Written by: Ashton Nanninga
Over the last decade, “Integrated Receivables” has generated quite a bit of buzz, not only in the Fintech landscape, but also within numerous industries where integrated solutions have been proven to help companies modernize accounts receivables (A/R) operations, decrease DSO, increase cash flow, and much more. But, as integrated receivables has risen to the spotlight to help automate and streamline business operations, so too have companies disguising dashboard-driven solutions that are really a mixture of disparate, siloed, legacy systems presented as integrated receivables solutions.
As with a lot of good things that have come from the digital age, some solutions being marketed today just can’t quite live up to the real thing. Technology businesses trying to market integrated receivables solutions that are missing key components such as remote deposit capture or PCI compliance, aren’t truly integrated.
Just take Kodak or Blockbuster, for example—they may not be in the same technology arena, but their business models and products failed to shift with the changing digital landscape simply because they couldn’t provide a holistic solution to evolve with customer demand.
Kodak dominated the photographic film industry throughout the 20th century, but didn’t adapt as digital photography entered in the 21st century and customer preferences began to shift. They waited too long to see the benefits of a new tech evolution. And with Blockbuster, we all know what happened when new streaming services—lead by Netflix—entered the media industry and quickly left Blockbuster behind.
These are just two examples of companies failing to adapt to an ever-changing tech landscape, and more importantly, changing customer demand. Neither of these shifts happened overnight, in fact, both companies likely could’ve remained relevant for much longer had they supported the shift from legacy products (e.g. film and DVDs) to new tech-driven offerings, instead of stubbornly expecting customers to conform to their rapidly aging offerings.
A very similar shift is taking place within businesses A/R operations as more businesses adopt integrated receivables solutions, and you should be wary of the companies that are trying to jump on the integrated receivables bandwagon, while hiding behind the “curtain” of shiny dashboards, but not being able to deliver a holistic receivables solution.
As we’ve written about somewhat extensively dating back to 2014 (and preaching since 2008), truly integrated receivables offerings should be able to accept, process and post any payment method (checks, ACH, credit/debit card, cash), from any payment channel (mailed-in, called-in, in person, lockbox, online, mobile), all on a single, secure and compliant, cloud-based platform.
Simply put, if any of these components are missing, it isn’t truly integrated.
So, as the original integrated receivables solution provider in the market, we’d like to provide a deeper look at what an integrated receivables solution “Is” and what it “Isn’t”.
5 Things a Truly Integrated Receivables Solution “Is”
SaaS, “on-demand software,” is a software distribution method in which applications are hosted by a service provider and made available to customers over a network, typically the Internet (i.e. the Cloud). This model of service delivery is integral when it comes to classifying leading integrated receivables solutions from legacy on-premise solutions trying to piggyback on modern tech trends.
SaaS solutions mean significantly reducing, if not completely eliminating all costs related to having hardware and software managed on site, as well as the dedicated staff needed to manage the on-premise systems. With this modern, cloud-based delivery model, there is no requirement for dedicated IT staff to go through tedious, time-consuming cycles of upgrading systems or hardware on an ongoing basis. Instead, each time a user logs in, the system is able to check for the latest updates so that users have seamless access to the newest version and available enhancements.
Truly integrated receivables solutions are cloud-based and delivered in a truly SaaS model, allowing you the benefit of rapid deployment (30-60 days in most cases) with none of the headaches and rapidly depreciated investments related to legacy on-premise systems.
Business needs change over time, and as we mentioned above, companies have to adapt to the changing business landscapes and customer demands. In the last year alone, since the start of the COVID-19 pandemic, eighty-three percent of businesses have changed their A/R processes, according to a 2020 PYMNTS.com report 1.
Chaining yourself to a solution that isn’t going to adapt with your needs and the ever-changing demands of your customers just doesn’t make sense. Between managing bank, merchant processor, and back-office relationships, you shouldn’t have to worry about continually updating your A/R platform and processes because one of those relationships changes in the future.
With an agnostic solution, your receivables platform will always adapt with you, maximizing flexibility and scalability by being compatible with your existing bank, merchant processor, back-office systems, and even your check scanning hardware.
Having an agnostic receivables processing platform is vital as those business needs and relationships change, sometimes quite often. An agnostic system means you don’t have to change platforms or rebuild existing processes as your business evolves today, tomorrow and years into the future.
