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Top 5 B2B Payment Hacks for Digitising Your Business in the New Year

Top 5 B2B Payment Hacks for Digitising Your Business in the New Year

Digitization is one of the priorities for businesses in today’s times, and why shouldn’t it be? The trend of digitization isn’t just about embracing cutting-edge technology. It’s also proving to be more effective for businesses that want to improve productivity and efficiency. In terms of payments, more and more companies are turning to digital payments because of the following benefits:

  • Digital payments offer more security as gateways armed with various security features that make digital transactions safe to process.
  • B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
  • It’s easy to track digital transactions as payment details are safely stored in easy-to-access databases – reducing confusion and ambiguity.
  • There are numerous digital payment options available now, and offering all of them to customers can result in faster payments and improved cash flow.
  • Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.

So, now that you’re aware of the benefits of payment digitization, let’s get into the top 5 B2B payments hacks that will allow you to digitize your business in 2022.

1. Automate AP and AR processes.

There was once a time when businesses used to rely on manual accounts receivable (AR) and accounts payable (AP) processes. However, manual processes are inefficient, especially when compared to automated AR processes. Today, slowly and steadily, businesses are embracing AR automation. The automation of AR processes leads to a decrease in the time necessary for following up on overdue payments. Most B2B companies are automating AR processes for accelerating operations and managing their cash flows more efficiently.

Letting go of legacy processes like physical signatures and paper checks can be hard for AP processes. However, these processes add to the workload of AP teams and lead to lags in payments. Through AP automation, businesses can accelerate payment timelines and make and deliver invoices rapidly. Going digital can increase the likelihood of your business getting paid on time and improve customer experience regarding transactions.

SMBs are turning to digitization, but the transition is quite challenging. According to a survey, the invoices of more than 60% of SMBs feature late payments. The same study also revealed that 16% of SMBs report receiving late payments by over a month. To improve these statistics, more and more SMBs are turning to AR automation tools that can seamlessly sync with their existing ERPs (ERPs such as MYOB, XERO, Acumatica, Netsuite and Sage 300)

2. Reduce reliance on legacy processes such as paper cheques

Paper checks and other manual legacy processes played essential roles for businesses in the past. However, due to the inefficiencies of these processes, their popularity has suffered over the last two decades. In 2022, the trend continued, with commercial cheques dipping even further than before. However, despite their dwindling popularity, 91% of the leaders in the fintech sector revealed a startling fact – organizations are still being paid with cheques by customers.

This startling fact has a lot to do with the reluctance or difficulties businesses face to move away from legacy systems and operations that are complex and unfriendly. However, since the emergence of COVID-19 as a pandemic, many reluctant companies have had no option but to switch to electronic transactions and real-time payments. This switch has allowed these businesses to survive during the pandemic. Not making the switch may have led to disaster at a time when the economic upheaval caused by the pandemic has been immense.

In 2020, a study conducted by Mastercard revealed that 68% of SMBs lowered their use of paper checks and cash because they had to. The reason was simple – the deposits were time-consuming. The AFP 2020 Survey reported that almost 60% of practitioners would want to shift from cheques to digital B2B payments because of the benefits involved.

3. Switch to smart payments

Electronic payments are attractive for several reasons. However, despite the apparent advantages they offer over traditional payment methods, many businesses hesitate to make a move. This hesitancy stems from complications from switching to payment methods like automated clearing houses or ACH. Most complications involve the separate traversal of remittance information such as amounts, payment methods, and invoice numbers.

Due to the separate traversal of this information, suppliers can’t immediately view the charges associated. Most suppliers are reliant on accounts receivable specialists. Even for the specialists, it’s a hard job to match the payments with the correct invoices, as they have to undertake the matching process manually.

Thankfully, ‘smart’ payments can do away with these complications. Smart payments are a result of the emergence of remote and contactless payments. ‘Smart’ payments, can increase the volume of electronic payments, and the most significant advantage of this payment system is that it doesn’t add to the manual workload. Simply put, when money changes hands under smart payments, the data also changes hands simultaneously, and the money is applied automatically to the right invoice.

Let’s take a look at some more benefits that smart payments have to offer:

  • Smart payments are entirely automated, and they eliminate the need to set payment reminders.
  • Transactions are rapid, and there is no requirement for cash handling.
  • Smart payments are among the safest and secure payment methods in today’s times.
  • There are no extra processing costs involved for businesses and their clients.
  • Adopting smart payments delivers an improved customer experience.
  • Smart payments also lead to a significant improvement in operational efficiency.

