Basic vs. Collaborative Payment Portals: Why Accounts Receivable Teams Should Know the Difference
Learn the important differences between these two types of payment portals and why they matter for your AR team
Accounts receivable payment portals let buyers easily review and pay invoices online, accelerating the seller’s cash flow and improving the customer experience.
In collaboration with Wakefield Research, we surveyed 300 CFOs to learn about their most mission-critical function—invoice processing.
Download The Path to Better Invoice Processing to learn why accounts receivable payment portals are the best solution for fixing your invoicing woes
In theory, invoicing is a simple process. You send a person or company an invoice, and they pay within the time agreed in the payment terms. What could go wrong?
Anyone who’s ever worked in finance knows the answer to that question: Plenty.
Inefficient processes, invoice errors, poor communication, and invoice disputes are just a few things that can slow your accounts receivable (AR) process to a snail’s pace, if not an outright halt. Which, in turn, impedes cash flow.
And considering companies process an average of 2,433 invoices per month, AR process inefficiencies alone could already be costing you a frightening amount of time and money.
In fact, many mid- to upper-midsized businesses are seeing increasingly destabilized cash flows, with delayed payments compounding at an alarming rate. Approximately $4 million in outstanding invoices a month are due to invoice processing inefficiencies, forcing businesses to stretch their human resources, get creative and survive with less cash on hand.
This is why accounts receivable payment portals are increasingly popular and necessary. Since portals simplify invoicing and make it easier for you to get paid, companies are turning to them to minimize issues and streamline their processes.
Continue reading to learn the following:
Once you’ve read this article, we hope you’ll have a clearer understanding of what accounts receivable payment portals are, and how to find the best AR portal solution for your company.
Traditionally, AR has been a very manual process, that’s looked a little something like this:
There’s friction at every step, which makes life harder for both you and your customers.
A payment portal automates some—if not all—of this process, depending on the type you implement. It’s a web page where your customers can view their invoices, pay electronically, handle invoice disputes, et cetera, with a high degree of self-service.
This is more convenient for your customers because the process is much simpler and more personalized, its 24/7 availability fits their schedule, and it’s better for you because you get paid quickly.
Sometimes referred to as a ‘customer billing portal’, there are two different types of accounts receivable payment portals you can deploy. The first is a standard AR payment portal, and the second is a collaborative AR payment portal, and it’s important to know the difference.
Learn the important differences between these two types of payment portals and why they matter for your AR team
A standard AR payment portal is the simplest of the two and is essentially just an invoice delivery and online payment service.
Think of it like the checkout page of an online store. As the customer, you’re shown a breakdown of what you’re paying for, and you can choose how you want to pay. Some standard payment portals only allow for viewing invoice and account statuses, meaning payments must still be made offline—I.e., via check.
This can save you and your customers a lot of time throughout the invoicing and payment process, but it doesn’t solve the whole problem.
And what is that problem? With a standard AR portal, communication only easily flows one way. If your customer has a question or wants to dispute an invoice, you must revert to the traditional process of using email and phone calls to find a resolution.
A collaborative AR payment portal doesn’t have these same limitations. It allows for two-way communication between your AR team and your customers, all inside the same app.
This is much closer to a checkout or service desk in a brick-and-mortar store, where a customer can ask questions and settle disputes there and then.
This is much more convenient for everyone, as all supporting documentation and communication logs are in one place, and every matter that needs attention is going to be noticed thanks to alerts delivered via inbox or voicemail. Plus, with collaborative accounts receivable portals, pertinent stakeholders can be easily pulled into ongoing conversations in real-time, without needless back and forth or delays borne from traditional communication channels.
This level of collaboration spans the entire AR process, making it as quick and simple as possible to process invoices and receive payments.
We’ve already touched on some of the key advantages of using an AR payment portal. But there are a good many more ways it can benefit both your AR team and your customers. Benefits include—but are not limited to:
One of the most obvious benefits? You get paid much faster using an AR payment portal versus traditional billing and payment processes.
