The Evolution of Distribution Accounts Receivables Operations; Checks Changing Channels, Online Payments Proliferation, Automated Cash Application & How Integrated Receivables Brings It All Together

Written by: Ashton Nanninga

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Checks (yes, you read that correctly, it says “checks”) continue to be a leading payment method within the B2B payments space. Even though the future of payment acceptance is undoubtedly trending towards electronic payment methods, checks are, and will continue to be, the foundational payment type for businesses and their accounts receivables (A/R) operations.

According to Mastercard’s Business Payments 2022 report,1 fifty percent of B2B payments are still made via check. However, the way paper checks have traditionally been accepted, processed and posted is gradually shifting as electronic payment channels such as mobile remote deposit capture (mRDC) are increasing in adoption within A/R organizations and processes.

The paper check has been the bedrock of receivables payment methods for decades. Traditionally accepted via mail or dropped off in-person by customers and consumers alike, checks have historically been processed in a manual, time-consuming manner for most A/R teams. While the advent of remote deposit capture (RDC) helped businesses do away with physically taking checks to the bank and accelerate the capture and electronic deposit of checks via a desktop check scanner, they were still left to manually apply those payments into their back-office accounting/ERP/CRM systems.

Until the emergence of advanced RDC and truly integrated receivables solutions, that is...

The introduction of new integrated receivables technologies (circa 2013-14) and other A/R automation solutions has enabled check processing and cash application to become a streamlined, automated operation, replacing the traditional siloed, legacy systems and processes of the past, with a single, cloud-based platform.

As check acceptance technology has evolved from desktop check scanners to the ability to take a picture of a check for electronic deposit via mobile remote deposit capture (mRDC) , the acceptance of paper checks has transitioned from internal teams scanning and processing checks to offering sales and field representatives the ability to accept payments on the spot. What’s more, with the use of leading mRDC solutions, field representatives can select open invoices to associate with a payment, significantly streamlining back-office reconciliation and cash application operations.

Mobile check capture solutions help business’ A/R teams by allowing delivery drivers, sales and field representatives, and other team members to accept payments on the spot, whether that be check, ACH or even credit card. Especially powerful across the broader distribution industry, mobile payment acceptance has been proven to reduce days sales outstanding (DSO) by up to five days by allowing check payments to be sent to the bank the same day as when they are accepted.

Due to the increased availability of integrated mobile payment acceptance solutions across the B2B payments landscape, check processing is increasingly changing channels--shifting from from solely back-office acceptance and processing to field and front-office receivables processes. In fact, since the start of 2020, over half of FTNI’s new distribution customer implementations have included mRDC solutions. And further supporting the larger shift towards mRDC among businesses, over 50% of FTNI’s new customer implementations since the start of 2020 have also included mRDC.  

Accepting mobile payments on the spot enables companies to provide an efficient (and secure) way for field employees to securely accept payments, while also simplifying internal operations by processing and posting all mobile payments from a single platform. With FTNI’s ETran Mobile solution, distribution companies, as well as organizations across a fast-growing number of other industries, are able to streamline paper-based receivables processes by capturing all payment details within a mobile application, immediately passing the payment data to the home office for real-time oversight, processing and posting. All while ensuring that approved payments are deposited to your financial institution the same day the payment is received. When combined with electronic invoice presentment and payment (EIPP), mobile checks in the field can immediately be matched to outstanding invoices which helps companies achieve straight-through processing.

With the addition of mobile payment capture technologies, your business will benefit from the flexibility of a modular, bank and merchant processor agnostic platform, as well as seamless integrations with any back-office system. Today’s leading mobile payment acceptance solutions allow companies the option to accept check, ACH and/or credit and debit card payments via a stand-alone application or embed payment capabilities within your app via mobile APIs/SDKs.

No longer only a consumer-focused payment channel, mobile payments are proliferating within B2B receivables at a staggering pace. Enabling your field reps, sales team members and delivery drivers to accept payments via mobile application is a quick and easy solution to streamline and modernize your receivables and cash application operations. 

