As humans, more often than we’d like, we use our amygdala when confronted with the need to make quick and urgent decisions.  This is the Fight/Flight/Freeze portion of our brain. This part of the brain is designed to help keep us safe from nasty predators and other life-threatening scenarios. Thousands of years ago, it protected us from saber-toothed tigers. Today, we engage that portion of the brain when confronted with very different types of frightening situations. Neuroscientists have discovered that the portion of the brain that is activated when suffering financial losses is the same portion as when our ancestors were being confronted by that saber-toothed tiger.* Humans are hard-wired to treat financial loss as a life-threatening predator. This is why, when faced with the decision to implement a new financial technology or solution that has a cost, but the potential for significant value, we either: FIGHT: Deny the information being presented and convince ourselves that the cost of change is too expensive. Example: “I could hire another head count for that price, no thanks.” FREEZE: Get stuck and do nothing. Example: “I can see the value and agree something should be done, but we’re not in a position to Read More

With cyber attacks making headlines almost every day, it’s not a matter of “if” you will be breached but “when.” Every AR transaction could expose gaps in your security that open your customer and financial data to hackers. Your chances of a breach also increase if you don’t know what payment systems all of your locations are using to process customer financial data. If your IT team isn’t aware of a system, they won’t be able to ensure that your financial data is secure. “20% of finance professionals said that their company was hit with a business email compromise attack.” TD Bank Human error also causes a number of breaches. AR employees may store customer credit card information in an unlocked Excel spreadsheet and then carry it around on their laptop. If the laptop gets stolen, your customer data is at risk. Or an employee may accidentally open a malicious attachment and give a hacker access to your network. The costs of a data breach are high. According to IBM, the average cost of a data breach is $3.86 million - up 6.4 percent from one year ago. These costs include everything from technical investigations to lost business and brand Read More

I was recently onsite with a prospective client to observe their order-to-cash process. The main focus was on the finance/credit side, but after having some impromptu conversations, it became apparent that their Sales reps were doing much (if not all) of the collections work. The main reason for this was threefold: Credit Holds - Customers would be cut off from placing new orders if they passed their credit thresholds or went past due on aged invoices. Therefore, it was in the Sales reps best interest to ensure their customers were paying up so that they could keep the pipelines open for new orders. Relationships – Sales owned the relationship with the customer and wanted to have control over all communications specific to each customer (good or bad). Commissions – Sales reps were paid commissions when invoices were paid, giving them clear incentive to ensure quick payment of invoices. While the above scenario was great for Finance in that they had a motivated team of Sales individuals focused on minimizing aged Receivables, there were some major impacts from a Sales standpoint. Collecting vs Selling Sales reps were spending more than half of their time doing things like making collections calls, going Read More

Multiple touchpoints create extra steps in your invoice-to-cash cycle. The more steps you have, the longer it takes to get paid and the higher your operational costs to serve customers. The average payment cycle for wholesale distributors is 37 days. If you want to shorten your payment cycles and free up your cash flow, take a hard look at your invoice-to-cash process. The more steps that you have in this process, the more friction you will create and the longer it will take to get paid. “48.8 percent of the B2B invoices in America are overdue” Atradius Late payments often stem from friction in the invoicing process. It’s not that business owners don’t want to pay on time – it’s that, due to the nature of their business, it can be difficult for them to pay. If a contractor is on the road most of the time, they may only be able to write checks once a month. If an invoice is due before they have a chance to process their monthly checks, their payment will be late. If these road warriors could pay you with a couple of swipes on their mobile device, they would submit payments faster. When Read More

Inefficient processes and siloed systems make it hard for AR teams to stay on top of every invoice – and for you to gather accurate data with which to base decisions. Wholesale distributors typically send 50K-1M+ invoices per month. Tracking, managing, and following up with all of these invoices is a massive job. In fact, AR teams for wholesale distributors can have hundreds of employees that are spread in locations across the country. Your drivers and sales people also serve as an extension of your AR team if they collect payments when they drop off goods and sell new orders. These teams often work in different software programs that don’t integrate with each other – making it difficult for you to gain visibility into every payment and your cash flow. Storing financial data in different silos makes it impossible to track the thousands of invoices that flow through your systems on any given day. Disparate systems also prevent you from gaining on-demand access to crucial analytics. You may have to base forecasts on historical data, as opposed to what’s happening right now. With a lack of insights into supply chain and customer relationships, you will miss opportunities to reduce costs Read More

Due to slim profit margins, you can’t compete with Amazon on price. To stay in the game, you must improve efficiencies and customer experience. The gross margin for building materials and construction wholesale distributors is 13.5 percent. With such slim margins, you’re under pressure to turn over inventory quickly. If it sits for too long, the carrying costs and interest rates eat into your profits. Analysts predict that the Federal Reserve will hike interest rates over the coming year – after almost 10 years of historically low, long-term rates . As the cost of borrowing increases, it will be more important than ever to optimize your operations so that you can control your costs and ensure that cash coming in is available as quickly as possible. This includes taking a hard look at your AR inefficiencies and finding ways to streamline your processes – while simultaneously giving customers a higher level of service. Small businesses have plenty of choice when it comes to where they can buy wholesale goods. With just a few clicks, they can get whatever they need on Amazon. Not only is the Amazon online shopping experience convenient, but the products are often priced lower and delivered Read More