4. Integrate AI and blockchain

In recent years, the e-commerce industry has seen the introduction of machine learning and artificial intelligence (AI). In 2022 and beyond, the B2B payments sector is also set to welcome them. AI technologies can be incredibly effective in accelerating processes associated with payments. These technologies can also reduce the workload of AP teams. Machine learning algorithms can also provide additional functions, such as assessing accounting data, suggestions for speeding up the processes related to payments, and learning trends.

The B2B payments sector is also witnessing the emergence of blockchain – the technology powering cryptocurrencies. If you’re new to blockchain, here’s what it means – it’s a distributed database shared among a computer network’s nodes. Information in a blockchain is stored in a digital format electronically. Blockchains maintain records of transactions that are decentralized and secure. The following are some of the advantages that blockchain payment systems would bring to B2B businesses:

Increased transaction safety: Blockchain transactions are significantly faster than conventional centralized system-driven transactions. As a result, hackers have very little time intervening in the transactions and stealing either money or transactional information. Also, every blockchain journal entry becomes irrefutable post-verification, and no one can change the entries. Blockchain transactions also involve the use of two security keys.

Fewer intermediaries: Major intermediaries often dictate the terms of financial transactions. For example, a transaction under the conventional system would involve intermediaries like the issuer, the exchange, the payment gateway, and the acquirer. All the intermediaries charge separately for their services, which increases transaction costs and makes the transaction time-consuming. However, blockchain-based payment systems don’t require intermediaries. When such a system is employed, buyers and sellers can participate in direct fund transfers without bearing intermediary costs.

High-speed cross border transactions: Cross border transactions typically take 1 – 5 days under the conventional financial system. However, blockchain-driven cross border transactions only take a few hours. In the future, we can expect even greater time savings.

5. Support as many payment methods as possible

The increasing number of payment methods leads to different businesses having different preferences. While some companies may prefer virtual credit card payments, others may be more inclined to buy now, pay later options. That’s why your business needs to support as many payment methods as possible. Flexibility in terms of payment will allow you to do business quickly, leading to greater customer retention and loyalty.

Additionally, innovative payment methods drive transaction costs down, and transaction speeds up. The best thing is that the costs are reduced for your customers. Sure, your business can still survive for the time being based on old-school payment methods. However, when you consider the fact that an ever-increasing number of companies are opting for B2B payments automation options, you’ve got to make the transition sooner or later.

So, there you have it – the top 5 B2B payment hacks that will allow your business to embrace digitization and all its benefits in not just 2022 but the years ahead as well. Of course, putting these hacks into practice will take you some time, and most likely, you won’t be able to do everything at once. However, it’s crucial that you start adopting these hacks to make business smoother for you and your clients.

Modernizing B2B Payments For the New Normal

Modernizing B2B Payments For the New Normal

The increasing importance of digital payments

The past decade has seen a marked proliferation of e-commerce. This is leading business-to-business (B2B) payment merchants to strengthen their digital payments infrastructure. Over the past couple of years, the world has struggled to get to grips with the COVID-19 pandemic, as a consequence, a lot has changed even for business-to-consumer (B2C) companies, who are now bracing for the transition to digital payments.

According to a study conducted by McKinsey & Co., 66 per cent of participants say that digital sales options for customers have become more important during the pandemic, compared to traditional sales options. Also, it revealed that the trend of omnichannel sales methods supersedes that of traditional methods after the pandemic.

So, it becomes imperative for B2B companies to address these changes in customer expectations triggered by the pandemic and the collective transition to digital payments, characterized by automation. B2B buyers now look for variety, ease, and convenience while transacting—something that B2B payment automation can provide. With the improvement in payment options for B2B buyers come the benefits of increased customer satisfaction and transaction conversions, ultimately leading to business success.

The focal points for B2B merchants

Here’s how B2B merchants can keep pace with the changing payment landscape:

1. Offering multiple payment options

Now, B2B merchants should look for ways to recreate the B2C payment experience for their customers. B2B buyers look for ease while transacting, and companies that offer multiple payment options can provide them with instant gratification. Contactless B2C digital payments can also be done in the B2B landscape in real-time by adding features like wire transfer, credit card, and digital wallets.

2. Digitize B2B accounts receivables

B2B companies can stay abreast of the changing payment landscape by digitizing their accounts receivables. This can be achieved using automated onboarding, which can save them time and money by eliminating time-consuming credit decisions, emails forms, PDF invoices, and manual bank reconciliations. B2B payment automation can provide buyers with consolidated periodic invoices and give companies more control over their cash flow.

