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How to Choose the Right Accounts Receivable Automation Software

How to Choose the Right Accounts Receivable Automation Software

There has been a significant shift in the functioning of businesses in recent years. As more and more people started working remotely, the challenges of cash flow management and working capital optimisation have become apparent.

Legacy accounting systems have also become ill-suited for managing business continuity in such a scenario. These systems could not provide accounts receivable teams visibility, transparency, and flexibility for cash management and payment collection. As a result, businesses worldwide have started adopting modernised accounts receivable (AR) processes.

Manually managing accounts receivables is not only labour-intensive but also quite time-consuming. A comprehensive AR automation software will facilitate the digital transformation of your business, so it is crucial to choose wisely. 

In the following sections, we will look into the challenges of completing AR processes manually. We will also provide a step-by-step guide for narrowing down the best AR automation software for your business. 

 

Challenges of Manual AR Collections

Most businesses have an Accounts Receivables policy in place, which lays down the ground rules for payment collections and the process of billing. However, in executing this AR policy, most businesses make mistakes. Small mistakes can lead to overdue invoices, resulting in cash flow bottlenecks that drain the capital needed to grow the business, hire new employees, and buy new equipment.

Here are some of the other challenges of an inefficient manual AR collection process –

1. Cash flow management

Tracking how much money is coming in and out of your business requires analysing cash flow changes which can be time-consuming. Cash flow management involves the following:

  • Tracking and posting payments
  • Management of the payment information
  • Applying cash

It takes considerable effort and time to send invoices and receive payments using manual processes. On top of this, if the customer does not pay on time, the wait time can put additional stress on your budget and cash flow. 

Reconciling payments with a manual AR process is another challenging aspect of cash flow management. Because the payment information comes in different file formats, it must be matched manually with corresponding payments. Your team might have to spend hours synchronising data and reconciling it with outstanding accounts receivable. Even if you hire additional staff for the AR processes, a manual system will always be error-prone and sluggish. 

Adopting an AR automation software is crucial if you want to see efficient reconciliation. AR automation facilitates the automatic sending of invoices on a scheduled date, so you don’t have to worry about forgetting to send invoices on time. It also includes payments automation that automatically reconciles payments and attaches them to the correct invoices.

2. Data Transparency

Another time-consuming task in the Accounts Receivable (AR) process is investigating and resolving disputes around unexpected payments. The manual management of the process makes it all the more difficult. Using an AR automation tool will help you avoid all these issues.

AR automation is always data-based, so internal teams and customers get complete transparency and visibility into the agreed and owed amounts. Thus, the automated platform will essentially work as the single source of truth on information about all open receivables. Minimising errors and avoiding data duplication contribute to the timely resolution of any form of dispute in collections.

3. Credit management

As a business, you would always want to ensure that you extend credit to customers who are diligent with their payments. However, evaluating the right people for credit extension requires visibility into their behaviours and payment history. Determining the creditworthiness of individuals can be another time-consuming task and costly if you are to hire credit agencies to do it for you. 

An automated AR system helps manage credit risks. With Modern AR automation platforms, you can access business credit scores within the system without subscribing to a separate credit reporting service. This will allow you to look into the customer’s payment behaviour – are they usually a little late on a payment? Do they pay the full amount? Equipped with the necessary information, you will be able to decide which accounts need closer monitoring and which ones need more lenient handling.

4. Payment collection

Another major challenge with manual AR collections is chasing the customers for payments. The traditional methods of collecting payments require a lot of time, energy, and resources. Your AR teams would have to send payment reminders to the customers through dunning letters or by calling them. 

Besides distracting your team from other high-value activities, repeated calls and emails can also sour your relationship with the customers. It is essential to work smarter using AR automation software in such a situation. Rather than hounding all your customers, AR automation software will guide you to pursue the most at-risk accounts. Modern AR automation also integrates with online payment platforms so your customers can pay you quickly through multiple digital payment options. The more you lessen the friction on how and when customers can pay you, the easier it is to receive those payments.

