CFOs are typically responsible for managing billing, collections, and payments. In this blog, we'll explore how each of these functions can be leveraged to greatly improve the customer experience, and drive massive financial gains.
According to a report by Accenture, 90% of business-to-business (B2B) executives point to Customer Experience (CX) as a critical factor to achieving their strategic priorities. However, only 20% of B2B companies excel at CX, presenting a huge opportunity to capture new revenues by increasing focus on CX and making investments to improve. Conversely, a whopping 80% of B2B companies are at risk if they do nothing, as they will see their revenues bleed away to competitors that make the change.
So you may be wondering what does CX have to do with a CFO and why should the CFO care? Isn’t CX a marketing responsibility that belongs to the CMO? Both are great questions and the answers are simple.
Most CFO’s will tell you that their top priority is to act as a steward of working capital (WC) and to manage inbound and outbound cash flows, ensuring that their company can continue to operate in good standing. Inbound cash flows are revenues that will be driven largely by CX as more and more companies optimize customer experience in order to compete in a competitive marketplace. See where am I going with this? Visionary CFOs planning for the future financial health of their companies should have CX as a top priority.
Now that we have established the relevance of CX to a forward thinking CFO, one might ask how can a CFO affect CX?
While it’s true that much of what we typically think of as CX falls to non-finance functions like Marketing, Sales, and Operations, Finance actually owns many of the post-sale touch points with customers through the Accounts Receivable (AR) invoice-to-cash process, including billing, collections and payments.
All three of these areas are critical milestones in the customer journey that can potentially make or break the relationship and any potential for future revenues. Consider the three scenarios below:
The billing process is often at the top of the list for customer complaints. The delivery process is often archaic, with many companies still sending out more than half of their invoices through snail mail. Invoices get lost or never delivered. The customer files it away and forgets about it. If there are any discrepancies or problems with the invoice, the customer must then figure out how to engage with the customer service or billing folks to resolve the issue. Often this can lead to wasted time, frustration, and ultimately a poor CX. Forward thinking CFO’s understand that billing friction leads to a poor customer experience and want to meet their customers where they already are: online.
“I already paid you!” How often do your collectors hear these words from a customer when reminding them of an overdue invoice? Even once is too much, but it is more common than you may think. The reason for this is that most companies run their collections process using out-of-date spreadsheets that they manually pull down from their ERP systems. The report is old the second after it’s been pulled. There is also always a chance that a payment has been received already but is not reflected in the ERP due to an inefficient cash application process. In either case, without real time data the information can be inaccurate, exposing risk of initiating the collections process on a customer that has already paid.
In your personal life, when was the last time you sent a paper check as payment for your cable bill? Similarly, when was the last time you visited your local branch to pay? At a minimum, you likely do electronic banking and pay through your bank’s web-banking portal. In fact, you may have even signed up to pay the bill automatically through either a credit card or ACH transaction as a convenience option to save yourself some time.
When the business-to-consumer (B2C) electronic payment experience is dead simple and convenient, why do companies still agree to take payments the old fashioned way by check via snail mail? Why is the B2B payment experience so tedious and time consuming?
According to a survey conducted by CRF and NACHA, in 2017 checks made up about 50% of B2B payments, ACH for 32%, credit and debit cards for 11 %, and cash and wire for 8%. Check payments have been declining since 2014, while ACH, cards, cash and wire have all increased. In fact, AR professionals expect ACH payments to make up 45% of the payments received by 2020, while checks are expected to decline to 34%. Are you ready for this shift?
Forward thinking CFO’s understand that expanding payment options to fulfill the customer’s desire to pay electronically through ACH, EFT and/or credit card leads to huge gains from both a financial and a CX perspective.
All 3 of the functions above typically fall under the realm of the CFO, but as you can see each function has a potential for either opportunity or risk to the customer relationship. Any CFO that owns and manages Working Capital should be thinking about CX, especially as it relates to processes under their direct control.
At VersaPay, we help forward thinking CFOs convert AR to cash faster while enabling CX improvements. By digitally transforming their invoice-to-cash process through automation, communication management and self-service capabilities, we help bring a B2C experience to B2B.