George Anderson Digital Commerce 360
With the right mix of web-based payment-management tools integrated with their ERP system, online B2B sellers can significantly reduce their “days sales outstanding” and improve cashflow across international markets, George Anderson of Corevist writes.
The world of payments presents unique challenges for manufacturers and distributors doing ecommerce. Unlike retailers, who generally accept immediate payment from consumers, B2B vendors often extend credit terms, which may vary by customer contract. That means B2B ecommerce solutions must offer a payment method of “invoice” for finalizing orders—but it also means customers need a way to pay down those invoices through a self-service portal, ideally one that’s integrated to the ERP for real-time account standing, invoice payment, and more.
In other words, B2B ecommerce on its own can speed up the browsing and buying experience for customers, but it won’t speed up cashflow without some thought given to web-based accounts receivable (A/R). That’s because every B2B ecommerce order will still land in the traditional invoice queue, which creates friction for all parties involved.
The struggles of B2B sellers and customers
B2B vendors without web-based A/R will struggle to reduce days sales outstanding (DSO). That means continuing to deal with late payments, the cost and friction of sending invoices, and constrained cashflow. For multinational companies, these complexities are only compounded, with different divisions partnering with different banks and doing business in different currencies.
On the customer side, delinquent credit status can cause confusion as B2B ecommerce orders go on credit block. What’s more, without a web-based payment solution, customer account management will continue to require cumbersome processes like phone calls to the vendor’s A/R department and placing checks in the mail. All of these throw roadblocks in the way of B2B e-commerce success for both the vendor and the customer.
Clearly, B2B vendors need to do two things:
Reduce days sales outstanding
Find ways to do it internationally (for global companies)
Reducing days sales outstanding
In a B2B ecommerce context, one way to reduce days sales outstanding is to give the customer visibility into their credit status right within the B2B portal—and give them the ability to select and pay down invoices.
If the customer can’t place an order due to credit block, yet they can see and pay down invoices on their own, then the B2B ecommerce solution has truly empowered them. That should be the goal of all manufacturers and distributors who want to do business online. It’s the key to reducing days sales outstanding.
The challenge is nailing the B2B payment portal. The ideal solution should remove all friction points by offering things like:
Direct, real-time ERP integration so all customer-facing information is up to date and all customer actions post to the ERP immediately;
The ability to view the customer’s entire order and invoice history;
The ability to filter invoices by status, date, and any other relevant criteria;
The ability to select multiple invoices for immediate payment;
The ability to take electronic payments like credit/debit cards, ACH transfer, eCheck, PayPal, and more;
Ability to log those payments in real time against the invoices in the ERP system, so the customer’s account gets back in good standing, allowing them to place orders again in the B2B ecommerce store.
Offering self-service e-payments internationally
For multinational B2B vendors, the problem is even more complicated.
Do you build an ERP-integrated payments portal for every brand and division around the world? If so, is that portal a core part of the B2B ecommerce solution in each instance, or is it a standalone platform requiring its own budget and technical resources?
How do you finance and manage multiple, unique ERP integrations?
Not only that, but your B2B payment portal (or portals) will have to deal with multiple banks, payment gateways, and currencies. That’s a lot of projects you’ll have to underwrite to support an international initiative to reduce days sales outstanding.
This does get easier if all your divisions are on the same centralized ERP system, or if their unique ERP instances are templatized. In either case, one way to address this issue is with a web A/R portal, integrated to your ERP(s) and integrated to a flexible payment infrastructure provider. If you choose a payment infrastructure provider who works with multiple international banks, you may be able to reuse the infrastructure investment with minimal adjustment in multiple global divisions.
The ERP integration is key not only for a globally scalable solution, but for the user experience of every customer. Without real-time ERP integration, customers won’t be able to see account standing, open invoices, invoice status, and more. If that’s the case, then the web A/R portal isn’t 100% self-service. Customers will still have to call in to manage their accounts, which means payment friction hasn’t been eliminated.
The takeaway: Self-service is here to stay
Wherever manufacturers and distributors fall in this landscape, one thing is clear: B2B buyers want to buy online, and they’d like to pay online, too. Not every customer relationship is ready for credit card payments, which means invoices are here to stay. Yet manufacturers and distributors can make life easier for customers (and for their own A/R teams) with a self-service B2B payments portal that’s integrated to their ERP system.