 
Related blog post: Modernizing B2B Payments For the New Normal
 

AR Software tips 2

Step-by-step guide in choosing an AR automation software

Choosing the right AR automation software will help you overcome the challenges mentioned above. To derive a better and quicker return on investment (ROI), you should ensure that your chosen AR automation tool can meet all your unique requirements. Here are the basic steps involved in selecting the best AR automation software for your business.

Step 1: Take time to understand the pain points of your AR team

Before you start researching the various options for AR automation software, it is important to first connect with the team members who the new solution would directly impact. 

The first step in choosing the right AR automation tool is to understand the main challenges faced by your team members. Understanding their requirements will help you set clear objectives about what you want from an AR automation tool. It would help if you also considered any existing tools your teams and colleagues use to ensure that you do not duplicate the effort. You will also be able to find out why the current solutions cannot meet the needs of the teams.

Here are some critical questions you can ask in this step:

  • What are the major bottlenecks in the AR process?
  • Are a significant number of clients turning bankrupt?
  • What is the error rate in reconciliation?
  • How much time is spent on invoicing?
  • How are collection calls made?
  • How much is your business losing because of these bottlenecks?
  • What issue would the team like to resolve with the new AR solution?
  • Are the current AR-related issues because of a gap in knowledge, technology, etc.?
  • Who are the other internal stakeholders included in the evaluation process?

With these questions, you will identify which AR processes need to be automated most urgently to improve the system’s efficiency.

Step 2: Research for new AR automation software that aligns with your needs

Once you have identified the gaps in your AR process, you need to look for vendors providing AR automation solutions that will help you plug those gaps. Good AR automation software solutions will allow you to automate the AR workflows while also providing options for customisation. 

Key features to look for in AR Automation software:

  1. Auto-generation of invoices and auto-delivery of invoices and reminders via emails and SMS.
  2. A digital payment platform for your customers that is accessible 24/7
  3. Option to process multiple payment methods like checks, direct debits, and credit cards.
  4. Facility for customers to schedule payments or pay instalments.
  5. Tracking the mature receivables categorised based on the number of days outstanding.
  6. Automatic ranking of outstanding accounts (based on amount and days overdue)
  7. Online credit application for efficient client onboarding
  8. Credit score insights to help you plan your next course of action in extending credit terms to customers.

When selecting an AR solution from the various options available, examine the following:

  • Whether the AR solution aligns with your values and unique goals.
  • Whether the AR solution prioritises customer experience in the process.
  • Whether the AR solution provider has any previous experience in your industry or type of products.
  • Does the AR solution provider understand the regulations that will impact your business?
  • The strategic investment outlook of the AR solution provider for the next 3-5 years.
  • Will the new AR system integrate easily with the other IT systems in the company (and those of the partners’ too)?

Download the CFO's Guide to AR Automation

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Step 3: Ensure your success after implementation of the new AR solution

While choosing a new AR automation solution, you also need to consider what your partnership will look like post-implementation.

AR Software post-implementation checklist:

1. Customisation options

 There can be times when a one-size meets all AR solution will not work for your company, especially when the existing systems are complex. To get the maximum value from your AR process, you need to find a solution that comes with customisation options.

2. Excellent customer service

Another critical thing to look for is your software provider’s track record of excellent customer service. A provider committed to improving your experience with the software and your interactions with them is a big part of the equation to ensure your success with AR automation.

Unlock better Accounts Receivables collections with ezyCollect.

If you are looking for a smarter way to manage your B2B accounts receivables processes, ezyCollect AR Collection Software is your choice. ezyCollect’s robust system will help you get paid faster while accelerating your cash recovery rate.

Book a demo today, and let our AR automation experts walk you through solutions for your business.

5 Reasons Why You Should Use Integrated Direct Debit

5 Reasons Why You Should Use Integrated Direct Debit

We often talk about the benefits of automating your payments with Direct Debit – and how you can work even more efficiently by using Direct Debit in an integrated way. But what does Integrated Direct Debit really mean? And what problems does it solve that the traditional direct debit system can’t?

