Cash flow has made automation a priority for CFOs

B2B payments are complex and expensive, and redesigning them to automate back office functions takes time and money.

Corcentric President and COO Matt Clark told PYMNTS that B2B modernization is, more than ever, a priority for CFOs of businesses large and small.

He said the adoption of digital solutions by businesses to improve their Accounts Receivable (AR) and Accounts Payable (AP) has accelerated. And this acceleration is inspired by the streamlined and intuitive interactions that characterize B2C commerce.

As Clark said, “B2C always leads the way because that’s where all the big investments go – B2B often lags behind. “

But now in the age of COVID, as Clark said, CFOs have taken stock of their back office solutions that have been assembled from a range of vendors and across a range of software. point by point. Financial executives may have tried to lead their own digital transformations, although those tech initiatives were arguably lower-level priorities.

Part of this hesitation has to do with the fact that solution providers typically come from two “angles,” as Clark put it. These could be tech companies that know how to do software well, but are not good at finance and payments. Conversely, there are payment-driven companies that have roots in B2C but don’t know as much about the B2B arena – and, in particular, the complexity of buyer / supplier interactions. In B2B, for example, purchase orders, invoices and preferred payment methods should all be part of the dialogue between buyers and suppliers.

Cash flow is essential

But hesitation can be a thing of the past as cash flow is more critical than ever and can be a life or death situation for the business struggling to keep its doors open.

“I think COVID hit CFOs right in the face in terms of where the opportunities for improvement were and what their exposure points were” in terms of late payments and inefficient workflows, Clark said.

And yet, beyond that old adage that timing is everything, cost is a factor. PYMNTS research indicates that while it is generally recognized that automated AP and AR features have reduced defaults, reduced time and errors, the 60% of companies whose turnover is reduced. between $ 25 million and $ 1 billion said they did not have the funds available to “pull the trigger.” ”On what they need (and want) to improve their operations.

But as Clark noted, the improved cash flow that comes with automation helps systems, in a way, to pay for themselves and generate significant ROIs.

Winking at the momentum of his own business, Clark said there has been “a lot of pull” with CFOs on the order to cash and AR sides of the company. business. The company’s AR management solutions can ensure buyers pay their invoices on agreed terms with a specific time to sell (DSO) in days through supply chain finance type agreements.

“We’re just trying to get them accepted,” he said of these suppliers. “And just getting them accepted frees up a ton of cash for these vendors on large amounts that [suppliers] felt that they had no way out because they cannot access their client’s bank account and withdraw money.

Telling a big customer in Europe, he said Corcentric was able to save 17 days on his DSO.

He predicted that such improvements and initiatives will only gain momentum in the months and years to come. Back office automation, he said, “has been perhaps a middle priority in recent years. We really see this rise to the top of the priority list. “