3. Providing instant credit

B2B customers show a preference to transact more when they hold a credit line and have forged a financial relationship with the company. For getting a leg up over competitors, B2B companies can offer their customers the ability to get instant credit while making a purchase. Such a strategy can help companies retain their customers and win their loyalty.

4. Beefing up security

B2B business identity theft and fraud have become increasingly common as the customer acquisition process occurs online. As such, security is something B2B companies should pay attention to. They need to leverage advanced fraud detection software and processes to protect themselves and their customers. A well-developed security solution can definitely fraud-proof the payment infrastructure and build risk-aversion abilities.

In Summary

B2B payment landscape is becoming increasingly digitized, and companies will have to adapt to these changes. In order to keep up, B2B companies need to review and evaluate their existing payment system to use technology to streamline areas where it’s necessary. Creating and adopting an omnichannel payment strategy can greatly help B2B companies get an edge over their competitors.
At ezyCollect, we understand the importance of modernizing your payments in order to keep up with the rapidly changing digital world. We provide Accounts Receivables Automation software that helps businesses automate and digitize their payments. Our solution is designed to help businesses get paid faster and easier, so they can focus on what they do best.

Contact us today to learn more about how we can help you streamline your B2B payments, get your business paid faster and keep up with the competition

How to Transform Your B2B Business With an Order 2 Cash Platform

How to Transform Your B2B Business With an Order 2 Cash Platform

The cash flow in a business is a critical factor in deciding its success. A steady cash flow can only be obtained if your order to cash cycle is optimized. For B2B businesses, in particular, ensuring that all account receivables are collected on time is essential to increase liquidity. But often, businesses do not pay enough attention to their order 2 cash cycles until they hit a roadblock.

So what is the order 2 cash cycle, why is it important to B2B companies and how can an order to cash platform help? We have all the answers for you, so read on.

What is the order-2-cash cycle?

The order 2 cash cycle is the collection of activities involved in making a sale, starting with receiving an order right up to the point of payment and invoice receipt. Though the process sounds relatively simple, in reality, it is a lot more complex. Companies often focus all their attention on securing an order from a client, but B2B payments are not given the attention they deserve. This makes the order to cash cycle longer for the business, delays revenue generation, and impacts the overall financial performance of the business.

The usual stages of an order-to-cash cycle include the following-

  • Order entry – Entering the order, collecting and storing all related data
  • Credit – Analysis of customer’s portfolio and risk assessment before deciding on a credit limit
  • Order fulfilment/ returns – Checking product availability, confirming the order, dispatch, tracking delivery, and managing returns when necessary.
  • Order billing – Calculation and verification of bill
  • Collection – Accounts receivables collection, cash generation, and reporting, and bad debt write-offs
  • Cash application – Cash posting, deductions management, account reconciliation, and discrepancy resolution
  • Dispute management – Third-party complaints and customer disputes management

As evident from the stages listed above, the order to cash cycle does not end with the payment receipt. It involves certain critical activities even after the accounts are reconciled.

The order to cash cycle needs to be optimized, but it is hard to find an end-to-end solution that can improve this process. But businesses today are learning to leverage technology in this area too. With a host of integrated software solutions, companies are learning to improve the various activities involved in the order 2 cash process.

Why is the Order-2-Cash cycle important to B2B companies?

Unlike marketing or sales, the order 2 cash process does not operate on the very surface and is more of a background process, and still has a huge impact on the business’s performance. Not just that, it can impact a business’s customer relations too. An optimized order to cash process improves the customer’s journey from the moment the order is placed. As the process involves every function after this point, including order confirmation, dispatch, and even returns, a well-managed O2C cycle ensures a hassle-free experience for customers.

The complete process from order placement to invoice receipt involves several departments in a company, including marketing, pricing, sales, finance, warehousing, collections and more, depending on how the business functions. This expansiveness of the order to cash process is what makes it so complicated. With so many functions and departments involved, making changes to the process becomes all the more challenging.

The order to cash process affects various operations throughout an organization, from supply chain management and logistics to inventory management and more. An optimized order to cash process means that all of these different operations involved are working at an optimum level. On the contrary, a bottleneck in any one of these business areas will affect the entire order to cash process.

The O2C process is also important because it determines the cash flow in the business through invoicing and accounts receivable functions. Any significant delays in invoicing or collection can affect other areas of your business’s finances like accounts payable, salaries, business loans, probable acquisitions, or any other activity that relies on liquidity. This is one of the major reasons why optimizing the order 2 cash cycle is essential.