In our recently concluded webinar, Amanda Lee, founder of Amanda Lee & Co. and Receivables Management Advisor, Jimmy Cooper, Co-Founder and UX Researcher at ezyCollect, and Tony Gu, Customer Sucess Lead at ezyCollect, discussed the benefits of a fully integrated Direct Debit solution and how ezyCollect is changing the way Direct Debits work for businesses.

Here are the key takeaways from the session.

What is Integrated Direct Debit?

Integrated Direct Debit is a payment solution that is an enhancement from the standard direct debits we all know.

Integrated Direct Debit works by collecting payments directly from customers’ accounts that have granted you Direct Debit Authority. When direct debit transactions are integrated into your AR automation platform, the whole direct debit process is streamlined from collection to reconciliation, minimising friction. You also gain more control over direct debit payments, making extending that flexibility to your customers easier.

5 Reasons Why Your Business’ Cash Flow Will Love Integrated Direct Debit

1. Automatically writes back to your accounting system

For many businesses, the issue with the traditional Direct Debit service is that it doesn’t integrate with their accounting systems. Without integration, AR teams still have to reconcile payments manually.

With an Integrated Direct Debit, payments are automatically written back to your accounting system. When your customer’s account is debited for payment, it will automatically be marked as ‘Allocated’ on your ERP, saving you precious time each day on allocating payments.

2. Simplified customer process and payment experience

We all know how Direct Debit automates the payment process by collecting payments from your customer’s account through a direct debit authority. But the flipside of that is that customers feel like they’ve lost control over their bank accounts. 

Integrated Direct Debit work differently in that while it gets you paid faster by collecting payments directly from your customers, it also allows for flexibility. For instance, if a customer requested to cancel the direct debit transaction, you can easily do so on the platform.

An Integrated Direct Debit payment option also helps you stay competitive. It’s another digital payment offering you can make to customers that competitors don’t have. Integrated Direct Debit is another way of offering the customer another great chance to pay you in a different way that your competitors won’t have.

Related blog post: The CFOs Guide to Digital B2B Payments

3. Technology frees up business resources

Because integrated Direct Debits automatically collects payment from your customers, time spent chasing payments is reduced. It frees up time for your AR team to do more productive work to contribute to your business’ growth.

It’s also important to note that because you now have more control over when you get paid, your cash flow is more predictable, allowing you to strategize business expansion plans with more confidence.

 

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4. Focus on customer relationships and experience

Focusing on customer relationships and their entire experience with your business is of optimum importance.

By optimizing the customer experience and giving them opportunities like ezyCollect’s Integrated Direct Debit where you can collect now, or the customer has an option to schedule the payment, it provides the customer with a user-based experience. It starts making their relationship feel more connected with your business.

Another issue businesses had with direct debit was the ethical responsibility that comes with a customer’s permission to access their bank account or credit cards to take payment. A client’s financial situation can change at any time, but because standard direct debits aren’t managed easily by businesses themselves, adjustments take time and money, affecting customer relationships.

The beauty of Integrated Direct Debit is that it factors in the human side of accounts receivables. It gives businesses the ability to make any adjustments through the platform in a split second. Businesses can control how they receive payments and allow for flexibility that enhances the customer experience.

5. Predictability over your business’ cash flow

With Integrated Direct Debit, you are getting your money in the bank on a specific date and time, which gives you a lot more capacity to manage the cash flow in your business.

A predictable cash flow also means that you do not have to find other finance solutions for your business to carry the overdue accounts in your business. Businesses need to ensure they are constantly pushing the responsibility back onto the customer to pay the invoice on time as this directly affects the cash flow. By adding Integrated Direct Debit to your payment options, you offer them a different way to pay you that’s convenient for both parties and flexible enough to adjust to their needs. 

Watch the webinar

Get the full insights into improving your AR collections with Integrated Direct Debit. Watch the entire webinar on-demand.

Learn more about Integrated Direct Debits

Talk to us today and learn how Integrated Direct Debits can work for you. Or book a demo of ezyCollect and see how our AR automation platform can get you paid faster.

