Turning Accounts Receivable Into a Competitive Advantage

What do business leaders wake up every morning thinking about?

Their business, usually. But what makes that business run?

Outside of capable leadership, a solid and sustainable long-term strategy, all driven forward by a dependable employee foundation, it is often the money being paid for what the business provides that acts as a key growth lubricant.

“I’m pretty sure [accounts receivable (AR)] programs aren’t the thing that business leaders wake up in the morning thinking about,” Ben Lamm, chief operating officer at Capital One’s Trade Credit Business, told PYMNTS.

“But AR programs can be a competitive advantage,” he added.

AR generally is viewed as a back-office function and tends to get very little investment.

“The typical in-house AR program runs the same way it has for the last 20 or 30 years, same tools, same processes, sometimes even the same people,” Lamm said. “It’s an outdated legacy program. It’s manual and clunky, not just for the merchant, but also for their customers.”

This outdated approach can lead to snowballing inefficiencies and increased risk for businesses whose customers have come to expect a more streamlined experience.

But while modernizing AR can be critical for businesses looking for a better answer, Lamm explained that true AR transformation is “more than just automation.”

A successful AR program needs to integrate exceptional, high-touch customer service as well, he said.

The Secret Weapon of AR Success Is Customer Service

“More merchants are looking for a better answer,” Lamm said. “They are hungry for efficiency, lower costs, cash flow management, risk protection and again, providing a really positive customer experience to win and retain customers.”

That’s why more businesses are turning to third-party solutions to help them improve their AR team’s efficiency and avoid common payments frictions such as disputes, lack of compatibility with payor preferences, decoupled remittances and manual headaches.

While digital solutions can smooth out the rough edges of historically manual and clunky processes, true AR transformation takes aim at the entire end-to-end AR process, not just pieces of it.

“Digital self-service capabilities are important, and they’re there to simplify an AR team’s work and address the majority of simple needs,” Lamm said. “Things like ‘What’s my balance?’ or ‘I need to look at a statement or an invoice.’ Similarly, automation can be a big benefit to customers. But if technology just makes it easier for one side of the transaction and not the other, then it is not the right solution.”

So, what is the best-fit solution for a merchant looking to drive differentiation while growing their customer base?

One that integrates a B2B-focused servicing team that can help customers and merchants with their more complicated AR needs.

“It’s the secret weapon” of AR success, Lamm said.

“You’ve heard the expression better, cheaper, faster,” he said. “I think automation really helps with faster and cheaper,” while it is high-touch human expertise and service that drives forward the “better.”

When great technology and exceptional customer experience are combined in an AR program, it can free up the business to focus on its product, customers and growth.

Tapping Into the Benefits of True AR Transformation

Customer experience along the commercial payments occasion has become a battleground for companies competing for sales.

“On the technology side, if you’re in a place now where your in-house system looks like it did 20 or 30 years ago, this is a chance to make a huge leap forward,” Lamm said. “[Digital solutions] provide visibility that is really critical for merchants to stay connected to their customers.”

But he emphasized that level of high-touch connection shouldn’t be lost on the customer service side.

“It’s really the tag team of great technology and great customer service associates” that lifts an AR program and the organization leveraging it into the next tier, Lamm explained. “I think of it like when I’m sick, if I have a headache or a sore shoulder, it is fine to self-service with an ice pack or Advil, but if there’s a complex issue, then I am going to go to the doctor. I need the combination of both when it comes to my health — and it is no different for businesses.”

True AR transformation requires a holistic approach that incorporates both automation and a sophisticated level of human touch — and the future of AR lies in finding the right balance between these two elements.

Simple needs should be efficiently self-serviced, reducing friction for buyers, while complex needs require the expertise of skilled professionals.

“If you’ve equipped [an organization] with the tools to make customized purchasing offers in real time and reduced the friction for the buyer by giving them self-service capabilities backed by great customer service … all of a sudden, that little old AR program that was running in the background that hadn’t changed in years just became a really powerful growth lever,” said Lamm.

“When business leaders are thinking about transforming their companies, I would just say they can’t overlook the in-house AR program,” he added. “It shouldn’t be clunky. It shouldn’t be a manual back-office burden. It really can transform to become something that’s a competitive advantage for your company.”

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.