Security and compliance are not an either-or area, a truly integrated receivables solution should have both. Security doesn’t equal compliance, or vice-versa. Your chosen solution should provide industry leading proactive security and compliance at multiple layers—at the solution and hosting levels.
One of the biggest benefits of cloud-based IR is robust security and compliance. By running in the cloud, your solution is guarded by experts whose full-time focus is protecting your and your customers’ data. You won’t need the overhead of dedicated security staff maintaining your various systems’ security requirements. By choosing a truly integrated solution, you will have the appropriate levels of security and compliance, especially PCI, for your A/R operations.
You don’t currently accept credit cards you say? That’s OK. Your business can still benefit from the additional security a PCI-compliant platform provides by holding your customers’ sensitive payment data to the industry’s most stringent security and compliance requirements.
Your business and processes are unique. No two companies’ A/R processes are alike, not even if they operate in the same industry and utilize the same back-office systems. Our decade-plus experience working with hundreds of business customers spanning 50+ back-office systems proves this.
Your integrated receivables platform should be able to be configured to your unique business needs, not the other way around. This means the capabilities and functionalities already exist within the platform and can easily be configured to meet your needs as your requirements evolve.
Regardless of the industry you operate within, leading integrated receivables providers can support any range of data elements, processes or workflows and bank, processor and back-office system requirements from a single, highly-configurable platform. As an added benefit, the platform is continuously improving as new modifications and enhancements are made for other customers across the platform. You have the freedom to evaluate those enhancements for your business and enable or disable them based on your current needs.
We love technology, it’s what we do best. But we’ll be the first to tell you that no software is perfect and no software can fix everything. There will always be improvements, configuration and yes, even some customization that needs to take place from time-to-time. At the same time, you can’t expect to purchase advanced software and try to retrofit it to outdated processes and expect to have success.
Software, and especially B2B software, requires open collaboration and partnership between the user and provider in order to achieve full success.
Your chosen integrated receivables vendor should be more than a vendor, they should be a partner. Listening to your needs and helping you evolve as those needs change. Technology is great, but you’re buying more than just the technology, you’re buying the people behind the technology as well. When something goes bump (at some point it always does), are you confident that bump will be addressed in an open, urgent and collaborative way?
In our book, there is no bigger honor than being trusted with the lifeblood of our customers’ businesses, payments from their most valuable assets—their customers.
5 Things a Truly Integrated Receivables Solution “Isn’t”
If you can’t conveniently access and action all payments methods and channels within a single platform/interface, it is not a truly integrated solution.
A growing trend among providers looking to join the integrated receivables conversation increasingly pull “feeds” of data from other systems or platforms into a dashboard. While this may look modern, the truth is that in order to actually access those transactions and data that are reflected within the dashboard, users are left having to tap into the siloed platforms where the transactions are actually being handled.
Using software that isn’t truly integrated results in increased complexity, inefficiencies, limited reporting, escalating costs, the list goes on and on. What is intended and branded as “integrated” is ultimately silos with complex or no integration between each system. The costs of siloed systems are considerable and will only increase as the digital age continues to spawn new technologies.
Automating the majority of payment methods and cash application with unique business processes and workflows is the best way to re-purpose resources and allocate costs. Don’t settle for disparate systems that are band-aided together and marketed as integrated, shift towards a truly integrated solution that can evolve with you as your business, and customers continue to evolve.
Leveraging other vendors technology within a software’s own offerings in order to fill a “gap” doesn’t constitute a truly integrated system.
In order to stay competitive, companies have had to add the ability to accept and process multiple payment types (ACH, credit card, debit card, cash, check, etc.) from different payment channels. To do this, instead of creating and offering one platform to streamline and automate these payments, some vendors have cobbled together different systems and capabilities from multiple third-party vendors. This attempt to conjure a workable mix of disparate solutions has led to a mash-up of complexities and increased costs, ultimately leaving customers plagued by incomplete oversight of payment data and hindered by manual processes that span numerous systems.
Truly integrated receivables solutions deliver an enterprise-wide view of payment acceptance, handling and cash application on a single platform. At any time, payments can be viewed and directly accessed for action, regardless of how or where they were received. Vendors who have taken the approach to string together multiple systems and functionality behind the disguise of an “all encompassing” dashboard, while potentially attractive, have ultimately made the process increasingly difficult and costly.
This day and age, you should only pay for what you use. This means that legacy software pricing models such as licenses or the applicability of Capital Expense (CAPEX)—recall, true integrated systems are cloud-based, not on-premise—should no longer apply.
