Reforming Accounts Receivable Collections Strategy for CFO’s Office

The success of B2B businesses depends on their ability to deliver the best customer experience(CX) that differentiates them from competitors. The proliferation of digital channels and the convenience and better engagement levels that they offer have only heightened the need to offer great customer experiences every time. What started out as a nice-to-have novelty for B2B businesses has now become a necessity. And organizations across the globe are making huge investments to boost customer experience. In fact, as per a recent study, 73% of businesses reported that CX is becoming a first concern, while 38% of brands have indicated an interest in improving the CX that they offer. CFOs across B2B businesses have identified this opportunity and have jumped on the CX bandwagon, adding it to their accounts receivable collections strategy as well – a crucial post-sales juncture for businesses and customers. However, the zest to deliver customer experiences in the B2B collections process may cloud your decision-making and could severely impact your cash flow. This is because most CFOs look at their Accounts Receivable from the lens of an optimist, assuming that all of their customers will pay on time. This causes the collections team to chase payment defaulters without considering their unique individual circumstances. The CFO’s office is also under pressure to meet tight deadlines and, often, unrealistic KPIs. Collections KPIs like ADD(Average Days Delinquent) and DSO(Days Sales Outstanding) are collections performance metrics that are always expected to be as low as possible. To improve CX and ensure steady cash flows, finance teams need to avoid a one-size-fits-all approach to collections, and instead, segment the customers based on their collections stage and financial situation. Customer segmentation enables the collection teams to classify their customers based on the type and reason of delinquency by analyzing historical payment behavior data. The teams can leverage the data to customize collection strategies for each segment. This helps ensure a friction-free customer experience and improves collection rates. You can explore a cheat sheet for customer segmentation here. In the ebook above, you’ll find information on how segmenting customers based on previous payment behavior and profile type helps collection teams build proactive and customized collections strategies. In doing so, CFOs create an ecosystem of trust and a CX that encourages customer loyalty and maximizes customer lifetime value(LTV).