The lasting effects of the COVID-19 pandemic have highlighted the inefficiencies of many plumbing distributors’ accounts receivable (AR) processes. Remote teams, supply chain disruption, slower mail delivery and greater demand for building products have forced distributors to pivot quickly in order to get paid as fast as possible. Here are three ways to automate your AR processes to improve cash flow.
1. Embrace self-service digital payments
Continuing to be paid by paper checks is a costly decision for most businesses. But many still are. Manual, paper-based payment processes are slow and cumbersome, and when considering the inconveniences involved in reconciling these types of payments, it’s clear that a better option needs to be implemented.
Luckily, that option exists today with self-service digital payments and it’s beginning to impact how decision-makers approach their sales strategies. Self-service payment portals provide a myriad of benefits such as instant invoice delivery that help businesses get paid faster. Customers can automatically view and pay invoices from anywhere as soon as they are sent, which is a huge benefit to buyers who are working in a remote or hybrid environment. Also, payments networks such as Billtrust’s Business Payments Network (BPN) automate payment acceptance and remittance data retrieval across ACH, wire transfer and credit card, making it easier than ever for customers to pay their invoices on time.
2. Create customer-centric processes
A great way to minimize late payments in any AR strategy is to understand customers’ billing preferences. Accounts payable (AP) capabilities vary greatly, with some organizations having fully dedicated AP teams with their own accounting software, while others may have a single employee dedicated to paying invoices. By talking to customers about their billing preferences, there will be less friction and time spent making payments.
Also, enhance your customer experience by offering convenient options like autopay and one-click payments. This replicates how most consumers pay their utility bills, with automatic deductions occurring monthly. The payment process becomes seamless for recurring customers, and delayed payments are minimized. For more infrequent customers with one-off payments, include a one-click payment option through an emailed invoice to remove friction from the payer’s experience. Imagine how easy it would be to receive an invoice via email, click “Pay Now” and continue as though they were checking out with their favorite online retailer.
3. Automate how you pay through AP portals
One of the biggest hurdles for any B2B company effectively accepting digital payments is the explosive growth in AP portals. Many of your larger buyers have undoubtedly heavily invested in their own AP processes, with AP portals being a centerpiece. The manual labor involved in keying invoices into these portals creates bottlenecks for AR teams and slows cash flow. Using a third-party vendor for AP portal automation helps you integrate virtually any portal to automatically deliver invoices. Look for a vendor who is already integrated with the AP portals you use, as well as ones you don’t for when you take on additional customers. Also, if you’re working with an AP portal that a vendor doesn’t support, they should be able to bring that portal into their system to provide true customization.
The challenges posed by manual AR processes can have long-lasting effects for plumbing suppliers. Digitizing AR processes creates necessary bottom-line benefits of lowered costs, increased on-time payments and more support for existing staff without additional staffing costs. But more importantly, it removes unnecessary friction from the payment process, creating a better overall experience for customers.