In A Slowing Economy, What Can Distributors Do To Prepare?

Operating capital is the lifeblood of any organization and one of the key factors that keep companies running in both smooth and challenging economic conditions. When a distributor has cash flow, it can make payroll, pay its suppliers, keep the lights on and even manage the unexpected costs of running a business. Without this financial cushion, companies quickly find themselves operating invoice to invoice, and pulling resources from one area to cover expenses in another.

With the national economic recovery in its 10th year, wholesale distributors may have forgotten what it takes to keep the lights on and the wheels running in a more challenging selling environment. Despite industry disruptors like Amazon Business, geopolitical issues such as trade wars, and a massive uptick in business-to-business e-commerce, wholesalers have been posting healthy year-over-year sales growth.

Distributors saw their top-line revenue numbers and profits grow in 2018, according to the National Association of Wholesaler-Distributors’ most recent State of the Industry report. Most segments of the industry experienced record-high levels of activity. In total, the industry reached a record-high $6.01 trillion in sales for 2018 (up 7.5% from 2017), and now comprises 29% of the U.S. gross domestic product. Based on various earnings reports and quarterly announcements, 2019 was a year of similar results.

But there’s a wind of change in the air. Unlike other post-recession years, 2020 brings some uncertainty with it. By the second half of 2019, for example, some economists and analysts were predicting a downturn within the next 12-24 months. NAW was also picking up on some “slowing growth” occurring in the industry. This braking was expected to last through 2019 and into early 2020. “The current 12-month growth rate (12/12 rate-of-change) is 7.5%,” NAW states, “but the quarterly growth rate is a smaller 4.7%, confirming that the industry is on the back side of the business cycle.”

This is one of several signs that distributors can use to prepare ahead. As part of that preparation, companies can carefully examine their cash flow positions and take the necessary steps to build and/or retain those reserves. In a new white paper launched by Modern Distribution Management (MDM), we explore the current business environment, show how it could evolve over the next year or two and provide actionable advice that all companies can use to preserve cash flow in any economic condition.

Click here to download “How You Can Preserve Cash Flow to Strengthen Business in a Slowing Economy” white paper.

4 Common Accounts Receivable Mistakes to Avoid

Managing accounts receivable (AR) could be a daunting task, especially when one mistake you make can potentially jeopardize the entire relationship you’ve built with your customers. If you have managed your company’s AR for a long time, you may have learned all the lessons already. But if you’re new in the role, it’s always better to prepare yourself ahead for problems you may run into instead of doing everything the trial-and-error way.

On that note, here are the four most common accounts receivable mistakes you want to avoid.

Mistake #1: Security – PCI Non-Compliance

If your company accepts credit cards as one of the payment methods, you’ll need to pay close attention to whether your business and the tools you’re using are PCI-compliant. Being PCI-compliant means that you follow the set standards and guidelines that help manage and secure credit cardholders’ data. Being non-compliant means you’re putting yourself and your customers at risk. You can be charged with PCI non-compliance fees and you could be heavily fined should your non-compliance lead to a security breach. Depending on the seriousness of the breach, your fine could be hundreds of million or even billion dollars. And the cost for PCI non-compliance doesn’t stop there. A security breach would seriously harm the relationships you’ve built with your customers.

Mistake #2: Limited Payment Methods

Let’s put yourself in your customers’ shoes: you’re narrowing down to two companies you want to do business with, one offering a variety of payment methods and catering to your personal preferences, and the other only providing you with one payment method: their payment method. Assuming that they provide equal benefits on everything else, which company would you go to? Now apply that to your business. Is it possible that you’re hindering your ability to gain new customers because you’re not taking into account their preferences when it comes to payment methods?

Mistake #3: Miscommunication & Human Errors

We’ve all received an email from a vendor or supplier where our name is spelled wrong. It happens. Human error. Maybe you don’t think you make that same mistake with your customers, but after processing thousands of invoices each month can you say with absolute certainty that you’re mistake-free? One mistake could be completely harmless, or it could ruin a relationship.

Maybe your team are responsible for too many manual tasks; time and resources constraint can easily lead to wrong decisions. Maybe there’s miscommunication. Sarah already called Mr. X to remind him about his past-due payment, but she forgot to note down the call, and someone else jumped in and called him again. John manually processed an invoice for company Y but was rushed at the time and forgot to include overdue policies on that invoice. Whatever the mistake may be, it could cost your business not only time and money, but important customer relationships.

Mistake #4: Head Count Problem

As your business grows, the AR workload grows along with it. Most people’s initial reaction is to hire more people to take on the extra work. Although adding more headcount may solve the problem in the short term, it’s not a sustainable or scalable solution. As your business grows, you should look for efficiencies. By bringing onboard solutions that automate much of the manual work, you enable your current team members to do more, allowing them to scale with the business.