3 Technologies That Will Forever Change B2B Payments Despite the fact that most wholesale distributors still rely on checks as their primary form of payment, the B2B payment world is changing rapidly. Here are three technologies that can streamline your operations and help you give customers a better experience: 1. Virtual credit cards Virtual credit cards are single-use credit card numbers that allow you to make online purchases without exposing your actual payment info or identity to hackers. AP teams can assign virtual credit card numbers to a specific purchase – minimizing the risk of fraud. The number expires after the first use. Virtual credit cards are gaining popularity with consumer and B2B buyers who are concerned about data security. Visa, MasterCard, and AMEX now allow customers to use their cards to make B2B virtual payments. Now is the time to prepare your AR systems to meet customer demand for virtual payments. 2. Online payment portals B2B payments are moving to the cloud. According to a recent survey, 80 percent of B2B e-commerce retailers accept payments via their websites. Meanwhile, 54 percent of organizations plan to move their payment infrastructure to the cloud within the next year. Cloud payment portals Read More

Move beyond finance to offer strategic insights into all areas of your business. CFOs in wholesale distribution companies have traditionally focused on negotiating supplier contracts and managing risk. But today, you have a huge opportunity to drive business growth. Since the recession, CFOs have been tasked with managing costs while positioning their companies for future success. During this time, technologies such as automation and cloud analytics have made it possible for you to gain a 360° view of your company and quickly find the data that you need to advise the CEO on the best course of action. Now, CEOs expect big-picture, strategic thinking from you to help drive the business forward. “75% of CFOs said that their role will become more strategic.” 2018 CFO Sentiment Study In fact, you may have a larger impact on the business than any other executive. According to a study by Forbes and KPMG, 75 percent of CEOs from high-performing companies said that the CFO would become the most important role in the company. With your strategic guidance, your wholesale distribution company can: Prosper in today’s disruptive market Improve the customer experience Leverage technology for a competitive advantage Maintain or increase margins Minimize risks Read More

Wholesale distribution e-commerce sites that offer buyers a seamless user experience are rapidly gaining market share. You need a plan to compete – or risk lower margins. Or even worse. You’re facing increased competition from e-commerce sites that make it easy for business customers to buy anything that they need online. In particular, Amazon Business is rapidly gaining market share. The marketplace now has hundreds of thousands of sellers and is set to hit $10 billion in sales – up from $1 billion just three years ago. Some analysts believe that Amazon’s business sales will soon surpass its consumer sales. As Amazon expands into more markets, you may feel the crunch. In 2016, revenue in the wholesale industry segment fell by 3.7 percent. Meanwhile, a leading distributor saw its Q2 2017 earnings per share drop more than 40 percent from a year earlier, which it attributed to price reductions and online sales pressures. Analysts predict that through 2022, “The business-to-business (B2B) e-commerce market will continue to dampen industry revenue by enabling suppliers and buyers to engage in wholesaler bypass.” “30% of B2B buyers finished their purchases on distributor websites in 2015. In 2017, this number dropped to just 16%. 40% Read More

In wholesale distribution, offering customers a seamless digital experience – both pre- and post-sale – can give you a competitive edge. For years, consumers have enjoyed the convenience of online shopping. They now expect the same experience when they make business purchases. Providing your customers with a seamless digital experience is more important than ever – especially as millennials take the lead on purchasing wholesale goods. According to Pew Research Center, this generation now makes up the largest percentage of the workforce. Meanwhile, 73% of millennials are involved with corporate buying decisions. But it’s not just millennials. All buyer expectations are changing. Today’s B2B customers are used to doing everything online – from banking to managing a business. Their reliance on technology impacts how they purchase wholesale goods. "By 2020, B2B buyers will make more than half of their purchases online." Digital Commerce 360 For example, more buyers are using self-service portals to make purchases and monitor their accounts. In fact, 86 percent of B2B buyers prefer to use self-service tools for re-ordering, versus ordering through a rep. Meanwhile, Gartner predicted that 85 percent of all customer interactions with an enterprise will be done without speaking to a human by Read More

We used to spend our lives waiting. Needed to go somewhere? You waited for a taxi or bus. Needed cash? Waited in line at the bank. Needed to buy something? Waited in line at a shop. Went out for dinner? Waited for a table. Wanted to watch a movie? Waited in line at the ticket booth, then at the concession stand, then waited for the movie to start. Now, with the likes of Uber, Venmo, Amazon, Grubhub, and Netflix, we never have to wait for anything. Yet, if you work in the receivables department of a wholesale distributor, waiting isn’t only the norm, it’s the name of the game. With your working capital tied up in receivables and inventory, your customers’ expectations changing, and the cost of capital going up, how long can you really afford to wait? Understanding Your DSO What is your Days Sales Outstanding (DSO)? Is it going up or down? How much higher is it than your standard payment terms? 10 days? 20? 30?! If you don’t immediately know the answer to these questions, there’s an issue. DSO - the average number of days that it takes your company to collect payment after a sale has Read More

We’ve all heard the story of Netflix and Blockbuster. The David and Goliath tale of how one small, agile, forward-thinking business took down a behemoth. How in only a few short years, Blockbuster went from being a multi-billion dollar business to filing for bankruptcy. Since then, countless business books, blogs and even university courses have been dedicated to dissecting the story. How could Netflix, a flailing business itself back in 2000, crush Blockbuster so completely and so swiftly? Nowadays, we laugh when reading about how Blockbuster turned down an offer to buy Netflix for a mere $50 million in 2000 - “How could they have been so stupid?” And we roll our eyes when looking back on Blockbuster’s online DVD rentals launch – “The future was streaming, not DVDs!” But hindsight is 20/20. If Blockbuster knew then what they know now, what would they have done differently? AR’s Digital Transformation Today's AR is going through a digital transformation, just like video rentals did almost 20 years ago. AR automation platforms are completely changing the way accounts receivable operates, improving things for both collections teams and the end-customer. And just like with Blockbuster and Netflix, there are companies leaning into this Read More