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How a Customer-centric Approach Accelerates B2B Payments

Looking at your customer base from different angles, based on their payment behaviour, industry, or risk level can be very rewarding for your cash flow.

Dimitri Raziev
Dimitri
Founder, Kolleno

To reduce the Days Sales Outstanding (DSO) and speed up the collection process of your invoices, it is useful to look at your customer base from different angles. Dividing your customers into different categories based on their payment behaviour, industry, or risk level can be very rewarding for driving B2B Payments.

The following are some of the customer-centric strategies to ensure faster collections.

Augment the invoicing method

Some organizations prefer to have the hardcopy invoicing technique, while others prefer the online means through emails and SMS. On the other hand, a majority of consumers tend to make payments after the invoice has been received. Therefore, ensuring that the finance team sends an invoice early enough requires quick invoicing techniques such as eInvoicing.

This then translates to quick payments that in turn, yield reduced cash-flow problems. Advantages of using mails and other forms of electronic invoicing include speed, traceability, reduced cost, and security. European Commission strongly supports the mass adoption of electronic invoices and regularly studies the savings effects for mass adoption.

Kolleno not only will allow you to send eInvoices, but our AI-powered algorithms will also suggest the perfect timing and will send invoices to your clients using the most appropriate tone-of-voice.

Analyse the Payment Method

Some forms of payment, such as check payments, have a wide gap between the time of initial payment to the moment the cash is posted. This should be a major concern to the financial team. It is vital to ensure that the customers using this kind of means are categorized into one bucket. While those that utilize efficient digital means like credit cards are in different buckets.

Give priority to the customers who make instant payments through digital techniques.

Kolleno Payments Portal not only offers your clients multiple payment options but will also offer payment plans for the customers who are delaying their invoice payment.

Use Analytics to Classify the Customers

Despite a good trend in payment from clients to a business, there is still a need to keep track of the payment behaviour and classify the customers according to the time they take to settle the transaction.

A very good tool to help speed up your collections period is to make Accounts Receivables Aging Reports. Aging Reports will give you a flash understanding, what is your weak link. The procedure is simple- you have to take a note of the time you receive the payment from each customer and see what is the overall picture. You can divide the payment period into 0-30 days, 31-60 days, and so on. The report shows how different industries get paid- the majority see their payments quite late. This can hurt the cash flow of your business greatly.  

Currently, the financial teams have found analytical tools that are very sensitive to the behavior of customers. From this, they can decide on which clients to give a call first before the other and can be used in future financial planning.

Analyse the Past Behaviour of a Customer

Some clients tend to take longer durations to make payment and they form a kind of late payment routines. For instance, the organizations that deal in a variety of stock or commodities may themselves encounter later payments. At the initial stages, identifying such traits is so hard but with the subsequent transactions, their trends can be noticed.

This defect can often be resolved by subtle decisions that involve categorizing the customers in different buckets according to their past behaviour and tendency to bring bottlenecks.  Furthermore, separate the ones that are quick to make payments for the effective cash flow of a company.

We at Kolleno understand that different industries need a tailored approach when it comes to the collection processes. Our algorithms are designed taking in mind the specifics of architecture, construction, facilities management, healthcare, legal, and utility industries.

Categorise Your Customers

Some customers are associated with higher risks as compared to the rest. For example, a large corporation that is reputable and with a large base of fixed assets. They pose lesser risk to the cash flow as compared with start-ups that have not even reached their break-even point.

Therefore, chasing the invoices of the riskier customers has more priority than that of the more reputable ones. However, this task may be very daunting. It can take a lot of your employee’s time away from their core responsibilities. Kolleno AI-powered collections software will categorise clients into different risk categories and will contact them in accordance with the best collections practices.

Conclusion

Cash flow is very important for an organisation especially those more concerned about their scalability. Proper analysis, as well as accurate information on the cash flow, can be very important for a firm for its general growth. Focusing on consumer behaviour is the best approach to optimising the cash flow within an organisation.

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