Jul 14, 2022
What is an integrated receivables solution?
Integrated receivables is the centralization and automation of all your accounts receivable workflows. Companies are opting to streamline their workflows with a receivables solution to save time, reduce accounting errors, and increase working capital. Some companies, like Archipelago Lighting, have tripled their revenue by working with an integrated solutions provider.
Business to business payments are best facilitated with an integrated receivables solution because of the nature of B2B transactions. Accounts receivables in B2B environments are responsible for a host of tasks, from credit checks to collections and reconciliation. Furthermore, in order to offer net terms—which are industry-standard in B2B spaces like manufacturing—businesses must sacrifice available cash flow.
Using manual processes for all these disparate tasks is time consuming and error-prone. In this article, we delve into how an integrated receivables solution can save companies time, increase liquidity, and improve customer relationships.
These solutions are a type of Enterprise Resource Planning (ERP) SaaS—software to improve accounting workflows and customer outcomes in real time.
But first, a note on the current economic environment
Such a solution is especially important at the present moment. One major aspect of automated accounts receivables is increased available cashflow. In the midst of inflationary or recessionary environments, you need to have cash on hand. Integrated receivables makes that cash available more readily available.
What workflows and processes are integrated?
Credit checks
Credit decisioning
In order to attract new customers and maintain existing relationships, it is common for B2B companies to offer credit lines or net terms to their customers. However, in order to do so, they must be confident in their customers’ creditworthiness.
Manual processes for credit verification, however, are laborious and subjective. You must both verify credit reports with, for example, Experian, and also call references. This can drastically slow the process of customer onboarding, while also impacting the customer’s experience of your brand.
The right integrated receivables solution for B2B companies should also accurately and rapidly verify customer creditworthiness, both protecting your company and streamlining onboarding. By outsourcing your business credit checks and decisions to expertis, your team gains back time and peace of mind.
Net terms enrollment
Once creditworthiness has been determined, customers can be offered net terms. “Net terms“ is the delayed time period that a customer may take to pay an invoice. Once you have a clear picture of your customers credit, you can offer them net terms, increasing the likelihood that they continue to do business with you.
Payment processing
Nowadays, customers expect to have multiple ways to pay. No longer is it acceptable to only permit customers to pay by check. The right integrated solution will allow a variety of electronic payment methods that align with your customers‘ business needs.
Look for integrations that allow your customers to pay by credit card, ACH, wire transfer, debit card, and more.
To learn more about integrated payment methods, check out The Best B2B Payment Solutions: A Guide
Accounts receivable financing
To maintain liquidity, B2B companies may offer net terms to their customers and then receive funding for invoices from a financial institution. Structured as either accounts receivable (AR) financing or factoring, this financial service is a cash advance on the value of an invoice.
To enhance your business processes, it is best to integrate this receivables process with other processes, like credit decisioning and payment processing. There is no good reason to have one financial institution provide payment processing and another provide AR financing, when solutions like Resolve accomplish both.
Payment reminders and collections
Busy customers understandably forget to pay. And even after careful credit assessments, some customers will be unable to fulfill their payment obligations.
Integrating reminders and collections with the other receivables tasks we’ve been discussing makes this process less intrusive and error-prone. Integration lets you stay on top of multifarious outstanding invoices without sacrificing positive customer relations.
Reconciliation
In accounting, reconciliation is a comparison of two records; for example, the total value of issued invoices with the total value of money actually received. Proper treasury management involves regular reconciliations.
With integrated SaaS receivables, reconciliation is easy. When the same software product is issuing invoices and taking payment, records can be automatically compared. Not only does this expedite receivables workflows, but also it minimizes the risk of human error when reconciling accounts.
A real life example
A great example of integration at work is Archipelago Lighting. Archipelago used Resolve’s receivables solution to integrate credit checks, accounts receivable management, and net terms management.
Archipelago had historically performed manual credit checks, which took 10 days to complete and would lose them sales. With Resolve’s integrated solution, credit decisioning was shortened to 24 hours, and customers were immediately enrolled in net terms programs.
Moreover, with the subjectivity of manual credit checking removed, Archipelago was able to offer significantly larger credit lines. With the certainty afforded by Resolve’s intelligent credit decisioning, the credit lines extended to their customers increased in value on average from $2,500 to $50,000. With this enlargement, Archipelago was able to triple their revenue.
What are the benefits of an integrated receivables solution?
Time saved
An integrated receivables solution saves your team time so they can spend it on value-added work rather than laborious, manual processes. 79% of companies in one survey said that automated AR improved their team’s efficiency.