Whether you have been making these mistakes without realizing it, or you are proactively looking for solutions to potential problems, I hope this blog has been helpful. Some of these issues could be easily resolved by implementing our recommended AR best practices.

3 Reasons Why Customer Experience Needs To Be Your Priority

“If you build it, they will come.” Many will know this phrase from the 1989 film, Field of Dreams. In the years since the film’s release, this expression has become somewhat of a mantra for the business world. Supply a great product or service, and you’ll have customers. Seems simple enough. However, in today’s competitive economy it is no longer viable to simply build a great product or service, attract customers and call it a day. You need to know how to provide a great customer experience as well.

The following are the top three reasons why you need to make customer experience (CX) your new priority.

1. Reduce Churn

Imagine you’re in a store, shopping around. You know they sell the product you want, so it should be a simple task. But the store is small and crowded, and the products are organized in a way that makes no sense to you. Where is everything located? The sales associates don’t seem to know, or care. You ask to talk to a manager, but no one can find one. Frustrated, you give up and leave. You can get what you were looking for somewhere else.

The above scenario is all too common. In fact, according to a 2017 report from American Express, over 50% of Americans have changed their minds about a transaction because of a service experience, and 33% said they would consider switching companies after only one negative experience.

The impact a negative customer experience can have on any business is rising, as customers are able to share their bad experiences online for the world to see. The report from American Express states that 35% of Americans will share their bad experiences online, and that around 9 out of 10 will tell others about the service they received.

In B2B, with its longer sales cycles and lower number of customers with a much higher value than B2C, these ramifications can be significant.

2. Increase Customer Advocacy

Just as customers who may have had a negative experience will turn around and share their experiences online and with others, the good news is that customers who have a positive experience will do the same. In fact, they’re even more inclined to do so. According to American Express, 53% of Americans will post positive comments online.

Providing a top-notch customer experience has more positive outcomes for your business than ensuring customers stick around. Customers who are repeatedly shown a superior experience and service level become loyal to your business, even choosing to pay more for your service or product based on their positive experiences.

Customers who have been won over by incredible customer experience may even go on to become advocates for your business. In a report from JitBit, it was shown that customer and brand advocates are 75% more likely than regular consumers to share their great experiences on social media. Brand advocates are instrumental in helping to influence other potential customers in their decision making. As well, 90% of customers are reported as having said that word-of-mouth recommendations have the most influence on their decision to go forward with a purchase.

3. Set Your Business Apart

The customer service and experience delivered by B2C companies has rocketed ahead of B2B. While business buyers are not looking to make personal purchases, their experiences with B2C companies have made them expect the same personal touch at work. According to a report from Salesforce, 82% of American business buyers expect to receive the same customer service from B2B services, as they do from B2C. However, 45% of business buyers also say that most companies don’t live up to those expectations.

Putting the customer experience at the heart of your business practice is becoming a key differentiator amongst B2B companies. Less and less people are willing to put up with negative experiences, but at the same time, few businesses are going out of their way to provide exceptional service.

In business, there is the notion that when it comes to B2C purchases, decisions are made with the heart, and when it comes to B2B, decisions are made with the head. While logic may trump personal feelings in the B2B world, at the end of the day each B2B buying decision is made by a person. Whether you’re selling to an individual for personal reasons or business, each transaction is made by a customer. So why not offer them an exceptional customer experience?

2019 Wrapped Up

The holidays mean something different to everyone. For some people, they’re about spending time with loved ones and enjoying favorite holiday foods together. For others, they’re about giving and receiving presents and making sure the special people in your life know how much you value them.

Here at VersaPay, it’s no surprise that who we value most is our family and our clients. 2019 has been an exciting year for both VersaPay and our clients and with far too many highlights to cram into a single blog post, we’ll name only a few:

As we leap from strength to strength, 2020 promises to be another exciting year. But before we trade in our laptops and email inboxes for cranberry sauce and chocolates, we wanted to thank all those that we’ve had the pleasure to work alongside this year; clients, end-customers, investors, partners, and colleagues.

We believe AR can only succeed when organizations put their customers at the centre of everything they do and we apply that same mentality to the success of VersaPay. We put people – you – at the centre of everything we do and we couldn’t do any of it without you.

Thank you!

Have a happy holiday season and a prosperous New Year!

