If your company hasn’t optimized B2B payment processes, what is it costing you? There are many ways out-of-date processes for invoicing and pursuing payment affect a business’s bottom line.
Some of those are obvious hard costs. Others are more hidden. But all are attributable to the nature of traditional payment processes, which are manual, labor-intensive, and often dependent on paper and postage. They’re slow, difficult to monitor and prone to error, in other words.
Yet all of these costs are avoidable by simply leveraging the right technology platform. We’ll get to that, but first let’s ring up the nine costs that are hurting the cash flow and bottom line of any company that still relies on yesterday’s payment processes.
What are the 9 avoidable costs of traditional B2B payment processes?
1. Slow payment cycles
The more friction introduced to a payment transaction, the slower it goes. Lagging payments complicate financial reporting, affect credit lines and need to be managed manually to ensure they’re completed.
2. Days Sales Outstanding (DSO)
With inflation rising, it’s costing companies even more to carry their customers’ debts. For a hypothetical company with a DSO of 45 days and an inflation rate of 8.6%, that’s 106 basis points, more than one full percent.
3. Reconciling disputes
Few AR professionals enjoy dealing with unhappy customers. When there are disputes on an invoice, unraveling what caused the discrepancy is time-consuming, tedious work. If the mistake is on your end, it can make customers question the accuracy of your billing.
4. Interchange fees
Depending on the card used, interchange fees on payments made by virtual credit cards currently range from 1.15% to 3.30% or more. The pandemic slowed down the escalation of interchange fees, but major credit card companies are now getting back to assessing them – and potentially raising them – twice each year.
5. Human error
Payment processes that require some level of manual data entry and remittance matching are expensive in more ways than one. Not only are companies paying valuable employees to do tedious work, but keystroke-intensive tasks are prone to human error.
6. Customer (dis)satisfaction
Businesses that haven’t kept pace with their customers’ AP systems by adopting modern-day AR automation experience more disputes over invoices, slower payments that affect their customers’ credit lines and lower net promoter scores. The worst-case scenario is that customers take their business to a competitor who is easier to pay.
7. Reputational damage
resolution, inaccurate billing or inability to adapt to buyers’ preferred payment methods. Why should they? Not when there’s an ever-increasing number of vendors and suppliers who have adopted technology to update their payment processes to conform to buyer requirements.
8. Employee disengagement
Outdated account receivable (AR) processes that are overly manual are hard on internal teams, too. AR teams are vulnerable to employee burnout and high turnover, and strategic projects that provide employees with more challenging work and professional development are often postponed because manual AR workloads are all-consuming.
9. Compliance penalties
Regulators may impose fines or penalties for inadequate or erroneous compliance with applicable standards. For instance, PCI compliance fines can range from $5,000 to $100,000 a month (approximately €4,900 to €9,800) depending on the size of the company and the duration and scope of non-compliance. A large company may be able to absorb these fines but mid-sized ones may not.
Avoiding costs with a digital payments network
Like we said at the top: These costs are avoidable, provided a company deploys the right technology solution: a digital payments network. Joining such a network will help an AR team easily satisfy varied buyer requirements for different payment formats, cure the headaches involved with AP portals and otherwise accelerate cash flow and improve customer experiences. While removing manual labor and endless keystroking from the process.
The result? A prodigious increase in the number of digital payments you receive with a parallel reduction in time-to-pay, labor and error.
Billtrust’s own Business Payments Network (BPN) delivers exactly this outcome, radically simplifying and accelerating how you get paid. Meanwhile, you’ll be liberating your AR professionals to tackle more profitable tasks. It’s why companies have joined BPN to deliver hundreds of thousands of invoices to over 175 AP portals worldwide.
See how BPN checks all the boxes when it comes to meeting the demands of a B2B AR team that wants to keep pace (or even get ahead!) of buyer payment challenges. While avoiding the costs of outmoded payments processes.
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