Despite the dire need for a digital solution that can optimize the order 2 cash cycle, it is not possible to have an off-the-shelf software solution that can handle the entire process as one. This is because the process can be dynamic. There is no one-size-fits-all approach here, as the O2C process can vary for different industries, products, companies, locations, or customer segments. The process can also keep varying within the same company as well. So a comprehensive solution is not possible.

But businesses today are building their own order to cash platforms that unite all the related functions through integrated applications and technologies.

What is an order to cash platform?

An order-to-cash platform is a technological solution that lets B2B businesses bring all the functions involved in the O2C cycle together by seamlessly integrating various applications across various functions. The applications can readily exchange data to ensure that the process runs smoothly from end to end. Payments are collected faster and disputes resolved quickly so that customers can find a reason to remain loyal to the brand.

The best way to ensure that the order 2 cash process is optimized is by making sure that the related functions can exchange information and data with ease for every transaction. For achieving this, technology plays a very crucial role. Interconnected applications that allow different functions to have access to real-time data increase productivity in the order to cash process. Technology also provides other perks like digital invoicing capabilities or accounts receivable automation.

An organization that runs on a platform-based structure can brave these challenges by building platforms that utilize the power of both the human workforce and the technological tools. They combine modular data and technology architecture to create scalable solutions that are handled by agile front-end teams.

An efficient and futuristic O2C platform should have a front-end team, an underlying support team, and a modular infrastructure of applications and tools. This entire ecosystem needs to be dynamic to instantly pivot to meet customers’ changing demands and the organization’s.

Front-end team

The front-end team in an O2C platform is a multi-functional team that directly deals with the customers to ensure seamless orders and payments while delivering a frictionless experience for the customer.

Support team

Supporting the front-end team is a well-defined structure of agile teams that work on the back-end using digital tools and applications and effectively manage end-to-end processes to deliver the order to cash services.

Modular infrastructure

At the base of it all is the technological infrastructure that completes the ecosystem. The tools and applications are necessary to manage all the different functions related to the order 2 cash cycle. Examples of such applications and capabilities include CRM software, customer service platforms, ar automation platforms, automated workflows, among other things.

How can an order-to-cash platform help your business?

A comprehensive order to cash platform can help your business in more than one way. Right from analyzing data, increasing sales, and providing automated transparency to customers at the time of invoicing to payments, the O2C platform can bring numerous benefits. An O2C platform can provide a unified processing capability that helps deliver faster turnaround times for customers and the front-end teams.

A unified O2C platform also ensures data consistency and accuracy across the various functions. The flexible modular architecture of individual applications and platforms enables repeatable processes. It also ensures that you can add new applications and platforms to the ecosystem as the need arises.

Key benefits of an order-to-cash platform for businesses

An order-to-cash platform can address many of the pain points that a business faces in optimizing its order 2 cash cycle.

  • Client facing platforms help deliver value to interactions with customers and help enhance the customer’s buying experience.
  • AI and machine learning-powered platforms help identify common challenges faced in the O2C process by detecting patterns
  • Modular data and technology architecture helps deploy new applications easily as and when required
  • A platform that allows for easy integration with all the related applications can reduce the complexity of the O2C process and help you respond to customer needs better
  • Data moves in both directions among interconnected applications, enriching the connections between various functions and departments. Such integration of data streams creates greater transparency in the whole process for all users
  • Workflow management is made easier through automation and accessibility to data
  • Integration to various accounting software like MYOB, SAP, Pronto, Attache, etc. can bring together all your financial operations for greater visibility into the process
  • An effective O2C platform can also help increase employee satisfaction by reducing the amount of repetitive work through automation and minimizing complexity

How to implement an order to cash platform in your business

Now that we know why a cash 2 order platform is beneficial to your business, it is also important to know how you can implement one to manage your B2B payments and the O2C process overall. Like all other initiatives, you take in business, deploying an O2C platform for optimizing your order 2 cash cycle requires measurable goals before anything else. Having your goals set will give direction to your efforts.

Setting Goals

For most organizations hoping to optimize their O2C cycle, there are three measurable goals in general.