Not only can your customers make invoice payments directly inside the portal using their preferred payment methods, but payment disputes can be handled and resolved in-app.
And, seeing as 27% of accounts receivable teams spend 50% or more of their day resolving invoice disputes, having that burden removed is highly valuable as it frees them to prioritize more strategic collections activities.
This benefits everyone as accounts are settled immediately, removing any wait times or out-of-date balances. Faster payments also lowers your DSO (days sales outstanding), which is a bonus for any AR team.
It’s an inescapable fact of life that we humans are fallible. So, the more manual steps there are in a process, the higher the risk of errors being introduced. Human error, by the way, is the most significant cause of invoice disputes.
What are just some of the most common manual errors that add to the problems that already plague conventional invoicing and payment processes?
These slow things down as you work to identify and correct any errors, which ironically is also a manual task. But that’s only if the error is detected. It’s easy for things to get missed, and these errors could cost you or your customer money. Or it can even cost you the loyalty of that customer.
Automating the invoicing and payments process by using an AR payment portal reduces the risk of errors occurring or, even worse, recurring. Keystroking or routing errors, for instance, can be eliminated, payment due dates are automatically inserted into invoices, and reminders can be automated.
Manually processing invoices, chasing payments, and dealing with errors and issues take up a lot of time. Not only does an AR team get bored with these repetitive tasks (boredom that can impact engagement and retention), but it’s also driving up your labor costs.
This is the same for your customers. They don’t want to be spending their AP team’s time manually entering the same data for each invoice or sitting on the phone disputing a charge.
Using a payment portal saves everyone valuable time, which translates into saving money. How much money, you ask? By our calculations, accounts receivable teams with collaborative payment portals are absolved from having to manually resolve over $1.6 million worth of invoices monthly. By boosting the efficiency and effectiveness of invoicing and collection activities, payment portals can deliver substantial time- and cost-savings.
Paper-based invoicing is manual, tedious, inefficient, and unmanageable at scale. Learn why electronic invoicing is a better alternative to traditional invoicing.
As we’ve already touched upon, traditional invoicing processes are deeply flawed. They include too many manual steps for an AR team to wrangle, spread across different tools and technologies. But by using a collaborative AR payment portal, you solve these issues, and transform your entire process.
Portals give customers a self-service option for making payments online. Learn tips for getting customers to use your payment portal.
Here are 3 reasons accounts receivable needs need AR payment portals:
With so much friction within the traditional AR processes, the most important reason your AR team needs a payment portal is to eliminate this friction.
By accepting different types of payment (ACH, bank payment, credit card) directly from within an AR payment portal, for example, you immediately make the payment process much smoother for both you and your customers. Eliminating manual work (and manual errors) accelerates processing and prevents disputes; invoices and payments are delivered in a timely manner, removing the delays caused by snail mail or email delivery.
Cash and account remediation is accurate and immediate. You can also integrate your portal with your financial management systems, removing reliance on manual entry and duplication of effort.
A collaborative payment portal also streamlines collections and communication with customers by encouraging deeper collaboration between AR and customer AP teams, effectively bringing comms together in one shared place. This replaces endless email threads and the frustration of leaving phone messages.
All of these improvements produce far greater AR efficiency, as bottlenecks, errors and costs are reduced or eliminated.
The more complicated your invoicing and payment processes are, the harder it is to maintain good relationships with your customers. And the worse the relationship is, the harder it is to resolve issues and handle disputes.
According to our own recent research, 82% of executives say their company has lost work due to miscommunication during the payment process. And it’s not an isolated problem: 42% report losing business from multiple occurrences of poor communication. A jaw-dropping 85% admitted miscommunication between their AR teams and customers actually led to customers not paying in full.
Perhaps even worse? Bad communication can lead to disputes, which can lead to litigation. Improving communication is the obvious way to nip these problems in the bud.