The VersaTeam

Great Hill Partners Makes All Cash Offer to Acquire VersaPay Corporation

Toronto, ON – December 13, 2019 – VersaPay Corporation (TSXV: VPY) (“VersaPay” or the “Company”) and Great Hill Partners (“Great Hill”), a leading growth-oriented private equity firm, are pleased to announce that the Company and an affiliate of Great Hill have entered into a definitive arrangement agreement (the “Arrangement Agreement”) whereby Great Hill will indirectly acquire all of the issued and outstanding common shares of the Company (“VersaPay Shares”) by way of a statutory plan of arrangement under the Canada Business Corporations Act (the “Transaction”).

Under the terms of the Arrangement Agreement, each VersaPay shareholder (the “VersaPay Shareholders”) will receive cash consideration of C$2.70 for each VersaPay Share held (the “Consideration”), valuing VersaPay’s total equity at approximately C$126 million on a fully diluted basis. The Consideration represents a 47.5% premium to the closing price of the VersaPay Shares on the TSX Venture Exchange (the “TSXV”) on December 12, 2019 and a 64.5% premium to the volume weighted average price (“VWAP”) of the VersaPay Shares over the last 30 trading days.

Benefits to VersaPay Shareholders

  • Immediate and significant premium of approximately 47.5% to the closing price of the VersaPay Shares on December 12, 2019, and approximately 64.5% based on the 30-day VWAP.
  • All cash offer that is not subject to a financing condition.

“We are very pleased to be able to recommend this transaction to our shareholders, employees and customers,” commented Art Mesher, Chairman of the Company, “With their deep knowledge of our industry and focus on supporting growth companies, Great Hill is uniquely positioned to understand our business and its long term potential, and help the Company to achieve that potential”.

“Great Hill is excited to partner with the VersaPay team and provide the capital to execute on their growth strategies” stated Matt Vettel, Managing Partner at Great Hill Partners. Craig O’Neill, CEO of the Company added, “I’d like to thank our employees who have worked so hard to achieve the growth and success we’ve experienced to date, our customers who have put their trust in us, and our shareholders who have supported us as a public company. We’re equally excited about our future working alongside Great Hill.”

Independent Committee and Board of Directors Recommendations

An independent committee of VersaPay’s Board of Directors (the “Committee”) comprised of Arthur Mesher, Sheldon Pollack and David Dobson was constituted to consider the Transaction. Capital Canada Limited has provided a fairness opinion to the Committee (the “Fairness Opinion”) stating that in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be received by the VersaPay Shareholders pursuant to the Transaction is fair, from a financial point of view, to the VersaPay Shareholders.

The Board of Directors, after receiving financial and legal advice, and following receipt of the Fairness Opinion and the unanimous recommendation of the Committee, has unanimously determined that the Transaction is in the best interests of VersaPay and is unanimously recommending that VersaPay Shareholders vote in favour of the Transaction.

In addition, directors and senior officers of VersaPay, who as of the date hereof collectively hold approximately 3.7% of the VersaPay Shares, have entered into agreements to support the Transaction and vote their VersaPay Shares in favour of the Transaction.

Transaction Conditions and Timing

The Transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act and will require the approval of 66 2/3% of the votes cast by VersaPay Shareholders at a special meeting of VersaPay shareholders to be called to approve the Transaction (the “Special Meeting”).

The completion of the Transaction will also be subject to obtaining required court and other approvals and satisfaction of closing conditions customary for a transaction of this nature. The Arrangement Agreement includes customary deal-protection provisions. VersaPay is subject to non-solicitation provisions and in certain circumstances, the Board of Directors may terminate the Arrangement Agreement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of C$5.67 million and subject to a right of Great Hill to match such superior proposal. The Arrangement Agreement also provides for payment by Great Hill of a reverse termination fee of C$7.56 million if the Arrangement Agreement is terminated in certain specified circumstances, including if Great Hill does not satisfy its obligation to provide sufficient funds to complete the Transaction.

It is anticipated that the Special Meeting will be held in February 2020. Following closing of the Transaction, the VersaPay Shares would be delisted from the TSXV. The Transaction is expected to close in the first quarter of 2020.

Advisors and Counsel

INFOR Financial Inc. is acting as exclusive financial advisor to VersaPay in connection with the Transaction. Capital Canada Limited provided the Fairness Opinion in connection with the Transaction. Cassels Brock & Blackwell LLP is acting as Canadian counsel to VersaPay and Arnold & Porter Kaye Scholer LLP is acting as U.S. counsel to VersaPay.

Blake, Cassels & Graydon LLP is acting as Canadian counsel to Great Hill and Alston & Bird LLP is acting as U.S. counsel to Great Hill.

Additional Information about the Proposed Transaction

A copy of the written Fairness Opinion, and a description of the various factors considered by the Board of Directors of the Company in its determination to approve the Transaction, as well as other relevant background information, will be included in the management information circular to be sent to the Company’s shareholders in advance of the Special Meeting. The management information circular, the Arrangement Agreement, including the plan of arrangement, and certain related documents will be filed with the Canadian securities regulators and will be available on SEDAR at www.sedar.com.