  • Reducing the cost per order – This goal is usually measured in terms of the labour cost involved in fulfilling each order or the number of orders fulfilled per employee. It may also be measured in terms of the share of automated transactions. In simple terms, the lower the cost of labor or the greater the number of orders handled by each employee, the better. Similarly, if the share of automated transactions is greater, the process is considered to be heading towards optimization.
  • Reducing the number of days’ sales outstanding – Process optimization, in almost every business area, means minimizing the processing time. In this case, the aim is to minimize the outstanding sales. The shorter the duration from order placement to completion, including account reconciliation and dispute resolution, the more efficient is your O2C process. Capabilities like e-invoicing, accounts receivable automation, automated workflows, automated cash application, etc., can help reduce the cycle time.
  • Increasing customer satisfaction – Most of the optimization efforts of a business are focused on enhancing the customer experience and increasing customer satisfaction. The O2C process is no different in this regard. By minimizing errors in invoicing, delivery or pricing, and closing deals faster, customer satisfaction can get a boost.

Platform design

When designing your order to cash platform, three essential characteristics can ensure efficiency and effectiveness. These three characteristics are –

Easy integration

The platform’s architecture has to be such that it easily integrates with your existing internal applications, external applications, and any new application you may need to add in the future. Integration is the key to success in an O2C platform. An effective order to cash platform allows both internal applications of the organization and applications used by third parties to run together seamlessly.

This ensures that the ecosystem created is barrierless and that there is free, unrestricted data flow wherever necessary.

Customer-focused solution

Introducing customer-centric solutions can make your order to cash platform far more effective. Leveraging technology to offer customer-facing solutions, like self-service capabilities, order tracking, payment requirements, and such can help improve the customer experience further. It can also reduce the order 2 cash cycle time as the manual intervention required is minimal.

Distributed responsibility

The O2C platform cannot be the responsibility of a single team or a single department. As the process itself involves multiple functions throughout the organization, the responsibility has to be shared among various teams. So any time an issue arises, it should be clear who is responsible for tackling it. Also, there has to be a process owner to distribute responsibilities across functions. This will ensure that the platform is not fragmented and there is no scope for confusion or mistakes, irrespective of the volume of client interactions on the O2C platform.

Challenges

In implementing an order-to cash platform in your business, you may face a few common challenges. Some of the most likely challenges that almost every organization faces in its efforts to optimize the order 2 cash cycle are –

  • Getting buy-in from all the relevant functions and top executives. An O2C process owner can bring all the functions together to agree to the initiative unanimously.
  • Creating end-to-end solutions that create tangible value for all. All business functions and stakeholders involved need to benefit equally from the solution.
  • Convincing decision-makers to invest in the initiative, as the ROI is certain but slow. The gains from this initiative are only seen over time, but the revenues generated once the ROI is realized are usually ten times greater than the investment.
  • Training employees for the disruption that the O2C platform will bring about. Organizations that take on change management initiatives before implementing O2C platforms are better positioned to handle the transformation.

Conclusion

Receiving B2B payments on time is only one of the many advantages of having an effective O2C platform. Optimizing the order 2 cash cycle in a business can bring better cash flows, increase process transparency, and enhance customer and employee experiences. With new insights from the integrated data across applications, more informed decisions can be made in sales and other areas of the business. If done right, an order to cash platform can be an invaluable addition to your business.

The Order-to-Cash Cycle: A Guide for Mid Market Businesses

The Order-to-Cash Cycle: A Guide for Mid Market Businesses

What Order-to-Cash does for accounting systems

Commonly known as O2C, the Order-to-Cash cycle helps your business accept and complete orders. The process manages your business’s order processing and accounting system from end to end. Though it may seem like the O2C cycle ends when an order is completed, several important steps follow it. Not only does O2C record significant payment details, but it also helps identify ways to optimise the process further.

It covers several functions that handle your accounting systems with ease and accuracy.

The value of optimising the O2C cycle

The O2C cycle impacts many aspects of a business, making its offerings beneficial to companies of all sizes. From sales analysis to enhancing a company’s B2B payments process, this cycle covers a variety of features that help manage:

  • Customer relationships
  • Cash flow
  • Order fulfillment timescales
  • Credit replenishment/sales potential
  • Working capital costs
  • Business health insights

The seven steps of O2C

  1. Credit approval
  2. Order acceptance
  3. Order fulfillment
  4. Customer invoicing
  5. Payment process
  6. Cash application
  7. Collections

Step 1: Credit approval

B2B payments involve the purchase of goods and services through credit. Here, the process requires the business to approve the supplier’s credit application. Approval for credit requests and credit limits for each customer is also taken into consideration. To know how much credit to lend a customer, credit management professionals provide supporting customer credit reports, also known as trade reports.

