4 ways customer-centric AR can help fuel growth

Accounts receivable (AR) can be underappreciated and overlooked, especially in terms of its influence on customer experience and business growth. For B2B businesses that offer customers credit terms, nearly every customer likely interacts with AR in some way: directly through support calls, digitally through email and portal communications, or indirectly through the effects of credit policies.

These interactions are critical to customer experience and demonstrate the broader value of AR. This is why we convened a financial executive roundtable at the latest Shared Services & Outsourcing Week to discuss some of the challenges companies are facing with AR and B2B credit.

One of their chief concerns was that it can be difficult to meet every customer’s needs—from those who desire B2C-style self-service to those who require elevated attention—when AR isn’t running as efficiently as possible. At the same time, when companies self-fund credit, every credit purchase affects cash flow. The business may not be able to weather the risk of raising limits for large customers or have the time and data insights to keep credit limits appropriately sized, which can hamstring both AR and sales.

To meet the unique needs of each B2B buyer, companies need a modernized and more efficient approach to AR to make right-sized credit decisions, help protect them from fraud and nonpayment risk, and provide predictable cash flow. At the same time, this approach should have the flexibility to offer customers the billing, service and payment options they prefer.

When a function is traditionally seen as “back office,” it can be tempting to only consider new solutions from a back-office point of view. How will a new AR system automate lead to deeper efficiency? Which ERPs does it integrate with? Will a customer portal help reduce support calls, payments by paper check, days sales outstanding (DSO) and overdue payments?

These questions are important and table stakes for any modernization effort. However, they leave out a key stakeholder: customers. Further breaking this down, consider how AR modernization can affect different types of customers, such as:

• Digital natives who prefer self-service and expect quick online credit decisioning
• Traditionalists who prefer the human touch and doing business face-to-face
• Those in the middle who like having both digital and in-person options for payments and communication
• Key account holders who expect white-glove service and bespoke terms

Even within these broad buckets, each customer is unique. They’ll have their own preferences for communication, support channels, and payment options and terms.

This level of flexibility requires modernizing AR to transform it from a back-end, process-oriented function into a more strategic, customer-centric role. Companies may choose to undertake this modernization effort by building their own technology or using a selection of AR technologies. Or they may seek a third-party partner that can offer both technology and credit underwriting.

This second option—what we’ll call a full-service AR solution—offers a few distinct advantages. It enables organizations to focus on their core business without the need to act like a bank, all while providing the level of customer service that today’s B2B buyers expect. Let’s look at 4 ways customer-centric AR supported by a full-service solution can help fuel growth and retention:

1. Customer-centric AR is efficient so that AR teams can regain time for customer service.

When selecting an AR modernization path, look for a partner that reduces manual work, automates communication, provides self-service customer account access and removes decisioning and collections from the AR team’s plate. These capabilities will help the AR staff gain more time for strategic work as well as more time to provide the higher level of service that some traditional customers and strategic accounts demand.

2. Customer-centric AR provides the modern payment portal experience many customers expect.

While every business may have customers who are digital holdouts or who expect personalized service, two-thirds of B2B buyers expect a B2C-like experience when buying online. A consumer-grade B2B payments portal can improve DSO, provide customized billing and term options and reduce support questions. And when more traditional customers usher in a new guard who expects digital experiences, businesses will be ready to onboard them—and retain them.

3. Customer-centric AR reduces the friction between decisioning and policy enforcement.

It can be a challenge for the customer relationship manager to also be responsible for communicating credit decisions and account statuses. This can cause external friction between sales and customers, as well as internal friction between sales and the finance or AR staff who handle decisioning. A full-service AR partner becomes a buffer between sales and credit decisions, helping to reduce friction. Businesses can still provide flexibility, benefit from more consistently applied policies and potentially offer commercial-sized credit limits for bigger customers.

4. Customer-centric AR supports customer retention and sales growth.

For companies that self-fund trade credit, there is a direct—and often challenging—relationship between purchases made on trade credit and cash flow, especially for those companies with seasonal sales spikes or that provide credit in the 6-figure range. When a full-service AR partner assumes the credit underwriting risk, businesses can choose to get paid within days by the AR partner, who manages payment, reminders and collections. This leads to several benefits that can impact customer service, retention and growth. Business can:

• More easily offer extended terms and commercial-sized lines of credit to help retain customers and attract new ones
• Use analytics to identify key customers with good growth potential
• Track customers who may need proactive service intervention for payment challenges
• Embrace new growth opportunities without cash flow being a barrier

Capital One Trade Credit offers a full-service AR solution for B2B enterprise companies. Backed by the scalability and security of a top 10 U.S. Bank, Capital One Trade Credit provides flexibility for both your business and your customers. Choose the program components your business needs while providing each customer with tailored terms and billing treatment.

Let's talk more about modernizing your AR. Contact us at tradecredit@capitalone.com.