About Great Hill

Great Hill Partners is a Boston-based private equity firm targeting investments of $25 million to $500 million in high-growth companies across the consumer, digital infrastructure, financial technology, healthcare, and software sectors. Over the past two decades, Great Hill has raised nearly $8 billion of commitments and invested in more than 75 companies, establishing an extensive track record of building long-term partnerships with entrepreneurs and providing flexible resources to help middle-market companies scale. For more information, visit www.greathillpartners.com

About VersaPay Corporation

VersaPay is a Fintech company and leading provider of cloud-based invoice-to-cash solutions, enabling businesses to provide a superior customer experience, get paid faster, streamline financial operations, and dramatically reduce DSO and costs. VersaPay ARC is the first platform to provide Customer-Centric AR with a customer self-service environment to view invoices online, collaborate on inquiries and disputes, and facilitate secure online payments (EFT/ACH and credit card). Businesses gain access to a suite of powerful tools that enable efficient collections, cash application and real-time insight into accounts receivable. VersaPay ARC automatically reconciles payments and account information through integrations with a wide range of ERPs and accounting software providers.

For more information:

John McLeod
Chief Marketing Officer
647 258 9406
john.mcleod@versapay.com

Babak Pedram
Investor Relations
Virtus Advisory Group Inc.
416-644-5081
bpedram@virtusadvisory.com

Charlyn Lusk
Managing Director
Stanton Public Relations & Marketing
(646) 502-3549
clusk@stantonprm.com

FORWARD LOOKING INFORMATION

This press release contains “forward-looking information” which may include, but is not limited to, statements with respect to the anticipated meeting date, timing for completion of the Transaction and delisting from the TSXV.

Generally, forward-looking information can be identified by the use of terminology such as “anticipates”, “believes”, “expects”, “plans”, “intends”, “estimates”, “schedules”, “forecasts”, “budgets”, “proposes”, or variations or comparable language of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will”, “occur” or “be achieved” or the negative connotation thereof.

Forward-looking information is based upon certain assumptions and other important factors that, if untrue or incorrect, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such information. Such information is based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including: the Company’s plans with respect to its products and services, including timing, content and pricing; market and industry expectations; a continuing increase in the number of customer relationships; the length of the sales cycles; the competitive environment; the ability to maintain or accurately forecast revenue from the Company’s products or services; the ability of the Company to identify, hire, train, motivate and retain qualified personnel; the ability of the Company to develop, introduce and implement new products as well as enhancements or improvements for existing products that respond, in a timely fashion, to customer/product requirements and rapid technological change; general economic, business and political conditions; stock market volatility; anticipated costs and ability to achieve goals; the impact of any changes in the laws and regulations in the jurisdictions in which the Company operates; and the effect of new accounting pronouncements or guidance. Although the Company believes its expectations are based upon reasonable assumptions and has attempted to identify important factors based on its current expectations, estimates and projections that could cause actual actions, events or results to differ materially from those described in forward-looking information, these are subject to a number of significant risks and uncertainties and there may be other factors that could cause actions, events or results not to be as anticipated, estimated or intended.

Forward-looking information is subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks related to: taxes, reliance on third-party service providers, potential failures of VersaPay and third-party systems, failure to develop or market new products or services, intellectual property, third-party claims for intellectual property infringement, privacy breach by service providers, merchant fraud, security breaches, service interruptions by cyber-terrorists or fraudulent or illegal use of services, competition, additional financing, variable revenues/earnings, dependence on key personnel, merchant attrition, loss of sales partners, increases in interchange rates, non-sufficient funds, market demand for products and services, changes in consumer spending, operating risk and insurance, conflicts of interest, stock price volatility, government regulations, litigation, general economic conditions, foreign exchange, liquidity, interest rates, internal controls and acquisitions strategy, as more particularly described in the section entitled “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2018 dated April 2, 2019. The foregoing list is not exhaustive and other risks are detailed from time to time in other continuous disclosure filings of the Company. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Accordingly, readers should not place undue reliance on forward-looking information.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein are made as of the date of this press release and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.

Great Hill Partners to Acquire VersaPay Corporation – Customer FAQs

To our valued Customers and Partners:

Today we have announced a definitive agreement for the acquisition of VersaPay by Great Hill Partners, a private equity firm based in Boston. The following FAQ will provide more detail which I trust will be helpful. If you have additional questions, feel free to connect with your primary contact at VersaPay. They are ready and waiting to speak with you!

