businesses pushing the envelope around trying to get cash flow in and trying to be as flexible as possible on payments.

Still, “that’s our job, right?” noted Purcell, touching more broadly upon the role of the CFO in a challenging macro environment.

“Whether you are on the buyer side or supplier side, the CFO’s job is to manage cash flow — making sure we are accelerating inflows and not paying anything before we absolutely have to pay it,” he said.

As CFOs lean into the business in a “very different way today than we did seven, 10 years ago,” he said, it is becoming more important for leaders to focus on customer retention and not creating unnecessary frictions within key relationships.

“You make a customer happy and you have a customer for life,” Purcell said. “But it’s also important to have a heightened awareness of cash flow management and how to optimize your cash flow inflows and outflows while also being very flexible across the organization. [CFOs always] need to have optionality and flexibility around their cash flows and what they do with liquidity.”

He added that businesses “can always be a little more profitable,” and that having a great value creation plan to continually drive business improvements often boils down to implementing modern tools and leveraging new technologies, including artificial intelligence (AI) and machine learning (ML) solutions.

Digitization of the B2B space has also provided new value adds that can help optimize and enhance buyer-seller relationships beyond just providing pre-negotiated flexibility, Purcell said.

“There are many benefits outside of being able to pay how and when you want to pay,” he said. “Maybe it’s some additional information or data, maybe it is the use of AI or ML to give insights around what the business is doing so that folks can focus on growth engines and drive efficiencies — there are a whole new host of ways to provide value today.”