New Findings from IOFM: Why Your Customers’ Billing and Payment Experience Matters for Cashflow

Even in the best of circumstances, managing collections can be a strain for accounts receivable professionals. Throw a global pandemic in the mix, and this process becomes exceptionally difficult as customers are more inclined to hold on to their cash. 

Many businesses looking to ride out this period of economic uncertainty by optimizing cashflow are now turning their attentions to their accounts receivable processes.  

Businesses that rely on manual AR processes often have 30 percent longer average DSO compared to businesses with medium or high levels of automated AR processes, according to PYMNTS’ recent B2B Payments Innovation Readiness Report.  

But, improving cashflow and reducing costs associated with collecting payment goes beyond simply automating back-office AR processes, a new report from the Institute of Finance & Management finds. Rethinking the experience you create for customers throughout the entire order-to-cash lifecycle should be a central concern when looking for ways to improve cashflow. 

What Makes for a Great Billing and Payment Experience? 

The customer experience doesn’t stop once a deal is closed. It’s important to remember that the way you invoice your customers and collect payment matters just as much as the experience you provide pre-purchase. 

Conditioned by the level of personalization and convenience they experience when making consumer purchases, buyers—coming from businesses of all sizes—expect you to provide the following: 

• An online experience, not one that relies on paper-based processes 
• Invoices that arrive in the format they choose and are easy to understand 
• A seamless payment experience that lets them pay via their method of choice 
• Convenient options set up for making recurring payments, short payments, and paying multiple invoices 
• The ability to access all their account information and find answers to their questions or concerns—anytime they need it 

This is where you have an opportunity to differentiate your business against competitors, because unfortunately (or fortunately for you) 45% of suppliers are falling short of customer expectations according to a report from Salesforce.  

Taking the steps to improve your customers’ experience couldn’t come at a more critical time—pressures from the economic impact of the pandemic are keeping customer retention top of mind for most businesses. Making it easy for customers to do business with you—at all stages of the order-to-cash cycle—is one great way to keep them happy when it most counts.

IOFM’s new report outlines six ways you can transform your accounts receivable to deliver on customers’ expectations and drive cash conversion. 

The Business Impact of Customer Experience 

Making your customers’ experience across the order-to-cash lifecycle a priority doesn’t just help with maintaining positive customer sentiment—it has significant implications for improving cashflow.  

Removing friction from the billing and payment experience with digital invoicing and payment options and on-demand help for inquiries ultimately gets customers paying you faster. 

Establishing these kinds of digital workflows also goes hand in hand with automating key AR back-office functions like collections and cash application, meaning that you unlock funds that would otherwise be trapped in manual processes. 

While finance professionals seem to be collectively recognizing the value of AR transformation—with 70% of businesses stating they have plans to automate their AR processes according to PYMNTS—IOFM notes it’s important to recognize that not all approaches to AR automation are equal. 

Many businesses focus solely on automating back-office processes without enhancing customer-facing processes—where self-service tools can alleviate support efforts in the first place.  

For businesses to recover from the economic fallout of COVID-19, improving cashflow will be critical. Delivering a digital billing and payment experience to customers is one tool for unlocking cash that you can’t afford to overlook. 

For more insights, you can download IOFM’s report “How Delivering a Better Receivables Experience Can Improve a Supplier’s Cashflow” for free here.