Purchasing, implementing and maintaining an integrated receivables solution should not be a costly venture. There should be a generally low barrier of entry for truly integrated solutions, and easily manageable ongoing costs that accurately reflect which parts of the solution are actually being utilized. What’s more, it is our firm belief that the focus of a successful pricing model should be on the core services provided, and that is payment processing and the channels required to do so (i.e., check scanning, online, mobile, API, etc.).
Have a customer who needs to pay 25 invoices via an online payment portal in a single payment? Or 100 invoices in an automatic debit draft? That’s two transactions, not 125, at least in our book. Your customer wins with convenient, contactless payment options (especially important during this time of COVID-19 and social distancing), and you win by collecting payments faster, achieving complete oversight on a single platform, and reducing DSO by fewer touchpoints in the receivables process. Not to mention the freedom of having that payment and remittance data automatically delivered to your back-office system(s) for cash application purposes.
As we discussed earlier, leading integrated receivable solutions are delivered in a SaaS-based structure. With this modern software delivery model, solutions should conveniently fit into most budgets as operating expenses (OPEX) since there is no purchase of hardware or physically installed software. If the solution you’re looking at requires heavy upfront or CAPEX budget requirements, it is not a true integrated receivables platform.
According to Mastercard’s Business Payments 2022 report 2, fifty percent of business-to-business payments are made via check. Regardless of electronic payments becoming the standard for companies and customers, checks are here to stay for the foreseeable future.
We completely agree that the future of payments is electronic. However, the hard truth is that solution providers advocating for the swift death of paper check payments is simply irresponsible. It might be convenient for them to say checks are dead—especially if they don’t possess a native RDC solution within their offerings—but those businesses who have customers that continue to provide remittance via check know otherwise.
The oversight, management and processing of checks is, and will continue to be, the foundation for successful A/R operations, even as companies and their customers evolve within the digital revolution. Not offering a comprehensive remittance processing platform and strategy that includes advanced remote deposit capture (RDC) capabilities and focusing solely on offering electronic payment solutions is a key sign that the software is not a truly integrated receivables solution.
Leading integrated receivables solutions should enable you to start where your business needs are today and conveniently expand your use of the platform over time. Solutions that force you to implement (and pay for) more than the services and capabilities you need today, lack the modularity of a truly integrated solution.
For example, let’s say that your business still receives the majority of your customer remittances in the form of paper checks. As we already mentioned, this is still very common for businesses within the B2B space. Chances are that you would like to start transitioning some of those payments to ACH or even Credit Card. But to do so in a manner that forces your wishes upon your customers would likely lead to unnecessary frustration among your customers and friction within your A/R operations.
Instead, the addition of convenient, contactless payment channels such as online payments and automatic debit (Autopay) solutions can help you pave the way for increasing electronic payment acceptance among your customers at their pace. The addition of electronic payment options over time, and with the support of coordinated customer communication, can deliver a great customer experience while also helping to increase customer adoption.
A truly integrated receivables partner will bring both the technology (platform) and strategy (human element) to work with you and understand your current processes, as well as your aspirations and vision for the future. The ability to support a seamless evolution as your customers’ payment preferences and your business needs evolve, is the mark of a truly integrated solution delivered by a valued partner.
As businesses have raced to adapt their A/R operations to the hyper disruption caused by the COVID-19 pandemic, charting a course to more modern and increasingly contactless payment options for customers has never been more important.
As a result, what had been a gradual rising tide surrounding the integrated receivables and broader order-to-cash (O2C) market over the past 5-10 years, has suddenly reached somewhat of a groundswell. As with many notable products and technologies over the course of history, not all products are created equal.
With the rise in demand for integrated receivables solutions, a growing number of providers have witnessed the emerging market trend and raced to throw their hat in the ring. Unfortunately, many providers are quick to prescribe a dashboard driven approach that falls short of a truly integrated solution.
Don’t fall prey to simply putting a dashboard ‘Band-Aid’ on your processes, even though it may seem like the quickest solution it is likely to result in more work later on. With today’s options for cloud-based, SaaS-delivered integrated receivables solutions, it has never been easier to find a solution that can adapt to your business needs both now, and years into the future.
Originally Published 11/20/2020
1 B2B Payments Innovation Readiness Report, 2020
2 Mastercard Business Payments 2022 Report, 2018
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