While checks do continue to make up a significant portion of payments within the B2B space, there is no denying the trend towards electronic payment methods (ACH/EFT and credit/debit cards) and channels (online payments, automatic debit, etc.). As with mobile, online payment acceptance has become extremely useful and increasingly powerful within the distribution industry. 

The onset of the COVID-19 pandemic proved to be a catalytic event among many businesses when it came to the adoption of online payment acceptance technologies. As employees and customers made the move to remote and socially distanced working environments, convenient, contactless online payment options became a necessity for many businesses. The disruption of “normal” business processes forced companies that had been considering the addition of new electronic payment methods and channels to quickly adapt, driving a surge in the adoption of online payment solutions among B2B organizations.

According to a recent PYMNTS.com report, 83% of businesses have changed their A/R processes since the start of the COVID-19 pandemic, with 66% of businesses now accepting more digital payments than before the pandemic.2 Offering the ability for customers to make secure payments online became a natural evolution for expanding A/R operations, especially during a time of hyper disruption and social distancing

Very similar to the aforementioned growth of mobile payment adoption among new FTNI customers, online payments has also seen exciting growth. Over 60% of new customer implementations since the start of 2020 have included online payment acceptance solutions.

Online payment options allow your customers to securely, safely and conveniently view and select open invoices/statements and make payments to their accounts via ACH/EFT, credit or debit card. Your A/R team gains complete, real-time oversight of all incoming payments from a single, cloud-based interface, and all parties can maintain safety protocols in the midst of the ongoing COVID-19 pandemic. 

FTNI’s ETran Online Payment solutions deliver multiple ways to securely (and compliantly) accept one-time or recurring payments. And, with the added ability to utilize Electronic Invoice Presentment and Payment (EIPP) capabilities, you can shift most of your A/R organization’s paper-based receivables online. 

ETran’s Online Payment solutions offer the ability to implement a fully-hosted payment portal that provides a user-friendly experience across any device, allowing customers to focus on quickly and securely making payments to outstanding invoices within their account. Additionally, FTNI’s online payment solution suite also offers the ability to embed payment acceptance capabilities within your existing webpage, or to deliver a secure payment page, providing a user experience that is controlled by you with FTNI hosting only the payment components. 

Now, perhaps more than ever, distributors are realizing the need to modernize A/R operations to increase cash flow, reduce DSO and ultimately save costs through the consolidation of systems and processes. 

Currently supporting 70+ leading distributors across the U.S. and Canada spanning multiple sectors of the broader distribution industry, FTNI’s truly integrated receivables solutions offer distributors multiple ways to streamline and accelerate A/R operations in an industry where flexibility and reliability is key. Along with FTNI’s proprietary solutions, we also have strategic partnerships in place with leading membership organizations and back-office software providers across the wholesale distribution industry (among others) to accelerate payment acceptance and cash application operations through tightly integrated solutions to help facilitate enhanced oversight of all A/R activities and straight through processing.

From desktop and mobile check acceptance and processing, to online payments, automatic debit, and even lockbox processing, FTNI offers solutions that help distribution companies, and businesses across nearly every industry, to accelerate A/R operations on a single, secure, Software as a Service (SaaS) platform. 

As customer payment preferences continue to change and expand to include new payment methods and channels, businesses must be able to evolve payment acceptance capabilities and back-office A/R operations accordingly. Contrary to what some media outlets and solution providers in the market may want to lead you to believe, checks are not dead. In fact, as businesses and A/R departments continue to navigate an ever-changing payments landscape, we here at FTNI believe that it’s not about payment method/channel elimination (e.g., checks), it’s about breaking down siloed, legacy systems and processes in order to maximize A/R automation across all payment methods and channels. 

Centralized oversight of all receivables activity on a single platform will enable your business to make more informed decisions and ensure employees are focused on the highest value functions. Afterall, one of our favorite sayings is that “each time an employee has to review a payment, it costs you money.”

Isn’t it time to move beyond the A/R status quo and the siloed systems and processes of yesteryear?

We think so. If you do too, then it’s time to discover how truly integrated receivables can transform your A/R operations.

Let’s talk.

__________________________________________________

1 Mastercard Business Payments 2022 Report, 2018

2 PYMNTS.com | B2B Payments Innovation Readiness Report, 2020

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