The CFOs Guide to Digital B2B Payments

The CFOs Guide to Digital B2B Payments

Digital payments are the key to unlocking optimisations in payment transactions. Digital payments have been the way for many B2C transactions for years but haven’t gained the same prevalence in the B2B space until recently. With the COVID-19 pandemic accelerating e-commerce and increasing customer expectations toward using technology, B2B organisations will inevitably march toward digital payments.

But the march has been slow – the reality is not many companies have adopted B2B payment automation yet. A study published in the Next-Gen Digital Payments Report shows that 51% of the B2B respondents are yet to digitalise their accounts receivables and accounts payables, which means more than half of the respondents do not have a solid payment digitalisation plan.

Here, we discuss what digital B2B payments are, the challenges of B2B payments and how you can start to leverage digital technology to improve your payments process. 

 

What are Digital B2B payments?

Any payment or receipt of money for goods or services made between two businesses using an electronic medium is a digital B2B payment. B2B payments can be a one time or recurring transaction depending on the contractual agreement between the buyer and supplier.

Digital B2B payments include online payment platforms and use technologies such as APIs for integration with other software and automation to streamline workflows. Advanced technologies such as blockchain and artificial intelligence (AI) are also making their way into the B2B space. It won’t be long before we see these technologies further redefine digital payments.

Economies worldwide recognise the importance of digital technology in improving business efficiency and profitability. In Australia, the latest tax break incentive for businesses adapting digital technology – including payment systems – emphasised just how crucial it is in building healthier businesses.

Additionally, giving your B2B clients an automated payment system will ensure you:

  • Receive your money on time, every time. 
  • Protect your financial details and the safety of your clients. 
  • Have less to worry about defaulters. 
  • Have sufficient funds to ensure you can supply your goods to your buyers.

 
Related blog post: Modernizing B2B Payments For the New Normal
 

B2B payment methods

There are different options available for businesses regarding payment receipt methods. Here are the most-commonly used B2B payment methods with their pros and cons.

Paper cheques 

Paper cheques are still one of the most popular payment methods today. It is much safer than direct cash transactions, and they are also the easiest to adopt – being used for years as a standard B2B payment method.

Pros:

  • Cheques are a great way to encourage conservative or old-school companies who haven’t digitised yet, to do business with you.
  • Since cheques don’t charge convenience fees, they will be inexpensive for your clients.

Cons:

  • Clearing a payment using cheques is time-consuming.
  • Start-ups and businesses run by millennials and younger cohorts may not be as familiar or interested in paying you through paper cheques because they’re accustomed to digital payment systems.
  • Both the paying and receiving companies need always to keep a minimum balance at all times.

Direct Debit

Direct Debit authorises another party to collect payments from an account when they are due by completing a Direct Debit Authority Form. Direct Debits are used for any kind of payment, but it’s most often used as a safe and convenient way to make recurring payments.

Direct Debit used to be the privilege of bigger and more established businesses with many customers, but technology has democratised and simplified the systems involved. Now any business – big or small – can benefit from the Direct Debit payment’s speed, convenience, and security. 

Pros:

  • Automatically collects payments from customers, so payments are never forgotten or delayed.
  • Direct Debit payments integrated with your accounting system can save you a huge time in reconciliation.
  • Cost-effective – Direct Debit transactions fees are much cheaper than credit card fees which charge around 3-5% for transactions.

Cons:

  • Possibility of payments not being collected due to insufficient funds.
  • There’s a certain level of trust required for customers to authorise direct debits. Customers might need some time to feel comfortable approving suppliers to collect automatic payments. 

Wire transfers

A wire transfer is a bank transfer wherein your client has your bank account details, and they make the payment directly from their account to yours. 

A wire transfer is different from a Direct Debit in that it is not limited to the currency of a business’ local banking system. Wire transfers are also usually processed within the same day, whereas Direct Debits can take a couple of days.

Pros

  • Wire transfers help you receive same-day payments.
  • You can receive wire transfers from both domestic and overseas bank accounts.
  • Wire transfers are safe, and you can track your receipts using the ID generated for each transaction.
  • For businesses dealing with international clients, wire transfer payments can easily be converted to your local currency.