In providing a self-service AR payment portal, you’re giving your customers easy and secure access to their account statuses and invoices, while making support documentation more easily retrievable. This makes the entire process more transparent.
Moreover, you’re affording them greater flexibility and convenience by offering a range of payment options, as well as opening up clearer and faster communication via real-time updates and reminders. By making communication with customers more immediate and two-way, it’s no longer robotic and potentially combative but personalized and collaborative.
Together, these deliver a superior customer experience that improves their attitudes toward your company, making your AR team's jobs much easier.
Learn the quantifiable impact of poor, inefficient invoicing processes and how collaborative technology reduces losses.
Reconciliation is a vital part of accounts receivable, and any delay or manual entry error can have a huge impact on your accounts.
But by using an AR payment portal, your customer makes payment directly against an invoice. This means the payment can be automatically reconciled against that selected invoice.
The same applies to partial payments and payments against multiple invoices. This removes the manual step, and it also ensures your accounts are always up to date.
By the way, when it comes to collaborative accounts receivable payment portals, the ability to make multiple invoice payments at a time or partial payments is highly coveted. As are the functionalities already mentioned that support the reasons why AR teams need these types of portals—granting customers multiple payment options, in-portal communication, and in-portal dispute resolution:
Learn the benefits you can expect when combining electronic invoices and collaborative payment portals.
It’s not just your AR team that benefits from AR payment portals. These technologies also have tangible benefits for your customers, which can only help your business. Benefits of payment portals for customers include—but are not limited to:
No one enjoys parting with money even at the best of times, so you don’t want to make the process even harder by forcing customers into limited or outmoded payment options. You want to make payment as convenient and painless as possible, which is what an AR payment portal does.
With accounts receivable payment portals, customers can choose how to pay—using whichever B2B payments they most prefer—opt to pay multiple invoices at once, or even make partial payments. All within the portal.
In the traditional accounts receivable process, it’s very easy for emails to get missed, messages to not be passed on, and so on. After all, the basic lifecycle of a receivable is fairly complicated:
When performed manually, this process leads to miscommunication between AR teams and customer AP teams, resulting in a terrible experience for the customer. This is the AR Disconnect, and it can wreak havoc for everyone involved.
A collaborative AR payment portal remedies this by bringing all accounts receivable communications into a centralized, cloud-based, shared location. By providing two-way communication within the portal itself, all comments, questions, and disputes are all logged and handled in one place.
This creates a transparent and collaborative relationship between the customer and the AR team, keeping everyone on the same page.
When it comes to transparency, it should always be easy for your customers to view their updated account information, invoice statuses, and supporting documents. Even if that information has been sent in an email, it can be far easier for your customer to simply log into a portal to review their account.
With an AR portal, they can check the status of their invoice and account at any time. They can also view their billing and payment history, so they always have a holistic view of their account with your organization.
Coincidentally, collaborative payment portals possess many customer-focused features that CFOs think their customers would love. Here’s a glimpse at those thought to be most valuable:
We’ve already gone over how collaborative payment portals are better than their standard counterparts because they bring automation and communication to the entire AR process and bridge the gap between AR teams and customer AP teams, but what does that mean in real-life terms?
We recently surveyed 300 chief financial officers in collaboration with Wakefield Research, and their responses highlighted how much more value a collaborative payment portal provides. For instance:
This means that simply by switching from a standard payment portal to a collaborative payment portal, you could improve your collection effectiveness index (CEI), your days sales outstanding (DSO), and restabilize your company cash flow.
Our survey also revealed that companies that use a collaborative payment portal have better data transparency compared to companies that don’t.
And it’s the same story for data reconciliation errors, internal communication, and AR delays. All of these are improved by using a collaborative portal, rather than a standard portal.
The high-level takeaway from this study: By choosing the right invoicing and payment acceptance tools, you can transform your invoicing processes and bridge the AR Disconnect. And it’s collaborative AR payment portals that offer the biggest benefits to both your team and your customers.
