Why a Great Customer Experience Is What’s Missing From Your Accounts Receivable

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According to a recent study by Pew Research, Americans’ reliance on physical currencies is lessening, with roughly 30% admitting to making no purchases with cash during a typical week. While this might not come as a shock to anyone, especially long-time advocates of going cashless, this trend is indicative of a larger movement, which is that digital payment methods are shaping the future of customer experiences and commerce overall.

We’ve seen a radical shift in how businesses are adapting to what their customers are demanding—from both a payments and customer experience perspective. Business-to-consumer (B2C) companies like the Amazons and Ubers of the world played a part in leading this change by making the payment experience as frictionless and efficient as possible and putting their customers in the driver’s seat.

Unfortunately, the response from the business-to-business (B2B) community has been less proactive. This is especially true when segmenting by business function and narrowing in on accounting and finance teams. Many organizations haven’t yet streamlined their billing process and when attempting to, failed to address the core pain their customers are experiencing. 

Those companies that have taken the first step and automated their AR process are better positioned than most, though a high degree of friction in the payment experience still exists, and it’s high-time B2B entities recognize this. To address the root cause of common hurdles to effective accounts receivable management, businesses need to think holistically about their AR—and it starts with the customer.

With that in mind, here are four steps you can take to reinvent your accounts receivable process and enhance your customer experience. In doing so, you’ll not only provide a more integrated and enjoyable payment experience but also get paid faster and drive higher retention rates and sales growth.

Cha-ching.

Step 1: Let your customers pay how they want

A 2020 survey into B2B payment behavior revealed a massive increase in late payments across North America. In fact, 43% of the total value of issued invoices was unpaid by the due date, which is a sharp increase from 25% the year before.

While much of this delay can be attributed to—either directly or indirectly—COVID-19, a more deserving culprit is the lack of viable payment methods available to customers. The pandemic won’t be permanent, but its impact on how consumers and businesses make purchases will be.

By providing customers with a diverse suite of payment options—ACH or credit card for instance—accounts receivable leaders can directly influence their likelihood of being paid on-time or even early. The smoother the payment experience—the less barriers and hoops a customer is forced to jump through—the easier it will be to pay, and the happier they’ll be to do so.

More than ever cash preservation is a key priority for CFOs, and accounts receivable is increasingly becoming an important lever for this. And, with COVID-19 disrupting daily business operations and it being harder than ever to forecast cash flow, CFOs are looking to build a bigger liquidity buffer. By removing obstacles to payment and letting customers pay the way they want, AR teams can speed up the order-to-cash cycle and accelerate working capital.

Step 2: Connect accounts receivable and accounts payable systems

Another step in further enhancing accounts receivable through customer experience is to establish digital connectors between systems at both ends of the transaction—your accounts receivable system and your customer’s accounts payable system. This ensures direct and seamless communication among systems, helping your AR to evolve from a system of record, to a system of engagement and insight.

Traditional accounts receivable technology is often supplier-controlled, reliant on email-based communication, and targets back-office efficiencies. Modern AR systems focus instead on connecting buyers and suppliers to provide exceptional customer experiences, heightened visibility into invoices—past, present, and future—and payments, and personalized in-platform communication. These systems are also data-driven and provide customers with the self-service tools they need to manage their accounts.

Keep in mind, whatever insights can be gleaned as a result of this integration must be accessible by suppliers and buyers. It’s vital both parties are able to reap the benefits of shared data and use it to make strategic decisions. When all customer information and activity—conversations, payments, disputes, etc.—is aggregated in a centralized repository that AR and AP teams have unfettered access to, there is significant reduction in payment friction.

How companies collaborate and engage with their customers has a significant impact on accounts receivable. To learn more about why a focus on the customer is necessary to reinventing your AR processes, download this complimentary report from The Hackett Group.

Step 3: Make end-to-end data accessibility and transparency a priority

The accounts receivable process has traditionally been one-sided. Even modern AR systems tend to favor the supplier and fail to provide value to customers—often resulting in too few customers adopting these payment portals and preventing the critical user mass needed to see an impact.

As mentioned earlier, suppliers have a lot to gain from digitizing their customers’ payment experience, but like everything we’ve discussed so far, the customer’s needs must be prioritized.

Providing customers with greater visibility into their accounts means they have a better idea of their payments owed, outstanding credits, deductions and other charges—meaning fewer back and forth emails and phone calls with you. It also means you and your buyers can save time, leverage payments terms, personalize and automate collections outreach, and assess the true value of your relationships.

Unfortunately, customer buy-in and adoption rates for accounts receivable solutions tend to be low. A key reason for this is that visibility into amounts owing, payments and data is lacking in existing billing and payment processes. That central repository we mentioned earlier is the catalyst for helping customers gain visibility and insight into their accounts. When data is accessible by all and considered truthful by all, suppliers can secure customer buy-in, leading to higher levels of adoption.

Low customer adoption rates frequently prevent businesses from realizing efficiencies and benefits from new systems. If your customers don’t get value from using your solution, they won’t use it.

Step 4: Focus on communication and collaboration between buyers and sellers

The most important facet of improving the customer experience within accounts receivable is focusing on communication and collaboration.

Much of what makes B2C payment experiences so human and uncomplicated, is the open dialogue that ensues across the entire journey. Buyers can comment on products or services, easily connect with suppliers, and in many ecommerce instances, chat directly with subject-matter-experts in real-time to discuss concerns and resolve disputes.

To bring this phenomenon into B2B payment experiences, you’ll want to leverage a solution that enables two-way, completely trackable communication, and actively encourages suppliers and buyers to engage and interact with one another.

By centralizing communications in one place—where suppliers can simplify and enable online discussions with customers about their payments—collections efforts and dispute resolution can be sped up exponentially and, in some cases, entirely circumvented.

Beyond disputes, enhanced communication and collaboration between buyers and sellers means streamlining and optimizing that front-office experience where interactions occur. There’s a positive correlation between continuous, open communication and customer sentiment, which almost always results in you getting paid faster.

Many collections professionals still rely on outdated communication channels—think emails, phone calls, and dunning letters. These approaches are highly manual and aren’t a good use of your resources. To address customers’ concerns, enhance their purchasing experience, and free up your employees to perform more meaningful tasks, look for accounts receivable software that offers in-platform communication.

The experience of making a B2B transaction doesn’t need to be wholly different to its B2C counterpart. The lack of ‘consumer’ in the title is not reason enough to forget that people are integral elements in the purchasing experience. For B2B companies, it’s time to account for and adapt to changing buyer expectations and realize that billing and payments are essential parts of the customer experience.

By providing diverse payment options, connecting AR and AP systems, making data accessible, and focusing on communication and collaboration, you’ll be able to provide your customers with a better billing and payment experience and ultimately get paid faster. 

How companies collaborate and engage with their customers has a significant impact on accounts receivable. To learn more about why a focus on the customer is necessary to reinventing your AR processes, download this complimentary report from The Hackett Group.

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Jordan Zenko

Jordan Zenko is the Content Marketing Manager at Versapay. A self-proclaimed storyteller, he authors in-depth content that educates and inspires accounts receivable and finance professionals on ways to transform their businesses. Jordan's leap to fintech comes after 5 years in business intelligence and data analytics.