We are excited about this next stage of our journey together as we pursue our big goal to change the way thousands and thousands of companies do business together.

Best regards,

Craig O’Neill
CEO
VersaPay Corporation

1. What does this announcement mean?

Great Hill Partners, a US private investor, has agreed to acquire VersaPay. Our board of directors unanimously supports and believes the transaction is in the best interests of our shareholders, customers, and all of us as employees. The acquisition will be an all cash deal in which $2.70 per share will be paid to shareholders upon closing, which is anticipated to occur within the next 3 months or so. Once this transaction is complete, VersaPay will become a privately-owned company. VersaPay will continue to operate substantially as it does today, but as one of Great Hill’s portfolio companies versus a public company.

2. Why did Great Hill purchase VersaPay?

Great Hill decided to purchase VersaPay because of:

  • They believe in the potential of the AR Automation and B2B Payments markets
  • Our industry leadership in these markets
  • Our experienced and talented team
  • Our strong customer and partner relationships
  • Our product and the valuable intellectual property it embodies.

3. Why did our board of directors accept an $2.70 per share offer?

A company’s current stock price does not necessarily reflect the underlying or intrinsic value of a company. For some time now, our board of directors has carefully evaluated potential plans, proposals and strategies to properly fund the company for growth and create value for our shareholders. Our board has determined that a take-private transaction was the best way to achieve both ends.

4. Who is Great Hill and what do they do?

Great Hill is a Boston-based growth private equity firm that has raised over $7.5 billion since inception. The firm’s principals have over 30 years of experience serving a broad range of technology and service-oriented industries, having invested in more than 100 companies and arranged over $5 billion in expansion and acquisition financings. Through its current and past investments, Great Hill has developed expertise in the payment processing and B2B verticals industries.

5. What does this mean for VersaPay?

Great Hill is investing in VersaPay because they believe in the potential of the AR Automation and B2B Payments markets, and they believe in our ability to be a leader in these markets. So, our mission and vision are not changing, rather, Great Hill will help us pursue them more energetically.

Being privately owned will allow us more flexibility in the way we run the business and means that we will no longer be encumbered by the costs of running a public company. It also means that we can focus on long-term growth instead of short-term profitability. Taken together, we believe VersaPay will be a stronger company as a result.

6. When will the transaction be completed and what are the next steps?

In the coming weeks, there are a number of steps we need to take to get regulatory and shareholder approval for the transaction. A management information circular containing detailed information about the transaction and will be made available to shareholders and a special meeting of shareholders will be scheduled to vote on the transaction. If two thirds of the shares outstanding vote in favour and all closing conditions are met, then the transaction will be closed. We currently expect this to occur within approximately 3 months.

7. Is this good for VersaPay and its customers?

Yes, this is good news. VersaPay’s mission and vision remain unchanged, and VersaPay will continue its commitments to its customers and passion for driving innovation in the AR Automation space.

8. What does this mean for customers?

There is no change whatsoever for customers. It is business as usual. VersaPay remains deeply committed to delivering on its product roadmap and customer commitments. With Great Hill’s backing VersaPay will be better positioned to make the kinds of strategic investments in technology and people that will enable us to deliver innovative solutions and attentive customer service.

9. What does this mean for partners?

There is no change whatsoever for partners. It is business as usual. Partners remain a growth opportunity for VersaPay’s business and a key enabler of our strategy to drive growth and leadership in the AR Automation market.

10. Will this change affect my pricing, contract or service levels with VersaPay?

No. All customer commitments remain in place and there will be no changes to the working relationship. And there are no pricing changes planned based on this transaction. All existing support and service arrangements will continue without interruption and customers will continue work with their existing Success, Support and Implementation contacts.

11. Are there any leadership or organization changes contemplated?

There are no changes planned.

12. Who should I contact if I have further questions on the acquisition?

If you have additional questions, feel free to connect with your existing Success, Support or Implementation contact at VersaPay. They are ready and waiting to speak with you!

Giving Customers What They Deserve – How AR Automation Improves the Customer Experience

Businesses’ success or failure hinges on the customer experience. Customer experience is the result of every interaction a customer has with your business – from marketing and sales, through to invoicing and payment – and it plays a large role in determining if a customer is going to do business with you again.

Making the investment in this area will not only positively affect your customers, it will greatly impact your business as well. The Temkin Group found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience.

So, what is the often-overlooked secret to delivering an exceptional customer experience and keeping customers coming back? Optimize, automate, and improve your back-office, including your AR process.

Each touchpoint a customer has with your business plays a role in their decision to work with your company again. Relying on cumbersome, manual AR practices can make the invoicing and payments process extremely painful for your customers. Fast, secure, and convenient payment options drive repeat sales and improve the overall customer experience.