In fact, 65.67% of CFOs we surveyed said that a collaborative AR payment portal would significantly improve the overall customer experience versus a standard portal.
Learn how collaborative payment portals transform manual invoicing processes and deliver exceptional CX.
Collaborative AR payment portals play a key part in invoice processing by allowing your AR team to communicate and resolve invoice issues with your customers.
This dramatically shortens the I2C (invoice to cash) process, as all the back-and-forth is done inside the portal. You’re not just sharing invoices with your customers; you’re collaborating with them. You can both ask questions and leave comments for each other.
This is especially important in cases where there’s a dispute and is the reason why collaborative portals create so much more value than standard portals.
This interaction can be done right down to the line-item level, which means an incorrect or missing item doesn’t stop the whole process. Your customer can simply flag the issue and exclude it from their payment, while you investigate and resolve the problem.
Another benefit of collaborative portals? They can impress customers by improving the very start of the billing and payments process. Omnichannel invoice automation automatically delivers invoices to customers via their preferred channels, since some may prefer emailed invoices, while others mandate suppliers must log into AP payment portals like Coupa or Ariba to upload their invoices; others still use EDI or (yes, even today!) cling to paper-based invoice delivery.
By being able to deliver invoices via a customer’s preferred channel, you’ve made it more convenient for that buyer. Since customers are more likely to clear invoices more rapidly when they receive them via a preferred channel, you’ll accelerate cash flow.
CFOs see quantifiable returns in investing in collaborative payment portals. Learn how they assess the ROI of these technologies.
Collaboration doesn’t stop at invoices, though. Your collaborative portal is also a centralized hub for sharing documentation. You or your customer can upload important documentation you easily share with each other. Those may range from purchase orders to project outlines and project files, proof of delivery/fulfilment, timesheets, photographs and diagrams, and so on. These documents can be attached directly to invoices, making it easy to find needed files.
This is especially useful when you’re trying to solve an issue or conflict. Supporting documents and screenshots can be uploaded, shared, and commented on. Once uploaded, the documentation is accessible to your team whenever they need it, speeding up dispute resolutions and investigations.
It goes without saying that payment portals process payments (try saying that five times fast!). But a good collaborative payment portal goes far beyond just displaying a credit card form. You can offer your customers a selection of payment options:
This is all done in real time, meaning you both have peace of mind that accounts are up to date.
The payment history is also saved and available to view for both the AR and AP teams whenever they want. This transparency helps to build trust and collaboration, as you both have access to the same information.
As much as we wish they wouldn’t, invoice disputes happen all the time. It’s an inevitable part of AR, but that doesn’t mean they have to be painful. (And unfortunately, many are painful, making a solution for this problem all the more desirable. In fact, 64% of executives report invoice disputes result in the threat or initiation of a lawsuit. Yikes!)
Collaborative AR portals simplify the whole dispute management process. Your customers can comment, ask questions, and raise disputes inside the portal itself.
This means disputes can be managed and resolved in real time, without having to switch between the invoice, emails, and phone calls. The AP team can also upload relevant documentation to support their dispute, such as purchase orders or delivery receipts.
And because partial payments can be made excluding disputed line items, a dispute won’t hold up the whole process. This means you can take your time finding the right resolution, without being out of pocket.
A short pay invoice can often create a headache for AR teams, but collaborative AR payment portals make short pays much easier to deal with. When your customer opts to make a partial payment, they can select a specific reason. This gives you the context you need to understand and start investigating.
For example, if the AP team doesn’t agree with a line item, they can omit it from their payment, citing ‘In Dispute’ as the reason. You can then ask questions, request supporting documents, and work together to resolve the dispute.
When we talk about AR, it’s easy to focus on functionality and automation, but the customer experience (CX) is just as important. When you provide a good CX, it’s much easier to keep your customers happy, building trust and relationships at the same time.