Cons

  • Wire transfers are expensive compared to ACH or Direct Debit due to processing fees, service tax and foreign currency conversion fees (if applicable). 
  • If your client wants a refund, you will be unable to reverse the transaction.
  • If your payment receipt transaction ID becomes known to someone else, it is easy to manipulate the wire transfer.

Credit cards

Credit cards are a borrowing mechanism that banks give both B2C buyers and B2B companies. Any business using a credit card can borrow money from their bank to make payment to you for the products/services they have purchased from you. But you will always be assured of your payment since the bank pre-pays you on your buyer’s behalf.

Many banks offer credit cards that are specifically designed for business payments. These cards also offer desirable deals that enable users to waive certain fees, earn bonus points, allow business savings and avail of a cash advance facility, amongst other features. 

 

Pros

  • Easy set-up for suppliers and adaptable to digital payment platforms
  • Convenient to use for your clients.
  • You receive payments quickly since your clients borrow money from their bank to pay you.
  • Banks always share a credit card receipt report with their B2B clients, helping you track who made payments to you and when. You can also identify any clients who have defaulted their payment to you.

Cons

  • Merchant fees can be expensive. However, there are online payment platforms that will let you surcharge the fees at checkout, or absorb all or part of the fees.
infographic of b2b payment methods

B2B Payment Terms

B2B Payment Terms sets the payment agreement between you as the supplier and your clients. While creating a standard agreement across all of your clients is ideal and is the simplest option, the reality is each of your clients may require different terms depending on their financial situation.

Instalments

Instalment payments allow your customers to choose a plan and pay in portions rather than paying full price up-front. With this agreement, you can receive consistent payment amounts to your business over the time period you’ve agreed upon, thereby reducing your financial risk by not waiting for your client to pay the total amount.

You can sync your instalment payments to a milestone met. We’ll touch upon milestone payments later in this article. But to illustrate, let’s say you receive the first instalment of your entire bill when you deliver the first batch of raw materials to your clients. Then you continue to receive each instalment as subsequent deliveries are made. You can choose even to charge interest on instalments, but that’s not mandatory. An equated monthly instalment (EMI) is an example of a commonly-used B2B instalment scheme.

Instalments are essentially a flexible payment method and can help with customer retention. You can offer your clients the payment technologies mentioned earlier to make each instalment payment.

Milestones

Milestone payments are frequently used in the services industries and help buyers build trust with suppliers. Payment upon delivery is a good example of milestone-based payment. For suppliers, milestones help you retain your end of the deal—you receive the payment only when you make any progress to the service/product you have to deliver.

Net Terms

In B2B transactions, it’s common for suppliers to extend their payment terms to their customers – called Net Terms. Net Terms allow businesses to pay for orders within a certain period after invoicing instead of paying it upfront.

The most common set-up is for businesses to be allowed to pay 30, 60, or 90 days after they receive goods or services, with no interest. From a buyer’s perspective, this can be beneficial to their working capital as they have a chance to resell goods or to use the raw materials for manufacturing and send the goods to distributors before the bill is due. Some suppliers may even offer discounts if the invoice has been paid before they are due.

As net terms are important to buyers, it will do well for suppliers to offer them. Suppliers benefit by providing a more attractive payment scheme, thus improving customer retention, and that is reflected in an improvement in sales and an increase in order volume.

However, Net Terms can also affect the supplier’s cash flow. The supplier must monitor payments via Accounts Receivable automation to ensure that payments are made on time as agreed upon by the two parties.