Here are some of the ways your AR process is affecting your customer experience:

Communication

The main issue for companies with an outdated AR process is the lack of an open, 2-way communication channel with their customers and the difficulty that causes when issues inevitably arise. Countless phone calls are made and emails are sent to your customers by your AR team trying to resolve issues surrounding invoices. It’s a resource drain for you, but it’s also a burden to your customers. Your customers keep different hours, they work in different locations and they all have different preferences on when and how they want to communicate with you. You need to provide them a channel that allows for that variety. You need to make things as simple and straight forward as possible for your customers.

Optimizing your AR process by implementing a customer portal provides a central location for your customers to view invoices and communicate in real-time. Your team can easily communicate with your customers, settle disputes and perform other activities that accelerate payment. No calling and emailing back and forth is required as the customer is able to directly ask questions and communicate in a meaningful and trackable way creating a better customer experience.

Access

Another huge problem for customers is the lack of access to their own account history. Most traditional AR processes don’t allow for customers to easily view past invoices and charges which, without meaning to, can result in customer not paying past amounts. It takes much longer for customers to evaluate what needs to be paid, when, and to whom, when the information is not all in one central location. Aged receivables then begin to build and the customer-supplier relationship is negatively affected.

AR automation platforms provide complete visibility to all invoices past and present, acting as a single source of truth for your customers’ charges. Both parties can view invoice and payment history meaning customers are always aware of charges owing. This ease of access eliminates the back and forth communication that would normally be needed to solve this issue. Customers these days are looking for self-service, and giving them all the information in a centralized location will allow them to do so.

Method of payment

Customers want to pay the way they want to pay. Most companies’ AR processes today do not cater for all of the payment methods customers use. By limiting their ability to pay via their preferred methods, you are decreasing the probability that they are going to pay you, and pay you on time.

Using an accounts receivables software that accepts a wide variety of payment methods will allow your customers to pay their invoices the way they want – with credit card, ACH, EFT, checks and more – which can be settled into a number of accounts and lockboxes. It significantly increases the simplicity of the payment process and, more importantly, will improve your overall customer experience. Putting the customer and their needs first should be your top priority.

To put your customer’s at the center of your accounts receivables process, you need a CRM for your AR. A solution like VersaPay ARC allows you to manage your relationships with your customers in one central location. Today’s digital age is making your customers want to self-serve in the fastest and easiest way possible. Expectations in our personal lives have carried forwards into our work lives and companies must try to meet those changing expectations or risk losing business. Give your customers what they deserve: a seamless, easy-to-use AR process.

Why Customer Self Service in AR is the Key to Collecting Overdue Invoices

Once upon a time, collecting payment consisted of manually extracting data from spreadsheets, drafting up individual invoices, and sending them by mail to your customers.

Then, the wait began for a check back in the mail. It was a long and drawn-out process thwarted with delays, but it was accepted as being just the way things were.

But now, we live in an Amazon Prime, express checkout, contactless world and won’t think twice about exiting a website because it took too long to load. Clearly, as technology has become more advanced, our pace of life has quickened.

This fast pace has also filtered into the corporate world, with technology fuelling fierce competition and increased workloads, business consumers are busier than ever.

Consequently, business consumers have begun to expect more from their buying experience.
They value flexibility and options to complement their demanding lifestyles.

Combine this with data from PYMNTS.com and American Express’ October 2019 Accounts Receivable Automation report which found that US companies are owed as much as $3 trillion in outstanding invoices, and it becomes apparent that failing to adapt your AR processes to match the needs and demands of customers won’t end well.

The result? Overdue accounts that send your DSO through the roof and working capital running for cover.

Oh, and don’t forget to throw in the high stress, rocky business, and strained relationships late payments cause.

Looking at these numbers, you’d be forgiven for assuming that the future of AR looks bleak. But there is a solution you can add to your arsenal of AR tools to help tackle outstanding payments – self-service online payment portals.

They’ll enable you to put an end to the game of cat and mouse often played in AR by facilitating customer self-service in your AR payment process. This is key as taking a customer-centric approach enhances your customer experience, making customers want to pay you.

There’s also much to be gained for your company. Implementing self-service digital payment portals can have a positive impact on the metrics that matter most to your organization. Then, your newfound cash and time can be used to help grow and scale your business.

Sounds good right?

So, without further ado, let’s dive right into the benefits of self-service online payment portals in your AR process.

Make your AR process work for your customers

Not all customers dodge bill payments because they lack the funds. Sometimes, paying bills is inconvenient, time-consuming, and even annoying.

So, to ensure swift payment from clients, flexibility and simplicity are essential.

