To curb the impact of the evolving business dynamics, finance organizations globally are trying to come up with innovative ideas of operations to stay relevant in the market today. Companies like Apple, Netflix, Amazon, Airbnb, and Uber caused a significant disruption in their respective industries – and the one thing common between them is a customer-first approach to doing business.
While all of these are Business-to-Consumer (B2C) companies, it won’t be long before buyers in the Business-to-Business (B2B) space would start expecting the same from their suppliers. To meet the CFO’s goals of improving the cash flow, A/R leaders also need to go above and beyond and work with customers to get paid faster and reduce the volume of outstanding receivables.
Being a customer-centric function doesn’t mean A/R teams need to meet every demand the customer keeps on the table. It implies that A/R teams should listen to them, understand their needs, and then work with them to achieve a mutual ground that serves both parties’ interests. But A/R leaders need to overcome a few roadblocks to inculcate this mindset across all the teams.
Here are three most commonly understood challenges that stop A/R teams from progressing towards providing customer experience:
1. Pivoting the credit and collections strategies
A/R leaders need to start by optimizing their core process, i.e., credit and collections, and rethinking the strategies around customers.
2.Improving the relationship between the A/R & the sales teams
A/R leaders need to focus on an A/R + Sales ecosystem to make not just sales, but profitable sales in a way that bolsters the cash flow and provides customer delight-
3.Investing in a more know-your-customer (KYC) approach
According to Salesforce, attracting a new customer is 6-7 times more expensive than retaining a current one. Hence, the most effective way to reduce Days Sales Outstanding(DSO) would be to channel the A/R teams to adopt a more customer-centric approach going forward. The shift towards becoming a customer-first function might be challenging and a long-term process, but it is definitely an essential step towards improving cash flow and customer retention.
Kevin Permenter from International Data Corporation (IDC) also has similar thoughts on how A/R teams should leverage technology to improve staff utilization and focus more on delivering exceptional customer experience and improving cash flow.
HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.