25% of B2B Payments Are Digital Payments

For business-to-business (B2B) payments, traditional methods such as checks and wire transfers remain the top choice for most companies, but digital payments are now accounting for a greater share. In fact, 25% of B2B payments are digital payments, the Working Capital Playbook, a PYMNTS and YayPay collaboration, reported.

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The increased rate of digital payments has affected corporate accounts receivable (AR) processes by removing a lot of the manual tasks that teams had to complete to process, apply and reconcile payments, and has improved efficiency and accuracy, Anthony Venus, chief strategy and product officer, accounts receivable automation at Quadient, told PYMNTS.

“These two benefits are critical for an effective AR process, as they not only elevate performance but also the customer experience,” Venus said. “Teams have become leaner and can manage more work with [a lower] head count, and they have the capacity to focus on strategic, value-added tasks rather than low-value activities.”

Digitizing to Benefit Customers and Vendors

Digitization has been increasing in both B2B payments and AR. Another recent PYMNTS study found that 74% of chief financial officers (CFOs) said their companies’ AR payment processes are currently digitized or would be within the next year. Another 74% said their collections processes were already digitized or would be within the next year, and 72% said the same about customer and vendor invoice digitization.

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Ninety-five percent of financial executive respondents said their reason for digitizing was to benefit their customers and vendors, while 64% said they were doing so to automate manual processes and 37% pointed to accelerating transaction processing. Seventy percent of the CFOs said that making AR processes more transparent would boost their customers’ lifetime value.

Venus said AR departments can make their AR processes easier for staff and customers to understand by maintaining transparency and consistency. He said clearly defining the AR process helps internal teams understand each step, and establishing a consistent process eliminates ambiguity and sets expectations for customers. This applies to the dunning process as well as processing credits or customer service items.

“The AR team needs to have a clearly defined workflow, and the customer must be kept informed,” Venus said. “This prevents confusion and frustration and ultimately improves the customer experience and increases the longevity of the relationship.”

Improving the Transparency of AR Projects

Improving the transparency of AR projects also allows AR teams to diagnose problems. Opaque processes and systems can be detrimental to vital, metrics-driven departments such as AR. Any delayed payments or errors could devastate the rest of the organization, including delayed vendor payments, payroll errors and any number of downstream issues. AR teams with opaque systems might not even know where such delays and errors originate, which can lead them to notice problem areas only after issues occur.

A transparent system, meanwhile, can offer teams a holistic view of employees’ performances and errors, allowing managers to correct mistakes before they cause damage and track which employees need improvement.

“Companies need to automate processes where keying errors take place,” Venus said. “Establishing systems which make it easier to identify where errors take place, such as tracking credit reasons or types, can help identify where the process is broken and inform what solution is required.”