Solve collection related issues by offering an online payment portal that’s on par with the online checkout systems your customers encounter in their day-to-day shopping. It’ll give customers the freedom to choose things like their:

  • Preferred payment method
  • Payment time
  • Transaction amount

By optimizing your AR process using online payment portals, you make your customers’ needs a priority and ensure your AR process works for them. This improves the customer experience whilst simultaneously helping your business reduce things like customer churn rate, DSO, AR team workload, and admin costs.

Self-Service Payment Portals can help you secure faster payments as customers will no longer be bound by your office hours. Nor will they be confined to speaking with you on the phone when collection time rolls around. Instead, they’ll be able to pay you when it’s convenient for them.

This is especially useful if your business operates in a different time zone to its customers. So, having an online payment portal could be the deciding factor that leads to your business getting paid quickly or not at all.

And, let’s not forget about the speed of service customers will experience, which is another huge benefit using self-service online payment portals. Invoices can be automatically generated, sent, and paid within minutes of each other instead of hours and days as is the case when using traditional methods of collection.

Another win for all!

Improve your company’s financial position

Did you know that on average, American companies write off 1.3% of their AR accounts as bad debt?! That’s up from a year ago.

This figure may seem small but for large companies, it can be an eye-watering amount.
What’s more, statistics like this are bad news for metrics like your company’s working capital and current ratio.

However, providing the option of customer self-service in your AR process through an online payment portal can encourage faster payment by removing the barriers caused by cumbersome procedures in traditional payment methods.

Offering a quick and easy way to pay makes paying invoices a simple, rather than an arduous task that customers need multiple promptings before completing. This facilitates speedier payments which quickens your collections, improves your working capital efficiency, and bolsters your current ratio.

Going further, adopting digital payment portals can do wonders for your AR metrics as the incoming payments can provide your business with things like:

  • More cash on hand to fulfill your short-term liabilities and build a solid safety net
  • The ability to invest financially in improving your customer experience through better products, systems, and processes
  • Greater financial stability and liquidity that’ll enable you to present a solvent image to your creditors and investors

Also, adopting a self-service approach to AR brings down costs but not just those commonly discussed. Online payment portals address the opportunity cost associated with chasing payments by reducing the financial and time costs of collections.

These resources can then be funneled into back into your business to solve other issues your clients face and finance more company goals and projects.

Avoid unnecessary risks and protect your reputation

Even in today’s technologically advanced world, some companies, be it due to a lack of awareness or skepticism, continue to use outdated and complicated methods for collecting payment.

This often leads to these businesses falling short in their AR customer experience. So, it’s no surprise that research by Mastercard once found that Fortune 500 companies are unable to access over $20 billion in working capital due to complex receivables processes.

Not only does this shortcoming disrupt collections, it also has far-reaching consequences.

Late payments adversely affect all parties associated with your business. For example, the costly delays associated with late and non-payment can result in you needing to borrow money to tide your business over as well as temporarily reducing or even halting certain operations to stretch cash.

These scenarios present serious risks to your customers who rely on your service as well as your own company. Also, these consequences are unfair to customers who have paid on time.

But more damagingly, this situation can instill fear, distrust, and frustration into customers, which can make them more reluctant to pay you. This is turn can negatively impact your AR Turnover and DSO, increase your client churn rate, and stifle growth.

However, embracing customer self-service AR tools like an online payment portal encourages faster payment by making bill payment painless experience. This’ll allow your company to uphold its reputation as a reliable supplier and avoid any AR-related disasters.

VersaPay ARC’s self-service options allow you to put your customers in the driving seat of your collections process and provide a great customer experience that gets you paid in a fast, easy, and secure way! Are your collections sluggish? Find out how VersaPay can get your AR processes back on form.

Customer experience is the key

With overdue payments posing a significant threat to even well-established companies, implementing customer self-service in AR processes is fast becoming a necessity rather than an option.

But one thing is clear, providing a frictionless customer experience in your collections process is key to enhancing your customer experience to ensure you get paid on time, every time.

That’s why implementing customer-centric AR tools like VersaPay ARC shift the odds of getting paid in your favor. Our ground-breaking software makes it simpler for customers to pay you by providing the flexibility and speed of service customers have come to expect in today’s competitive, digital market.

This tool also positively affects metrics like your revenue, DSO, and working capital, providing you with the resources to grow.

Don’t fall foul to the deathly slow ways of collecting payments still used in AR today. Make your customers a priority and get your collections process back on track, using VersaPay ARC as your vehicle of choice.

Want to learn more? Click here to uncover how VersaPay can help revolutionize your AR collections process.