Collaborative AR payment portals give your customers a fantastic experience, as they can do everything they need to do through one easy-to-use UI. They can view invoices, make payments, raise disputes, ask questions, view their history, and much more.
It doesn’t just encourage collaboration with its two-way communication tools and granular controls. It makes it simple and easy. Which is really what we all want from any process or tool.
💡 Note that payment portals that provide a way to collaborate with customers with all relevant information readily available are seen by CFOs as much more valuable than those that don’t.
Every company is different, and so is every accounts receivable team. So, it’s important to find the right collaborative AR payment portal for your unique situation. Having said that, there are a number of key features—split into three categories—that every AR team will benefit from. Those categories include:
A key function of a payment portal is for both AR and AP teams to be able to log in and manage their side of the account. Everyone needs to be able to view, download, and print invoices. As well as view key information like statements, payment history, account balance, and supporting documents.
You also need to be able to save payment methods and set up autopay agreements. As well as export data on demand or on a schedule.
There are also some account management features that are specific to your AR team. Your list of invoices can become huge, so advanced filtering is a must-have feature for your team. As is the ability to apply invoice approval and payment acceptance rules.
Your team also needs to be able to define customer hierarchies and manage user privileges, so only the right people can access the portal.
Here are the most important account management features you must evaluate when choosing an accounts receivable payment portal:
When you’re looking for an AR payment portal, you want to make sure you can give your customers flexibility when they pay.
You want to offer multiple payment methods like credit card, ACH, credit, et cetera. Your portal should also allow payment for multiple invoices with one payment, partial payments, and deposits against sales orders.
Your portal should also make it easy to schedule payments and set up automatic payments on their invoices. It should also handle credit card surcharging for you and give your team the ability to set up payment plans for customers.
Here are the most important online payment features you must evaluate when choosing an accounts receivable payment portal:
It’s clear from what we’ve already covered that collaboration makes a huge positive impact on your AR processes. So, you need to choose an accounts receivable payment portal that makes this as easy as possible for everyone involved in the process.
You need your portal to be accessible 24/7, with self-service signup. It’s also important to offer email reminders and notifications to ensure no time-sensitive tasks within the portal get missed.
For your portal to be truly collaborative, you need to have two-way communication with customers, as well as the ability to send comments internally within your team. This is especially important for dispute management. Your customer should be able to dispute invoices down to the line-item level, flag disputes during partial payments, and upload supporting documents.
Your AR team should also have access control over which customers are allowed (or prevented) from opening disputes.
Here are the most important collaborative features you must evaluate when choosing an accounts receivable payment portal:
If you need more guidance on deciding which AR solution to use, download our ebook and evaluation checklist.
Measuring the success and ROI of new tools or processes isn’t a simple task. And there are many stats and KPIs worth measuring to track the success of your AR. So, to keep it simple, let’s refer back to our survey on invoice processing and collaborative payment portals.
When we asked 300 CFOs what measures they used to assess the ROI of a collaborative AR payment portal, a theme quickly emerged, as you’ll see from the three most popular answers:
All three of these concerns focus around CX and collaboration between the AR and AP teams. This tells us that “success” isn’t just about bringing money in faster, it’s actually tied to developing a better working relationship between seller and customer.
Despite the clear benefits of adopting a collaborative AR payment portal, there’s one big caveat:
You only get these benefits if your customers actually use the portal.
If your customers don’t sign up and actively use the portal for viewing invoices, making payments, raising disputes and more, you’ll just end up back where you started. This raises a vital question, of course…
Trying to convince your customers to sign up and log in frequently might sound intimidating. But there are several things you can do to ensure widespread adoption:
But how do you know if they’re really using the portal? We recommend focusing on three different metrics to help measure your adoption rate:
Looking to transform your processes with a collaborative accounts receivable payment portal? Book a free demo with one of our experts to see how Versapay can help.