Accounts Receivable Takes The Lead On Faster B2B Payments

Accounts receivable (AR) is difficult enough for large enterprises managing thousands of invoices and customer relationships. But with the pressure to digitize intensifying, these AR departments are now facing new pressures beyond merely managing a massive workload.

New, faster payment methods are emerging and in high demand among corporate customers. Within the enterprise, meanwhile, finance leaders are seeking access to analytics and data-driven insights, with AR a crucial source of that information.

While B2B payments digitization and efficiency remains a two-way street, requiring collaboration between both buyer and supplier, Gaviti Founder and CEO Yan Lazarev said that businesses on the receiving end of these transactions may hold more power than they think to promote digital transformation and healthier cash flow.

In a conversation with PYMNTS, Lazarev discussed the biggest AR pains of middle-market and large corporates at a time when receivables pressures have never been higher.

Payment Pressures

Traditionally, AR workflows have remained paper- and spreadsheet-driven, offering a limited avenue for finance leaders to gain valuable insights into incoming payments — let alone for AR teams to ensure that their outgoing invoices and incoming payments are accurate.

On one hand, AR departments’ B2B payment pain points can be traced back to the customer. Paper checks remain a common payment method between larger enterprises, a payment method that Lazarev described as “the worst way to get paid on time.”

Indeed, the discussion about delayed or late B2B payments is often focused on the actions of the buyer. But Lazarev said that AR departments do hold at least some responsibility for accelerating revenues and cash flow.

“In order to get paid on time, you as an organization and finance team need to reduce the amount of errors and delays to a minimum,” he said. “It all starts with generating invoices on time, making sure those invoices are correct and introduced to the client.”

Supporting a variety of B2B payment methods can be another important component of ensuring payments are received on time, although as the number of choices business payers seek when settling invoices grows, the infrastructure challenge on the AR department expands as well.

Lazarev said that the majority of mid-sized firms are struggling with managing the ability to accept various payment methods and are in need of solutions that can support consolidation of management of those various payment rails in order to most efficiently maintain seamless infrastructure and present customers with the choice for more efficient payment modes beyond the paper check.

Data Decisions

While it can be challenging, AR departments are making headway in supporting the digitization of B2B payments through payment acceptance efforts. This trend, noted Lazarev, is supporting AR teams in another massive goal in today’s modern business environment: providing data-driven insights to business leaders.

Yet just because a payment is digitized (and therefore involves data) does not necessarily mean easy access to analytics.

“The more data available, the better,” said Lazarev. “That being said, the fact that a business has payment data doesn’t necessarily mean it’s easy to export that data to a third-party solution.”

Data integration remains one of the biggest hurdles in the way of AR optimization today, particularly when it comes to integrating invoice and payment data with back-office systems like the enterprise resource planning (ERP) system. And while the volume of invoices, payments and clients can elevate the risk of AR teams drowning in troves of data, such a complex ecosystem also makes it all the more imperative that businesses are able to integrate and consolidate AR data to promote accuracy, timely payments and analytics.

Alongside the digitization of B2B payments, AR platforms are similarly embracing an electronic evolution. Yet for large corporates, these tools can be immensely complex and lack a user experience designed for finance professionals without expertise in IT, data and programming.

“It’s really difficult to use for the non-techie, which is your average finance team leader,” Lazarev said of the systems that target large corporates.

Adding to the complexity is the fact that there are hundreds, if not thousands, of various ERP solutions around the world today, creating even more complex IT challenges in promoting integration.

With the last year or so turning enterprise modernization into a vital means of survival, the AR department is more incentivized than ever to digitize. Yet finance leaders must take a strategic approach to this modernization, combining an investment in payment diversity with a focus on data technology that supports data integration.

Yet for all of the innovation that has occurred thus far in AR, sophisticated payment and data technology will still fall short for the large enterprise looking to accelerate collections and arm finance leaders with valuable insight.

“The space itself is huge, and we see a lot of innovation coming from all different directions helping finance teams digitize their processes,” said Lazarev. “But our approach is that a great solution is not enough. It’s very much about ease of use and user experience. Those finance teams need to love the solution in order to use it often and well.”