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Payment Advice to Boost Your B2B Business

By offering modern and quick payment options you ensure your invoices are paid on time, retain customers and even improve your cash flow.

Dimitri Raziev
Dimitri
Founder, Kolleno
Payments

If you are a business-to-business company owner you have important tasks to solve. Number one is to offer your clients easy and modern payment options. The payment processing is completely in your own hands. It shouldn’t be one of the bottlenecks that have a negative impact on your cash flow. By offering modern and quick payment options you ensure your invoices are paid on time, retain customers and even improve your cash flow.

Below we list several payment tips for B2B businesses and how your cash flow will benefit by adopting them.

Adopt Digital Payments Methods

Regardless of whether your business has an online presence or not, it is essential to offer your business customers digital payments options. The data shows that 75% of B2B customers prefer credit card payment options and 63% use mobile wallets, while usage of cheques is steadily declining. Moreover, virtual card spend is projected to increase to $355 billion by 2022. Digital payments have another benefit- speed, and business customers around the world are ready to embrace it. Recent research has found out that instant payments (where the transaction is settled in less than 10 seconds) will account for more than 9% of all B2B payments by 2022.  

The effects of a global pandemic have changed the mindset of many private or business customers. It accelerated the shift to electronic payments options. Offering your B2B customers various ways to pay their invoices is essential to lowering your Accounts Receivables, which in essence is the free credit line to your customers.

Automate Your Accounts Receivables

The COVID-19 pandemics have caused the digital revolution in all sectors, including AR automation, with 63% of firms adapting digital invoicing. Using paper invoicing and manual invoicing practices is not efficient anymore, as it takes time and effort to process.

The B2B Payments Innovation Readiness Report prepared jointly by American Express and PYMNTS portal has found out that manual Accounts Receivables procedure cause the businesses to spend 67% more time to get their invoices paid. Furthermore, the average Days Sales Outstanding (DSO) for firms with technological procedures adapted was 40 days, versus 52 days for firms relying solely on the manual processes. The reasons for this are a long time to follow up on the late invoices. Besides that, the automated AR processes lead to fewer errors.

Optimize Your Payments

Processing your payments is entirely in the hands of the business itself. By finding the most efficient payment processing options will benefit greatly your company and will reduce errors.

The AFP 2020 Survey has talked to financial professionals and 50% have admitted that with the introduction of electronic payment methods the business managed to increase the settlement time, improve cash forecast, and easier matching of payments to the orders.  

Moreover, adopting modern payment options is much cheaper, as some of them are completely free of fees, quick, and convenient.

Consider Subscription Business Model

“Every business soon will be a subscription business”, says an article by Stanford University. While this might be a strong statement, the subscription business model is a booming market and grew by 100% a year between 2011 and 2016. Moreover, the pandemic has accelerated the subscriptions, and the market has grown by 40% during the lockdowns. The trends and mindset of people are shifting towards less ownership, towards being members of the “club”.

For B2B companies it is even more relevant as many of them are offering Software-as-a-Service (SaaS) products. By offering a subscription model, your business is securing returning customers, which means more predictable revenue and creates brand loyalty. In order to successfully adopt the subscription business model, it is essential to integrate various digital payments options, that your B2B customers will be able to adopt.

Bottomline

Kolleno offers a cloud-based extension to your existing Accounting Software that will make your AR automatic. Our AI-powered algorithms will send electronic invoices to your customers, as soon as the transaction has been made. Moreover, the customer who delays their payment will receive a reminder and easy-to-follow payment guidance, using the most appropriate tone-of-voice. Some customers will receive a tailored payment plan, including optional partial payments depending on their payment behavior. These steps will have a positive impact on your AR. Your customers will receive several options to make a payment including Stripe, Direct Debit, ACH, or EE transfer.

The tips discussed above are great for making your business more efficient. Also, it is helpful in improving the cash flow in your own company. However, the benefits do not stop there. Offering your customers various payment methods shows that your business is customer-centric and is striving to improve customer experience. By adopting digital processes, your business also appears to be more progressive and efficient.  Furthermore, adopting digital payments and automatic procedures will facilitate better data analysis. This in turn will provide more insights into what processes can be improved and where the cost saving can be achieved.

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