Challenges of B2B Payments

Choosing a B2B payment option isn’t always easy. Here are a couple of challenges that you need to look out for when evaluating which B2B payment method to offer your customers:

  1. Interoperability between businesses – Check if the payment method is compatible with your client’s preferred method. Or, select two or more payment methods that can support all of your current and future clients.
  2. Security issues – When receiving money, your payment method should offer you and your client security. It’s best to check what security features each method offers before selecting one.
  3. High transaction fees – Depending on the payment method, your transaction fees can range from 2% to 5% per transaction. This may drive away budget-conscious buyers who don’t want to pay these processing fees. 
  4. Lack of visibility and efficiency – Some payment methods aren’t transparent, and it can be hard to identify which stage of the transaction your payments are in during processing periods. 
  5. The disparity in fund payment days – While some payment methods offer a 24-hour payment cycle, others can take up to 30 days to clear. It can be challenging to keep track of what is owed to you and when you may receive it.

To address the issues surrounding B2B payments, the efficiency and reliability of systems used are essential, and the ability of payment systems to accept various payment methods.

 

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Benefits of Digital B2B payments

Understanding the nature of B2B payments and the issues that can arise during transactions has paved the way for B2B payment automation. And with digital technology becoming more sophisticated yet accessible, automation takes a step further with digitalisation.   

Indeed, Digital B2B payments are increasingly becoming the payment method of choice for many businesses in today’s economic landscape. Here’s why:

  • B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
  • Modern B2B payments automation technology has safe authentication measures. From credit card pins to 2FA on mobile/desktop payment management apps, you can safeguard the financial privacy of your client and yourself.
  • Digital transactions are easy to track, with payment details stored in easy-to-access databases – reducing duplication and ambiguity.
  • Digital B2B payments are less expensive in the long run. Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.
  • Automation helps you maintain good relations with all of your stakeholders because of the ease, efficiency, and promptness of digital payments. 
  • Many digital payment systems integrate with AR automation software that can generate detailed reports about your financial health. You can use these reports to gain insights regarding customer payment behaviour to help your collections strategy.

 
Related blog post: Top 5 B2B Payment Hacks for Digitising Your Business
 

Steps to digitalise B2B Payments

According to new predictions made by FIS in the latest Global Payments report, only 2.1% of payments will be made by cash in Australia by 2024.

There’s no doubt that there is an ongoing shift toward digital payments. With the benefits accompanying it proving to be substantial, now is the right time to start planning how you can digitalise your payments. Here are some tips to help you get started:

  1. Think of your B2B payments experience as a B2C experience. Consider what people may prefer in a payment system and try to make it happen for your B2B needs. Features such as a digital ‘Pay Now’ button on your invoices and SMS reminders can make the payment experience better for your clients.
  2. Identify the nature of your B2B payments system. Figure out what may need changing and how you can improve your payments management system. For instance, you may need payments to automatically write back to your ERP so you don’t have to worry about reconciliation. Also, identify what you wish to retain from the old system if it is good.
  3. Think of which payment methods your clients are most likely to use and try to offer multiple payment methods. Some clients might prefer credit card payments, while some may prefer a direct debit payment. The easier it is for them to send payments, the more likely they will do business with you and pay you on time.
  4. Make available digital offers that provide your clients with the buy-now-pay-later options, helping you improve client loyalty. Consider financing solutions to offer to your clients for them to be able to complete payments.
  5. Implement identity-management protocols and premium security measures to safeguard your payment system users.

Transform B2B Payments with ezyCollect

Contact an accounts receivables automation expert to help customise a digital payment system for your business. Book a free demo of ezyCollect and discover how AR automation and B2B digital payments can work for you.

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

The O2C cycle is often riddled with manual steps that can cause a lot of friction in between- and frustration for both the business and customers. This dramatically affects your receivables collection and, eventually, the health of your cash flow.

In our recently concluded webinar, “The 10 Gifts of Accelerated Cash Flow”, we invited Amanda Lee, Founder and Receivables Management Advisor at The Retriever, to speak with  Arjun (AJ) Singh, Co-Founder and CEO ezyCollect, to discuss how you can take advantage of a streamlined and optimised O2C process through accounts receivable automation, creating a seamless cycle that not only ensures you get payments efficiently but also improve your relationship with customers. Here are the key takeaways from the session.