The credit approval step also analyses the financial situation of the supplier. It takes into consideration various necessary details ranging from their cash flow to outstanding receivables. Once this is done, a set limit on customer credit is placed.

Credit approval professionals work in step with the sales team to set the payment terms of the order. These terms include due dates for payments, early payment discounts, and penalties for late payments.

In addition, the credit professional also takes care of minimising risk while maximising sales volumes. Being a high-stakes discipline, they also face the consequence of incurring losses and cash flow problems by extending credit improperly.

Step 2: Order acceptance

Sales teams connect with customers to share information on what services are available. Based on customer interest, sales professionals negotiate with customers on the order’s price, quality, delivery, and payment terms.

Ensuring the suppliers fulfill the terms of the order is a crucial part of the order acceptance step.

Step 3: Order fulfillment

The step involves locating, preparing, and shipping the order. During the fulfillment stage, ensuring the date and location details of the shipment is of utmost importance. Here’s where automation plays a key role in streamlining the fulfillment process. Updating sales inventory counts on time is key to avoiding accepting new orders before the previous ones are completed.

If an unavailable item is accidentally purchased, the same needs to be recorded in real-time to avoid further issues in billing. Automating this process allows businesses to manage this step with ease and efficiency. Without involving manual assistance, automated services can easily fetch necessary order details and assure no bottlenecks in delivery occur.

Similarly, all services promised in the order are duly followed from end to end.

Step 4: Customer invoicing 

After delivery, accounts receivable professionals invoice the customer for the amount due. The invoice is either shared physically or electronically, depending on the order. Currently, the use of electronic billing via email has become more popular, overtaking older systems of faxing and telephonic billing.

Generating and delivering invoices to customers is crucial and time-sensitive work. The sooner a customer receives and clears a payment, the sooner the business stabilises its cash flow.

Step 5: Payment process 

Customers clear payments in a variety of ways – ranging from paper checks to virtual credit cards. Here, the supplier must decide which forms of payment they are willing to accept. The supplier then sets up processes to increase the efficiency of receiving payments through these select channels.

To prevent incurring high costs associated with each payment, businesses need to manage their customer payment preferences with their own interests.

Step 6: Cash application 

Post payments, the money is then applied to specific accounts. The process acknowledges the receipt of cash and marks the invoice as paid. Though seemingly simple, this step is a bit more complex than it appears.

As companies typically handle large quantities of payments on a monthly basis, the need to categorise them is high. Cash application specialists are responsible for matching these receipts with their respective invoices. Remittance advice assists this process as it comes inclusive with certain forms of payment.

Remittance is also sent through email or telephone, but this further complicates accounting systems and leads to inaccuracy. When certain payments are delayed or cover multiple invoices, further complications arise and require advanced solutions to ensure accuracy.

Clearing payments on time enables businesses to regain their cash flow for business operations and, in turn, replenishes credit limits for customers.

Step 7: Collections

An account becomes delinquent if it does not clear its payments by the established due date. At this stage, the account transfers over to collections. The collectors are in charge of contacting and reminding defaulters to clear their dues.

In certain cases, customers intentionally delay clearing payments to better manage their cash flow or business credit scores. Collectors will get in touch with defaulting customers to understand and resolve their payment concerns to avoid the same.

Now that you understand the processes in the O2C cycle, let’s look at ways you can optimise it for your business.

Best practices in O2C 

Knowing how to enhance the Order 2 Cash process can give your business an edge over companies that do not. Reducing cost is only one aspect of this practice, the other benefits you stand to gain from investing in O2C solutions are numerous, and we’ve listed a few below.

A logical starting point for invoicing and payment acceptance 

Several value-added O2C strategies are applicable to the payment process. Some of which are intelligent invoice design and Electronic Invoice Presentment and Payment (EIPP). To roll out timely payments, customers need to understand how to use these invoices. Making use of integrated payment acceptance solutions helps speed up the invoicing process for both customers and suppliers.

Older methods like paper invoicing cannot be optimised efficiently due to the limitations of old school systems, however the good news is that most businesses are on electronic invoicing. Similarly, modern invoicing systems require multiple steps for delivery and payment, which can be time-consuming. Electronic invoicing significantly eliminates the delivery time and helps speed up cash flow between the customer and company.

Automation of cash application or payment reconciliation

The O2C cycle stays incomplete until the cash due is properly allocated to a specific record system. For a company to receive revenue through these payments, there has to be an automatic application of cash. Any delays in cash application result in a high days sales outstanding (DSO) and a low business credit score. DSO occurs when companies do not receive a payment well past their invoice scheduling date.