Take, for example, Trenchless Supply, who partnered with Resolve to implement integrated receivables. CEO John Sanzone remarked that, before implementing Resolve’s SaaS solution, their accounts receivable workflows were becoming burdensome. Regular customer requests—for example, that an invoice be resent—were beginning to pile up as Trenchless scaled. Sanzone’s staff were continually investing more time in managing their receivables, which took them away from growth-oriented tasks.
Yet once Resolve’s receivables solution was implemented, customers had a way to see their invoices online, and no longer needed to call the office. Moreover, Trenchless Supply also received net terms financing, which helped them further scale their operations, without having to turn to an accounts receivable factoring company (thereby giving up control of their invoices). Customer experience was improved with Resolve’s invoicing dashboard, and Trenchless Supply’s team got their time back for value-added tasks.
DSO reduction
Speaking of saved time, you can also expect to reduce your Days Sales Outstanding (DSO) through types of software integrations too . With a multifaceted payment channel, programmed payment reminders, and clear net terms, you will reduce the time it takes to get paid.
Nearly 90% of companies from one survey noted reduced DSO after implementing AR automation software.
Reduced human errors through automation
Tedious, lengthy accounting tasks lead to understandable human error. AR automation addresses this pain point.
We have already mentioned some ways in which automation improves treasury management—let’s review them.
- Credit checks
When checking customer credit, software can eliminate the need for subjective credit assessments and reference calls. The best credit verification software even uses “quiet business credit checks” that don’t affect your customer’s credit scores. Mistakes can be costly if you improperly perform credit checks. Better leave this high stakes task to data, automation, and the experts.
- Reminders and collections
With dozens of outstanding invoices, it can be difficult to issue timely payment reminders. Using automation means your integrated system knows exactly who and when to remind.
- Reconciliation
Cash management through reconciliation is easy to get wrong. Your accounting team would likely rather focus on strategic tasks, directed at growth and customer service, than on comparing 100 rows of one spreadsheet to 100 rows of another. Yet reconciliation is a critical task: so, let software do it instead.
Improved customer satisfaction
Your customers have more ways to pay. Customers prefer a diversity of payment methods, and the right integrated receivables solution will allow customers to pay in more ways than just by check. Through, for example, Resolve’s online portal, your customers can pay via ACH, debit card, credit card, wire transfer, and more.
Moreover, customers have greater visibility into their own account through an online dashboard, when you integrate with Resolve. They can see their invoices and their net terms in a click.
Furthermore, quiet credit checks are to their liking because their credit scores are unaffected. As they are completed in 24 hours, and net terms quickly issued, you and your customer can hit the ground running.
Lastly, above all, your customers are happy to take more days to pay: extending net terms to your clientele is a great tool to improve satisfaction and to attract new, larger accounts.
Improved security and fraud protection
In-house, it is difficult to implement and adhere to rigorous security policies. However, since during accounts receivable workflows you are handling customer payment data, security is critically important.
Finding the right solution can help optimize security policy. A SaaS provider specializing in this domain will have expertise in securely managing sensitive customer data. When selecting a provider, look for a receivables platform that has clearly defined security systems in place.
Fraudulent activity is also significantly reduced through the credit verification process. With a clear picture of who you’re doing business with, your risk of exposure to invoice fraud is minimized.
How do I select the best solution for my company?
Outsource to a SaaS provider
It is, naturally, extremely difficult to design and synthesize all said receivables modules in-house. The only real solution is to outsource to a SaaS provider in the receivables space. Resolve is the choice many of your peers—like Trenchless Supply, Archipelago Lighting, and GB Fabrication—have already made; however, leaning into educating yourself and read resources such as this B2B payments guide to learn how to select the best integrated receivables provider.
Look for a company that offers white labeling for seamless customer experiences
Take the example of GB Fabrication, who were hesitant to outsource their receivables before discovering that, with Resolve, they were able to white label their software dashboard to conform to the image their loyal customers expect of the brand.
Read more about GB Fabrication’s experience with integrated receivables.
Lastly, look for a company that guarantees the benefits above, but which is also a company you want to work with long term. SaaS thrives on great people backing great products.
Conclusion
An integrated receivables solution is a way for your company to centralize and simplify a network of disparate receivables workflows. Normally a SaaS solution, it allows your business to scale through automation, improve security and liquidity, all while opening more payment channels to customers and improving their experience with your company. For these convincing reasons, integrated receivables solutions are becoming an industry standard in the B2B fintech stack.
Ready to automate your B2B transactions? Resolve is an innovative new solution that will elevate your accounts receivables and B2B payments workflows. Resolve integrates every aforementioned module and takes a partnership approach to B2B relationships to boot. If you’re looking for a partner with expertise, committed to customer service, consider Resolve.
