Accounts receivable (AR) processes in the business-to-business segment present a quite different set of challenges from those experienced by finance colleagues in the business-to-consumer sector. Thanks to organic business growth, often over decades, B2B payments are well-established but embedded in manual workflows.
As companies grow, they focus on customer acquisition rather than establishing efficient practices. Years on, there might be a half-dozen or more systems for a variety of tasks in accounts receivable, each operating independently. As a result, we see the common issue of highly-trained staff spending inordinate amounts of time on manual processing in one form or another.
Enterprise resource planning (ERP) software often sits at the center of many businesses, installed to bring together the disparate elements of the business. ERPs, or similar management software like CRMs, improve the accuracy of many business processes and aggregate data in ways that aid strategic insights. But in the finance department, there are still too many daily tasks like manual reconciliation and data entry.
Clearly there’s still too much paper involved in the accounting offices, but as Jeremy Boogaart of PayTrace explained to us in a recent interview, “The other ‘normal’ complexity that finance teams experience would be relying on multiple, separate digital systems. As just about anyone who has worked in finance or accounting can confirm, sending invoices, collecting payments, tracking order statuses usually takes place across a variety of systems, many of which are not connected to each other.”
In the inherent complexities of large organizations (let’s say, companies turning over more than $15m) and their different stakeholders, there are always issues around tracking the necessary detail of financial operations, thanks to the presence of those manual processes or disconnected software platforms. And that’s despite the presence of an expensive ERP, CRM or e-commerce hub that should bring all the threads together.
An additional responsibility placed on finance teams’ desks is data and financial governance. Companies that still use several software platforms, paper checks, and invoices are open to accusations of clerical error, and are at a higher risk of fraud and non-compliance.
“It would be ideal if some of the convenience we’re all used to in our ‘consumer lives’ were present in B2B,” Jeremy said. “Stores offer you a variety of payment options to use: credit cards, bank accounts, digital wallets, and more. Want to split your payments into three or four? Sure, there’s an option for that. Want to buy it now and pay for it later? No problem. And I’d wager that most of those stores have your favorite payment methods and shipping addresses all saved and ready for use.” But in B2B, there’s the need to get sales orders, approval, an invoice, more approvals, then payment by favored means.
“It’s easy to see why the B2B process hasn’t evolved as fast as B2C,” Jeremy said. “But that doesn’t mean it can’t. Adopting digital options for payments, invoices, and accounts receivable automation can help reduce the time it takes for many of those extra steps to be completed, and provide B2B customers with that consumer-like purchase experience they crave.”
Given that the design of and the intended purpose of a CRM/ERP is to centralize processes across the business, it seems logical that it should be the single place where accounts receivable is based. But the necessary scope is wider, Jeremy said. “Truly automating payments means including operational systems like CRM, ERP, and e-commerce. There are certainly wins to be had by just basing embedded payments in an ERP to support finance areas like collections and reduce DSO, but one of the challenges is to elevate that conversation to the entire business application landscape.”
There’s another element to the legacy of systems and processes that organizations work with. Large platforms like company-wide ERP or CRMs are often managed, at least initially, by IT departments, so the de facto integration method to join AR with the existing stack would be via APIs. But most organizations have invested heavily in customization of their Microsoft Dynamics, Acumatica or NetSuite installations. “When you take advantage of embedded payment solutions, meaning solutions whose functionality is available from within [our emphasis] the CRM or ERP itself versus connecting via an API to transmit the data to another system, that’s where companies can best realize the benefits of AR automation,” Jeremy told us.
It’s possible to offer customers in B2B environments the type of simplicity and convenience that consumers expect. Gone are the days of directing your customer to another site to make a payment:
“With an embedded AR automation solution, you provide your customers with a fully branded, uninterrupted payment experience, and they, in turn, appreciate the ability to pay quickly and easily without bouncing around to multiple sites. Plus, with digital automation solutions like Trace AR, both you and your customers can enjoy the consumer-like experience of paying digitally, securely, and tracking order and payment histories online,” Jeremy said.
Trace AR is one of the PayTrace B2B payments solutions that eliminates the need for more manual processes and extra systems, and solves those everyday challenges facing finance teams we detailed above. Embedding payments in the working environment used by accounting professionals brings significant benefits. Reducing manual processes reduces errors, lets well-paid, well-qualified personnel concentrate on the types of roles they trained for, and for the business, improves order-to-cash and ultimately, cash flow.
Software designed specifically for a particular business function, when it’s effective, has positive effects that spread outward like ripples in a pond. Centralized processing and automation embedded in a core system allows better data-based reporting, prediction, analysis, and strategic planning. Compliance teams can rest a little easier knowing that (at least, in the case of PayTrace’s platform) sensitive card details and financial information aren’t stored on-premises. And smooth financial processing means there are options presented everywhere: order status information widely available, better cash flow, well-informed staff throughout the business, a reputational boost that helps every partner relationship, and a great deal more.
We asked Jeremy if reducing processes means finance departments might rethink how they work, or even consider restructuring – after all, this is finance software we were talking about: key benefits should affect finance departments, first and foremost. “In many ways, yes. But only in the best of ways! For instance, when you save x amount of hours each week. Instead of wasting employee hours on manually processing invoices [and] fixing mistakes, you can have your teams innovating on new ways for growth and working on more strategic projects. The sky’s the limit, really, on what you can do with any amount of time or money savings.”
To find out more about embedded payments for finance, head here to begin your investigations.