Since customers clear payments in a variety of ways, cash application becomes all the more challenging. Certain payment methods involve manual keying, which can be time-consuming and less efficient than electronic payment options. In some cases, even electronic payments can disengage from their respective invoice, requiring additional time and resources to find a match. Handling such instances without accounts receivables automation can be challenging.

Realistically, no matter how hard a business strives to reach a 100 percent match rate, there will always be loopholes and exceptions. Automating the cash application process not only cuts costs but also reduces DSO. With the help of technology, sellers can automatically transact data from any source and match it with open receivables. Whether customers clear payments by cheque or electronic methods, this process improves overall hit rates and minimises their time.

Implementing such tools helps businesses work through exceptions and can help post payments on time. Being resource-friendly, it also helps get the job done without depending on manual intervention.

Increased brand loyalty through better customer experiences

O2C systems provide both customers and call center staff with secure access to research and print invoices and settlements. Some systems also let customers manage their own invoices with easily available web tools. In addition, O2C enables businesses to free up their resources for other tasks, allowing them to focus on customer experience and other vital operations.

It also helps identify possible areas that could use further optimisation to boost customer experience. Knowing which areas to customise for customers helps a business deliver service delight, which develops brand loyalty.

Conclusion

The strategic potential that Order-to-Cash can offer business is endless. The right approach creates an opportunity to improve your business’s cash flow and boost customer satisfaction. It also has the potential to help you achieve your goals for corporate sustainability while significantly reducing costs in the process.

Finding the right solutions for your business can be tricky and involve a bit of trial and error. But an important factor to note during the evaluation process is the flexibility these solutions can provide you with. You need a system that can accommodate strategic invoicing based on your customers’ needs. What’s more, is the ability of the system to manage both intelligent cash applications and electronic adoption.

These key capabilities will help suppliers achieve the right balance between buyer satisfaction and low DSO.

4 Steps For Optimising B2B Payments

4 Steps For Optimising B2B Payments

It is almost the end of the year, and while in some ways 2020 and 2021 sort of merge together in our public memory, the pandemic and it’s after-effects have accelerated the digital trend in b2b and b2c. While many were first hesitant to embrace the lifestyle that digitisation provided, being digital-first is now an indispensable part of business. Upgrading to the latest technology is no longer a want but a necessity. As a result, digital transformation is now more than a buzzword in most industries. While the industrial sector embraced it years ago, the service sector is also increasingly becoming more digitalised. One of the areas that have recently undergone massive digital transformation is payments.

The customer is always right

Take a moment to see how we pay for our clothing, french fries, or a new coffee table? Today, a large number of people make their payments over the internet, especially with the explosive growth of online shopping and D2C brands.

As most retail customers demand user-friendly, secure, and fast payment options, traditional banks and digital experts have focussed their efforts on developing processes to meet the needs of their customers. While significant steps have been taken to automate traditional banking procedures, little has been done to improve business-to-business payment experiences.

Business-to-customer (B2C) transactions are often believed to have reached historic heights, particularly during the pandemic. The truth is that they are still minuscule when compared to business-to-business (B2B) transactions. As per a UNCTAD report, in 2019, B2C e-commerce was estimated to be around USD 4.9 trillion. On the contrary, global B2B e-commerce was valued at USD 21.8 trillion in the same year. This provides a clear estimate of the potential in B2B payments and automation. Therefore, many new players have begun to work on ideas to develop and modernise payments for businesses.

Room for improvement

Before diving into how B2B payments can be automated, it is important to understand what sets them apart from B2C transactions. The following are some critical factors that have a significant impact on B2B payments.

1. The Number of People Involved in Decision Making

In a business firm, no payment decision is ever made by a single person alone. Every business transaction directly or indirectly has an effect on various stakeholders like customers, shareholders, managers, employees, and so on. Therefore, on average, five to seven stakeholders are involved when any payment-related decision has to be made.

2. Delays

When many people participate in the decision-making process, inevitably, there would be a delay in reaching a final decision. Since B2B payments typically include the opinion of 5 or more stakeholders, decision-making takes a longer time. In fact, delays in the payment cycle constitute a big problem for almost 30% of middle-market companies.

3. Volume

Unlike retail customers who purchase small quantities, businesses tend to buy in bulk from wholesalers. Buying in bulk not only allows them to get trade discounts but also enables them to sell large quantities to customers. Since their purchases are in huge quantities, the transactions are also worth several thousand.

