Chris Anderson popularized the term long tail in his book The Long Tail: Why the Future of Business Is Selling Less of More. He described the retailing strategy of selling a large number of different items in relatively small quantities, alongside a fewer popular items in large quantities. Amazon is a good example of this.The long tail notion can be applied to accounts receivable, but more often than not the costs and benefits can be the reverse of Amazon. The courier company chasing after me probably has hundreds of thousands of outstanding accounts receivable with their customers, each representing small amounts of money. Together they add up to a large amount of money, but the cost of chasing after it far exceeds the amount that needs to be collected. Many medium and large companies face a similar dilemma.
For a host of reasons, for most companies, between 45 to 80 percent of all invoices require manual intervention. This is expensive. Often their customers will say they didn’t receive the first invoice, so they will respond to the second. There are many reasons for this, such as the first invoice being lost in the postal mail. Or the pdf invoice that was emailed was routed to the junk folder. When they receive the follow-up invoice, many companies treat this invoice as their first notification and take the typical amount of time to pay the outstanding amount. Your cash flow suffers accordingly.In some cases, your customers may have questions about whether the invoice is appropriate. If they do, payment will be further delayed. They have to gather their arguments as to why the invoice is incorrect, while you gather your supporting evidence as to why the stated amount is what is owed. You will speak on the phone, send emails or even courier documents back and forth. All the while the clock is ticking and you haven’t received your funds. Accounts receivable (AR) automation winds down this accounts receivable treadmill. For example with our AR automation platform, VersaPay ARC, your customers will receive notification of an invoice in any manner you choose. They can log on to the customized web portal that was designed for them and see a full history of all their transactions with you. They can look at back invoices and all the surrounding details, such as when the invoice was issued, when they first looked at the invoice online, how many days they took to pay the invoice, and what payment method was used. All documentation for that invoice is visible online, so you and your customer are looking at the same material. If they have questions, they can go to the self-service portal and answer many of their questions, and when they need to collaborate directly with your AR representatives they can easily do that by looking at a shared view of the transaction history. As a customer of the large courier mentioned above, the ability to view my invoice, open a dispute and settle the payment all within an online portal would have greatly improved my customer experience. With the efficiencies of online invoice presentment and payment, the long tail starts working for you instead of against you and helps you to make customers happy.