In today’s hyper-competitive B2B online sales landscape, effective cash flow management – underpinned by a sturdy Accounts Receivable (AR) framework – is the lynchpin of operational efficiency. As many finance pros can attest to, AR can often be complex and time-consuming, especially for B2B transactions involving large volumes and longer payment cycles. Reams of paper-based documentation and manual data extraction from multi-format invoices exacerbate the problem. But with the right tools, consistent methodologies and proactive measures in place, AR can operate like clockwork. With that vision in mind, we’ve compiled some top tips on how to optimize AR processes for B2B online sellers, helping them establish healthy cash flow patterns, reduce the risk of bad debts and improve overall client relations.

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1) Clear Payment Terms

When clients understand your terms from the beginning, there’s less ambiguity and fewer payment delays. We always advise to set specific credit terms for each client type, and this may vary based on industry standards, the nature or length of a particular client relationship, or the volume of business. Payment terms might include options like Net30 or Net60, depending on your cash flow requirements and risk tolerance. Research indicates that 36% of small businesses wait between 30 and 90 days to get paid, and the most popular payment policy, according to the 573 small businesses surveyed, is invoice on completion, with 30 days to pay. 30% of respondents also attest to relying on this formula to get paid, while 17% demand payment immediately on completion. Irrespective of the business type, establishing clarity on your preferred terms from the offset is crucial.

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Our recently launched all-in-one Global Accounts Receivable solution, designed to simplify credit, risk and invoice management, enables companies to offer extended payment terms of up to 90 days to their customers, without absorbing any credit risk. This has proven to be extremely popular among clients looking to focus on driving sales volumes rather than debt collection and underwriting payments.

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2) Automate Invoicing & Payment Reminders

As discussed in a previous blog post, automation is an invaluable tool for streamlining the AR process, allowing B2B sellers to reduce manual workloads and focus on growing their business. Strategically engineered automated systems – like the 40Seas Global Accounts Receivable platform – centralizes invoice data in a user-friendly dashboard, allowing companies to easily track payment statuses, manage due dates, and expedite invoice approvals, mitigating the risk of payment delays. By connecting their ERP or accounting software, companies can enjoy a streamlined reconciliation process, matching invoices with purchase orders and delivery receipts in real-time, while collecting payments via credit card, direct debit or digital wire transfers in different currencies worldwide. Automated payment reminders can also be sent to customers at predefined intervals, reducing the need for manual follow-ups.

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3) Offer Multiple Payment Options

Simply put, the more convenient you make the payment process, the faster clients are likely to pay up. Convenience plays a critical role in ensuring timely payments, as clients are more inclined to settle their dues when the process is straightforward and aligned with their preferences. Offering a diverse range of payment methods is particularly advantageous for international B2B clients, who often face limitations when it comes to accessing certain payment platforms. By accommodating these needs, businesses can remove barriers that might delay transactions. A flexible range of options, including credit cards, wire transfers, and other digital solutions, empowers clients to choose the method that suits them best, ultimately leading to quicker payments.

Digital payment platforms like PayPal, Stripe, or similar services, which have gained significant traction in the B2B space, further streamline the payment process. These platforms not only accelerate collections but also provide clients with the added convenience of handling payments in a familiar and user-friendly environment. Businesses that prioritize such flexibility and convenience are likely to experience improved cash flow and stronger client relationships, as they make it easier for clients to fulfill their financial obligations efficiently.

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4) Monitor & Analyze AR Metrics

Even AR processes have KPIs. If you’re serious about enhancing AR operations, it is essential to regularly monitor certain metrics to identify any under the bonnet issues or areas for improvement. Key metrics can provide insight into cash flow patterns, helping sellers manage receivables more effectively. For one, companies should regularly calculate Days Sales Outstanding (DSO) – which measures the average number of days it takes to collect payment after a sale. A lower DSO indicates efficient AR processes, while a high DSO could signal issues with payment collection or credit policies. We hear a lot about KYC, but sellers really need to meticulously review payment patterns to identify chronic late-payers, or those with a history of late payments might need adjusted credit terms, payment reminders

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5) Implement a Proactive Collection Strategy

Establishing a clear and consistent collection process reduces the likelihood of delinquent accounts and helps companies to maintain healthy cash flow. This goes back to the previous point about making it easy for clients to pay – set clear payment expectations from the offset and if needed, send friendly reminders for payment well before the due date or escalate the urgency if payments go unpaid over extended periods. Some clients consider implementing late fees or offering discounts for early payments to create the necessary incentives.

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For more information on the 40Seas Global AR platform, visit our homepage and click ‘Request a Demo’ on the top right hand side of the page. A member of our team will be able to handle your query directly!

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