4Frequency

Customers that shop in stores usually do it when they have a specific need. This could be a one-time purchase from a certain store over several months. Businesses, on the other hand, must always ensure that they have enough stock to offer their customers. That is why they make regular and recurring purchases, as they also prefer to build long-term healthy relations with their sellers.

5. Industry

The nature of B2B transactions, as well as the terms and circumstances that apply to them, differ from industry to industry. Each industry has its own set of laws, regulations, and payment requirements. Every contract is unique, and the delivery method, quality control procedure, invoicing, payment, and other terms depend on the industry’s generally accepted norms. As a result, B2B payments are far more complicated than B2C payments.

Despite these differences, the demand for faster and more efficient processes has grown in the B2B sector as well. Now, business owners and entrepreneurs also desire similar payment services that retail customers enjoy already. This would not only save them time and money, but it would also help them enhance their other business operations. As a result, banks and fintech firms are working hard to close the gap and provide useful solutions to the payment issues that businesses face regularly. According to a 2021 Statista report, 34% of companies all around the world have expressed their willingness to switch to fintech solutions.

How to solve the pain points of B2B payments 

To understand how to automate B2B payments, we must first identify the issues that businesses have with the current system. Delays, fraud, manual processing, and visibility are some of the most common problems with B2B payments. As a result, new B2B solutions must address and seek to resolve these difficulties. The following are some of the most important B2B payment trends for 2021.

1. Transition from manual processing to automation

A large number of companies still process payments manually. Manual processing is bound to have errors and may prove to be insecure as well. Moreover, it would take longer to manage all the payments manually. Instead of continuing to process payments inefficiently when done manually, it is better to invest time and resources in more efficient automated processing solutions.

B2B payment automation solves practically all the problems that come with manual processing. It provides more control and visibility over the transactions and, at the same time, saves operating costs and time. Adopting AR automation software, for example, allows a company’s accounts receivables team to automate repetitive and time-consuming processes while increasing their cash flow and collection efficiency. Instead, they can devote their time and energy toward more productive or strategic projects. Similarly, integrating a payment API (Application Programming Interface) with an ERP (Enterprise Resource Planning) software would help the company in managing the payments and sharing banking data in a safe manner. More than anywhere else, electronic transactions are surely a game-changer in B2B payments as they make them more efficient, secure, convenient, fast, and instant. Digital payments give buyers and suppliers various growth prospects by allowing firms to focus their time and resources on more profitable areas.

2. Managing risk through multi-factor authentication

As e-commerce and online transactions are growing, businesses are also increasingly complaining of cyberattacks and payment frauds. One of the ways to solve this problem and provide a platform for more secure payments is Strong Customer Authentication (SCA). It is a requirement of the European Union that was enforced in 2019 and has already been implemented by most member countries. Two-factor and multi-factor authentication are formed on the basis of the use of multiple ways of authentication.

These are:

Knowledge: an element that only the user is aware of.

Possession: use of a device that only the user possesses.

Inherence: something that the user is.

The extra layer provided in the form of multi-factor authentication blocks the access of hackers and scammers to company accounts and thus, protects data and offers secure payments. Apart from these, multi-factor authentication has numerous benefits. Some of them are:

  • It builds customer trust and confidence in the business by offering customer security.
  • It offers extra protection to sensitive information that passes through a company. Thus, it reduces the risk of unauthorised access and hacks.
  • Extra security offered by multi-factor authentication reduces the risk of processing fraudulent payments.

3. Overcoming payment delays

As mentioned earlier, payment delays are a major issue that most middle-market businesses have to deal with. According to a study, 44% of B2B SMEs said that late payments seriously hamper their business performance. Such delays in payment not only impact the company’s cash flow but also affect their reputation and relations with clients and suppliers. There could be various reasons for payment delays, such as insufficient funds available at a given point, long payment terms, and outdated payment methods.

Accepting digital payments simplifies, speeds up, and simplifies the process of payment processing. It enables companies to make rapid and error-free payments. Via electronic payments, they can keep track of late payments and also automate payment schedules.

4. Improving visibility

Most businesses do not have end-to-end visibility over their transactions. This means that they can only assume that their incoming payments are on time and their outgoing payments are reaching their destination before prescribed deadlines. Using digital systems, businesses are able to view every payment as it goes through the system. It gives businesses greater predictability and control over cash flow, business relations, and operations.

To summarise, B2B payments can be optimised by automating them. Digital payments provide numerous benefits like better security, faster processing, real-time updates, end-to-end visibility which help businesses provide the right payment experience for customers and also for their internal employees.