Sizing up the right prospects for receivables automation

Middle market companies just as eager for value and efficiency as their large corporate counterparts

Receivables automation is a hot topic as businesses struggle to manage growing volumes of paper and electronic remittances. Automating some or all of a company’s order-to-cash lifecycle delivers significant benefits, from greater straight-through processing and faster access to cash, to higher customer satisfaction and stronger information for decision-making.

Yet many financial institutions (FIs) mistakenly assume only large companies are ready for receivables automation.

The reality could not be more different.

The advantages of receivables automation tools can apply to both large corporations and middle market organizations. Any business looking to improve efficiency, accuracy, staff productivity and working capital stands to gain.

In fact, a surprising number of middle market companies are already adopting receivables automation—some at an even faster pace than their larger counterparts.

These savvy organizations recognize the value of reducing manual workarounds, speeding access to information and redeploying limited resources. Receivables automation is no longer an idea for the future—it’s an essential way to keep their businesses competitive right now.

For FIs, it means more opportunity to strengthen customer relationships, differentiate your bank or credit union in the marketplace and add new revenue streams.

Complex receivables cycles drive demand for automation

The fast rise of receivables solutions mirrors growing customer demand. Companies of all sizes face daunting challenges with their incoming payments and associated remittances, including:

• Days Sales Outstanding (DSO) that’s higher than necessary
• New payment methods that require individual data feeds and processes
• Electronic transactions that still require manual review or data entry
• Large volumes of unapplied cash

As a result, accounts receivable teams struggle to keep up with cash application. It can be difficult to verify deductions and discounts. Processing delays often result in false collection notices for customers. Company leaders make decisions with limited visibility to payment status or current financial data.

Receivables automation tools address these (and many more) common pain points. Receivables management services from Deluxe, for example, equips banks and their business customers with a modern cloud platform that streamlines payment processing and cash application across all paper and digital payment types. RaaS leverages cutting-edge artificial intelligence and machine learning capabilities that can tackle invoice matching and receivables processing faster than any human.

When fully realized, receivables automation can span all of these services:

• Bill pay
• Remote deposit capture
• Lockbox
• Integrated receivables
• Remittance matching

The more areas a company automates—and the more receivables services that can link together through a common platform—the greater the impact for banks and businesses.

Don’t overlook the middle market opportunity

Too often, FIs miss out on new technology revenue by limiting sales and marketing efforts to the largest customers in their portfolios. As recent sales trends show, size is no longer the primary factor in an organization’s readiness for automation.

Today, with the right platform and provider, FIs can offer receivables automation to large corporations and middle market organizations through a single solution. End-to-end automation is the ultimate goal, but with flexible platforms like RaaS, customers can migrate from manual processes or other providers in the order that best suits their businesses.

For example:

• A middle market company struggling to improve their customer experience could realize immediate value from mobile remote deposit capture in the field and an online billing service—then move into more sophisticated receivables automation options in the future.

• A larger corporation that already relies on an FI for lockbox services could easily add remittance matching and integrated receivables capabilities for both their paper and electronic payments as a next step in their automation journey.

This flexibility lets banks and credit unions tailor each engagement to a customer’s specific needs. It also provides a clear path for growth and retention, without the disruption of switching providers or banks in the future.

Bring receivables automation to your bank’s best prospects

As your bank moves forward with receivables automation, follow these steps to find the best prospects in your portfolio:

1. Identify the right criteria. Building a clear picture of your ideal receivables automation customer helps everyone stay focused. Company size is important, but it’s no longer the only factor to consider. A customer’s receivables volume, mix of payment methods, current bank services, existing technology and organizational culture will also influence the likelihood of a sale.
2. Analyze your customer portfolio. A great sales roadmap usually begins with your bank’s existing data. Take time to review what you already know about your commercial customers and use it to inform your receivables automation strategy. It’s smart to consider transaction volumes and amounts for each payment channel, as well as customer business size and industry.
3. Team up with your receivables provider. Just as your FI acts as a resource to your customers, your solution provider should support your bank or credit union’s sales efforts. Look for one-on-one support and flexible resources, from help with customer segmentation and prospecting to pitchbooks, presentations and customer-facing brochures.
4. Conduct discovery sessions with key prospects. In-depth conversations with key stakeholders in treasury management, accounts receivable and accounts payable will also illuminate opportunities. Here, FIs can provide considerable expertise by helping customers look at the entire order-to-cash lifecycle. Often, what one department perceives as minor delays or manual workarounds can have a sizable (and often unrecognized) impact in other areas of the business. Finding these opportunities will support a strong business case for automation.

Throughout your sales process, be ready for some surprises that may challenge conventional thinking. A smaller B2B customer with fewer receivables may be a better candidate for automation than a large B2C company with a high volume of payments. Middle market businesses may have more short-term potential than enterprise companies.

What’s important is learning how to match the solutions available in receivables automation to the challenges occurring in your customers’ businesses.