Planning Guidelines for Faster B2B Payments
- 1. Planning Guidelines for Faster B2B Payments
- 2. • Introduction • How the “Right” Invoicing Accelerates Cash Receipts • Acceptance of Digital Payments Accelerates Cash Receipts • Digital Invoicing & Payments Synergy • Customer Success Story • Benefits • Conclusion • Questions Agenda
- 3. 3 Introduction There are two ways to accelerate customers payments: 1. Enabling & maximizing “On-time customer-initiated” payments that require no collection follow-up 2. Effective Collections Maximizing the first will reflect an enhanced customer experience and reduce collection costs.
- 4. 4 Introduction - Definitions • Digital Invoicing (aka E-invoicing and E-billing) is electronic delivery of an invoice to a customer (vs paper invoice sent via Postal Service). EDI Billing is Digital Invoicing • Digital Payments, aka Real Time Payments (RTP), and “Frictionless Digital Payments” are electronic payments that transfer funds and Remit Advice • Digital Payments are made directly between buyer and seller through a direct, secure, internet connection on an Account to Account (A2A) basis (~ EDI)
- 5. 5 How the “Right” Invoicing Accelerates Cash Receipts “Right” Invoicing: a. Enables fast compilation of invoice from ERP data b. Is in customer’s required format c. Is accurate and conveys all information required by customer d. Delivers invoice in customer’s required or preferred mode (e.g., e- invoicing, post to Vendor Portal). Many European & Latin American countries require e-invoicing e. Delivers invoice to customer same day of compilation • Software giant Oracle reports that 80% of invoices it receives electronically/digitally are paid on time vs. 65% of those received in hard copy Make it easy for your customers to pay you.
- 6. 6 Acceptance of Digital Payments Accelerates Cash Receipts Digital Payments: a. Are received from customers the same or next day b. Funds availability is same or next day • Digital Payments also facilitate COD transactions by providing almost instantaneous confirmation of funds receipt which allows the delivery of product to proceed with minimal delay • Digital Payments can be made/received in many currencies by the Payments Gateway provider.
- 7. Produce Invoice Deliver Invoice Customer Pays Invoice Payment Received Process & Fulfill Order Funds Available Total Days Elapsed 2 3 3 to 9 35 2 to 9 2 to 4 47 to 62 2 1 to 2 1 32 * 0 to 1 0 to 1 36 to 39 Paper Based Digital * Some customers (SMB’s) will pay earlier; COD can be increased. Digital Processing Accelerates Cash Availability by 11 to 23 Days or 23 to 37% independent of Collection Effectiveness Reduction of O2C Cycle Time with Digital Invoicing & Payments
- 8. Additional Advantages of Accepting Digital Payments • Enhanced Customer Experience – accommodate their payment preference for self-serve digital payments. Key element of Strategic AR Management • Many Small and Medium size businesses (SMB) do not usually perform administrative tasks during standard business hours. The ability to pay vendor invoices off-hours is a necessity for them & will help the supplier get paid earlier. • Lower lockbox and credit card fees • Reduced Cash Application costs from receiving more complete, standardized remit information that is conveyed with the payment (vs separately, like EDI)
- 9. 9 Digital Invoicing & Payments Synergy • Digital Invoicing, Digital Payments, and a Customer Care Portal are most powerful when offered together • The combination is appealing to Small & Medium size business & B2C customers: Deal with the invoice once, quickly review & pay. Square claims 75% of invoices it delivers on behalf of its clients are paid same day! (heavy B2C) • A Customer Care Portal facilitates the end-to-end transaction: (a) enabling the payment, and (b) providing access to the invoices and statement of account • Payments can be made via a wide range of mobile devices
- 10. 10 Increasing Collection Effectiveness to Accelerate Cash Receipts Technology can also increase Collection Effectiveness without cost increases • Portfolio Coverage – AI-Driven Digital Assistants, such as Emagia’s Gia, perform automated collection contact to ensure all delinquent customers are contacted (via voice or Gia e-mail). • Increased Effectiveness - Account prioritization optimizes use of collection contact to predictable late payers, while avoiding unnecessary contact of customers who normally pay a few days late.
- 11. Overview: Global water treatment solutions provider with $5.6B in revenues. Global Shared Service Teams in India, Poland, and the USA. Digital Billing & Payments Solution: Emagia AI-powered Customer Billing, Payment Portal, Digital Payments, & Cash Application. Deployed across 80 business units, 16,000 customers with multiple currencies from multiple countries. Functionality includes straight-through processing of Digital Payments (E-checks and Credit Cards), and customer logging of disputes. Impact a Few Months After Implementation : • Accommodation of Customer Preferences/Requirements for self-serve Digital Billing & Payments resulting in increased Customer Satisfaction • > 500 customers using Digital Payments paid > 25K invoices worth ~$90 MM • >600 credit memos used by customers in Digital Remits • 92% auto-cash hit rate • 60% reduction in operations cost to process payments Customer Success Story 6M Transactions 85% Current AR 100% Customer Touch 92% Automated Cash Application Rate THE EMAGIA EXPONENTIAL IMPACT
- 12. Benefits of Digital Invoicing & Payments Accelerated Cash Receipts Ability to Meet Customer Requirements & Preferences Increased Productivity Reduced lockbox and bank processing costs Faster, more Secure Invoicing & Payments from Customers Improved Customer Experience/Satisfaction Meet Customer Billing Specs Faster Receipts & Lower Costs Increased Revenue & Profit
- 13. Conclusion • Digital Invoicing is a requirement and/or preference of most customers. Meeting customer requirements leads to faster payments & a better customer experience • Digital Payments are faster, lower cost, more secure and preferred by many suppliers to paper checks • AI Powered Digitization and Automation are the key enablers for these capabilities • Implementation is a lower cost, faster undertaking than most IT projects
- 14. If you have any questions or comments about this session, please let us know in the chat box or write to us at info@emagia.com Orders Credit Cash Application Collections Deductions Payments Invoicing