Why now is the time for CFOs to transform AR

Now is the right time to transform accounts receivable to wow B2B customers, grow sales, and mitigate risks

B2B buyers expect the ease of a B2C experience, even for their largest five- and six-figure purchases. Remote work has increased online buying and decreased in-person loyalty. For CFOs who want to seize this moment for transformation and bring wider benefits to the business, the B2B credit and accounts receivable experience is a critical place to start.

To explore this topic in depth, Scott Simpson — Senior Vice President at Capital One Trade Credit — recently presented a session at the 2023 Gartner CFO and Finance Executive Conference. For those who couldn’t attend the conference or Scott’s session, here are his key takeaways.

Why it’s time to seize the AR moment

The way we shop seems static and ubiquitous…until it’s not. Just 20 years ago, families used to go to video stores to rent movies. Then came the ability to rent movies by mail and now you can stream content on demand. The mall was once our first stop when buying a gift or back-to-school shopping. Today, e-commerce dominates, and even in-person, buyers browse online and read reviews before purchasing.

A similar transformation for B2B buying is reaching a tipping point. Consider these data points:

Of particular note is Amazon Business, which jumped from $13.27 billion in sales in 2019 to $35.68 billion in 2022 — and is expected to reach $59.03 billion in 2025, according to Statista.

Why? B2B buyers shop where it’s really simple and easy to buy because they have many other decisions to make that day. If they find it complicated to purchase from your organization or if another vendor is easier, they will move on.

Consider the Amazon Business buying experience vs. a non-digitized, non-optimized vendor.

Non-digitized B2B suppliers:

  • Take hours or days to process a credit applications
  • Have difficult changing terms without affecting systems or cash flow
  • Send paper bills by mail
  • Only provide customer service 9-5 on weekdays
  • Take days to clear check payments
  • Are unable to give customers an intuitive self-service way to view account history, upcoming payments, and past invoices

Amazon Business: 

  • Offers multiple payment options
  • Enables eligible customers to choose extended terms up to 45 or 60 for pay by invoice
  • Provides online billing, spend visibility, and guided buying
  • Has an easy one-click buying experience with customized delivery options
  • Gives customers more control over B2B procurement with on-demand invoices, purchase history, and ability to add multiple users

The $35+ billion that Amazon Business sold in 2022 isn’t a new $35 billion. That’s money that is being siphoned from local and independent suppliers — like your organization.

A manual, clunky B2B accounts receivable (AR) process is a danger to the retention of your customers and a barrier to winning new ones. It also may be limiting your growth opportunities.

The growth inhibitions of in-house AR

In-house AR programs don’t just limit the ease of your customer experience. They expose your business to deep structural issues. When a customer purchases a product from you, you must replace that inventory — yet you’re waiting 30, 60, or 90 days to get paid. If a customer defaults (an issue that may become more common as the economy continues to struggle), you may never get paid. That gap in your cash flow inhibits your ability to grow and focus on the things you want to invest in.

If a customer requests an increase in their credit limit, your business must take on that risk. Should you need a loan to manage your cash flow gaps, that’s also getting more expensive with an upwardly trending prime rate that increased from 3.25% in March 2020 to 8.5% in July 2023.

The structural challenges caused by risk and cash flow may seem to be inherent to the B2B credit process, but they don’t have to be. Help is available — and should you choose to seize this AR transformation moment, the right partner can transform how you do business.

How to wow customers, grow sales, and mitigate risk

There are two main options for businesses seeking to move away from an in-house AR program:

  • AR automation software: These are point solutions that automate one or more AR processes, like online payments, billing reminders, and payment processing. This software can be useful for augmenting your in-house AR program.
  • End-to-end, full-service AR: These nuts-to-bolts solutions provide technology-oriented, digital-first experiences that automate AR processes, provide back-end integrations, and redefine the customer experience. However, many AR solutions that focus on the end-to-end process still do not address the inherent cash flow and risk burdens of in-house AR programs.

What today’s B2B suppliers need is an end-to-end AR solution that also addresses the structural challenges. For a transformative AR program, you need more than just full process automation, a modern customer portal that meets today’s B2B buyer expectations, and an easy-to-learn internal system.

You also need:

  • instant credit decisioning,
  • ongoing credit monitoring,
  • the ability to offer extended terms and bigger lines of credit with mitigated risk,
  • prescreening to arm your sales reps with strong, differentiating offers,
  • a dependable cash flow,
  • and the support of a trusted financial and technology partner that you know can weather whatever the future may bring.

To learn more about what Capital One Trade Credit can offer for businesses ready to transform AR, contact us today.

If you’d like to learn more insights and takeaways from the 2023 Gartner CFO Conference, read our blog post, “What’s ahead for finance leaders in 2023 and 2024.”

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