3 critical areas of focus in the O2C cycle for accelerated cash flow

1. Best practice credit approval

Extending trade credit is something that many businesses do manually, and this can cause a lot of issues that can lead to bad debts – affecting your cash flow in the long run. Adapting an automated and data-driven process delivers efficiencies that are beneficial for both you and your customers.

First of which is a more reliable credit check. Unlike manual application processes that primarily rely on trade references given by the customer, an online credit application system integrates credit risk scores from trade reporting agencies so you can get data-driven insights and make better decisions before onboarding customers and extending credit. Having this data at your fingertips gives you that professional knowledge without much effort, and you’ll be able to manage risk right from day one, making that goal of accelerated cash flow much easier.

Another benefit of online credit applications is a better onboarding experience. First impressions last, as the adage goes, and that couldn’t be farther from the truth in business relationships. Onboarding customers in a disorganised, time-consuming process that are prone to error reflects an unprofessional image on your part – inadvertently sending the message to your customers that they can cut corners as you do. By digitising a credit application, you create a streamlined and automated process that not only benefits your operational efficiency but also means you mean business, and customers need to be in that same level of credibility too.

2. Humanised automation

Humanised automation seems contradictory, but part of reducing your overdue accounts hinges on this balancing act of human connection and automation. Automation creates communication efficiencies in accounts receivables, paving the way for a more personal approach to customers that need it the most.

With an automated communication workflow, you don’t have to physically communicate with everyone, but you’ll be able to focus on customers that need more. An AR automation platform tells you who those customers are through consolidated credit and risk data, providing you with that opportunity to connect and build relationships. To truly understand why your customers’ payment behaviour changed, there has to be human interaction involved. You can work with them to resolve blockers preventing them from paying you on time. It’s about continuing that cycle to sell, and having a receivables ledger that’s 100% collected each month and clear, persistent, and personalised communication with your customers is going to help you achieve that.

3. Frictionless payments

Getting your payment on time is the goal of an optimised O2C process. It is crucial then to make this part of the O2C cycle as pain-free as possible, allowing your customers to pay at a time convenient to them through various payment methods that they can choose from. 

An online payment platform is designed to do just that, not only as a portal where customers can pay you but also includes their statements, so they no longer need to contact you, especially when making the payment after office hours – all the information they need is readily available to them. By creating convenient pathways for payment, you can get paid easily and quickly.

The gifts of accelerated cash flow

As we’ve learned thus far, an accelerated cash flow is very much possible thanks to accounts receivable automation. While an improved cash flow is the end goal of automation, optimising the O2C process also comes with its benefits.

1. Greater business intelligence

AR automation gives you access to data and gives you the insights to make better decisions that can affect the health of your business.

2. Business continuity and data integrity

AR automation resolves cash flow issues, as we now know. With an improved cash flow, you’ll be able to run and grow your business the way you want to.

3. Sharpen your focus

Automation gets all the repetitive tasks done, so you can hone in on strategy-related tasks that further your business.

4. Shore up customer trust

Automation ensures consistency in processes and clears communication pathways – both of which allow you to build trust with your customers and, in turn, foster customer loyalty and growth.

5. Customer Perception

Digital, automated processes are now the norm and what your customers expect. Adapting automation in your business creates a professional image and aids in brand equity.

6. Lowered DSO

Automation streamlines your O2C cycle, removing any friction between processes so you can get paid promptly.

7. Error reduction

AR automation minimises the need for manual entries, reducing errors. Its capability to integrate with your ERP also means there’s no double-handling of data that can lead to more problems in your accounting.

8. Time savings

Leveraging an account receivable platform removes the need for manual processes, saving your staff tons of time. The amount of time saved can then be used to focus on more high-value work that can grow the business.

9. Gain real-time visibility

With an AR automation platform, you can get a live view of credit risk scores to be confident in making decisions based on current and accurate data.

10. Enhance efficiency across the business

While AR automation improves the collections processes of your receivables, this also translates into improvements across business functions and teams.

Watch the webinar

Learn more about optimising your O2C process. Watch the entire webinar for insights from Amanda and AJ. Join our mailing list to receive invites for future webinars.

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.