Commercial Cards and Automation Are Transforming the AR Function

Moving analogue and manual processes to automated, digital ones represents the future of B2B payments.

That’s because, against a backdrop marked by rapid technological advancement, B2B payment systems are undergoing their own significant transformations — not the least of which are being built atop the future potential of commercial card usage and other innovative accounts receivable (AR) solutions.

“AR teams are often feeling the pinch of being understaffed and overlooked … but if these AR teams can get the tools they need, they can do some amazing things to help their companies,” David Bork, head of AR Solutions at Boost Payment Solutions, told PYMNTS.

Bork emphasized how these issues are being exacerbated by recent economic conditions. According to a June 2023 survey, 81% of businesses reported an increase in delayed payments, with 50% experiencing late payments from customers and 77% of AR teams falling behind on their metrics.

These statistics highlight the pressing need for enhanced AR solutions to maintain cash flow and operational efficiency — and payment mechanisms like B2B commercial cards have emerged as a vital tool for firms to leverage when addressing that need.

“The acceptance of commercial cards is becoming more and more common,” said Bork, noting that “they are really being pushed on the purchasing side, on the AP [accounts payable] side through the banks. And the reason for that is because the cardholder gets working capital, they might get a rebate from their bank, and cards reduce the amount of fraud.”

“You certainly can’t ignore commercial cards anymore,” he added.

The Role of Commercial Cards in Solving AR Challenges

Despite their advantages, commercial cards face resistance primarily due to perceived costs around their use and acceptance. But by optimizing acceptance processes and leveraging technology, businesses can mitigate these costs and improve their financial health.

“The reality is, the longer your customer goes without paying you, you’re paying a price for it from a capital perspective,” Bork said. “And the longer that goes out, the more expensive it is for the company trying to collect.”

For suppliers not yet utilizing commercial cards, Bork recommended thorough research and choosing a trusted provider. “Understanding the solutions out there and ensuring they meet your needs is crucial,” he advised, while also stressing the importance of reviewing card processing annually to avoid unnecessary fees and ensure compliance.

“Depending on what provider you’re using, there can be a lot of different fees. There can be annual fees, there can be monthly fees, I’ve seen PCI compliance fees and non-PCI compliance fees on the same statement,” Bork said. “It goes back to understanding who you’re working with and making sure that’s somebody you can trust, and they are in your corner.”

Fraud prevention is another critical aspect where commercial cards excel. Bork advised against outdated practices like storing card information in physical files. Instead, he recommended solutions such as mobile terminals for field transactions, IVR systems for phone payments, and eCommerce portals, all of which enhance security and compliance.

“I do still hear of companies where it’s a called-in card and they’re writing it down and then running it. That’s certainly not a best practice,” Bork said.

Embracing Automation and Innovation

As businesses continue to face delayed payments and cash flow challenges, the adoption of commercial cards and automated AR solutions can provide much-needed relief.

“Automating processes ensures cash is efficiently applied and payments are promptly processed,” said Bork, noting that this not only improves efficiency but also frees AR teams to focus on more strategic tasks rather than “either keying a transaction itself, or doing cash application in a manual way.”

That’s why, by staying informed about technological advancements and choosing the right partners, companies can enhance their financial stability and operational efficiency by empowering their own AR teams.

Of course, overcoming the acceptance hurdle is also crucial for leveraging commercial cards. That’s why the importance of having a key point of contact and having a policy are big contributors to effective payment processing.

“If you make a call to a bigger company, you might ask 10 different people and get 10 different answers,” said Bork. “If somebody says yes to acceptance and maybe they weren’t the right person to say yes, but if there’s a policy and it’s well distributed and it’s understood, that goes a long way in everyone understanding exactly how it is that a supplier can be paid with a commercial card.”

Looking ahead, Bork again emphasized the importance of automation within B2B payment processes.

“If you automate that B2B payment through a straight-through processing type solution, it’s really to your benefit because it is going to put cash into your bank account in the most efficient way possible,” he said.

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