7 Accounts Receivable Best Practices Transforming the AR Process

If you’re finding it too time-consuming to manually mail out invoices and match payments to invoices, or if you’re finding your DSO (Days Sales Outstanding) keeps increasing while the time and resources required for your accounts receivable (AR) process are constrained, you need to make a change. We’ve put together these seven accounts receivable best practices that can help you collect payments faster while saving time and resources and improving the customer experience.

1. Automate your AR process

If you find your AR team spend too much time sending and tracking invoices, dealing with customers’ inquiries, or chasing customers to collect payments, you need to automate. A good AR automation solution can drive efficiencies in your AR process, reduce human error, and also reduce your DSO. Through effective invoice presentment and management, integration with your ERP system, and by providing an easy-to-navigate payment portal dedicated to your customers, the right AR automation platform will improve the customer experience.

2. Speed up your AR process with discounts and shorter payment terms

Another tip to help improve your payment process is to offer discounts or to shorten your payment terms. Terms such as 2/10, N30 act as a little incentive to help your customers pay faster. Likewise, shortening payment terms means cutting down your common 30-day or 60-day term down to 20 days, ten days, or even require your customers to pay upon receiving the invoice.

3. Have a proper collections plan

Having a strategic collections plan can help you collect smarter, faster and set things right when problems arise. Start with sending out invoices electronically using a platform that tracks if invoices are delivered, opened, and viewed. Make sure you set up automated payment reminders to be sent to your customers a week, three days, or one day before the due date, depending on your terms. Having a portal where you can communicate directly with customers and record customer responses is also essential.

4. Have a firm credit policy

Not all customers are created equally — having a dashboard that tracks customer credit history to make sure that they have been making payments on time guarantees you a better chance of collecting payments faster. Your credit approval process may vary depending on your customer profiles, but make sure to regularly review your credit approval process and have your credit policy be known to all of your customers, especially if they are in a high-growth industry or are experiencing an economic crisis.

5. Have different payment options that cater to your customers’ needs

Customers may experience frustration or annoyance if you don’t accommodate their regular or favorite payment options, especially if they have worked with companies that cater to such needs before. Instead of just accepting checks, you can consider ACH/EFT (electronic funds transfer), and credit cards. Always ensure you’re putting your customer at the center of your AR process.

6. Create a billing dispute resolution process

Sometimes you may find yourself having to deal with a dispute from a customer. In order to keep yourself prepared when that occasion arises, you should create a billing dispute resolution process and have a platform in place where customers can easily raise issues, at an invoice level and line-item level. This will not only help streamline the process but also help improve customers’ overall satisfaction level as their queries or complaints are always dealt with professionally and proficiently.

7. Track your AR KPIs

Metrics are vital to your business’ performance, as they help to tell whether you’re going in the right direction with your business decisions. Regular reporting on your AR KPIs can help you see where your company currently stands in comparison to your competitors or other companies of the same scope, as well as helping you compare your current business performance to last month’s, last quarter’s, or last year’s performance. Having a platform that automatically tracks and displays AR metrics allows your team more time to focus on the decision making and result analysis process.

This is by no means a finite list of accounts receivable best practices, but we definitely recommend starting with these in order to not only speed up your cash collection process, but to streamline your entire AR process and improve your customers’ experience as well. At the end of the day, the easier it is for your customers to pay, the faster you can get paid.

4 Surprising Ways Paper Invoices Cost Your Business Money

Change can be a frightening thing. Doing things the way they’ve always been done often seems like the easier option. However, just because something has always been done in a certain way doesn’t mean it’s always been done in the right way. Take accounts receivable and invoice presentment. Manually sending out hard-copy paper invoices to your customers is the way it’s always been done, but is it the way it should be done?

Do you know what invoice processing is costing you? According to a recent report from PYMNTS.com, the average cost to process a single invoice is between $16.00 to $22.00. Where are these costs coming from? You might be surprised to find out. There are unexpected fees and hidden costs to every invoice.

Here are four ways manual invoice processing is costing your business money:

1. Time Intensive Labor

Instead of your team spending their time completing challenging and fulfilling tasks that will further grow your business, they’re manually sending invoices and inputting data. According to a report from Ardent Partners, the average time for a business to manually process an invoice was close to 11 days. On the other hand, this number was around 3 days for the best-in-class businesses that frequently leverage invoice automation and technology. With a process that much more efficient, your employees could be freed up to put their time to a better use.

2. Costly Mistakes

Accounts Receivable, exciting as it is to you and I, doesn’t exactly get most people’s blood pumping. When people become bored, they become careless. And careless people make mistakes. But isn’t even a few mistakes a few too many? Aalto and Cambridge Universities conducted a study where it was discovered that errors in typing on average range from 1.0% to 3.2%. Those numbers might not seem too high, but if you’re manually processing 10,000 invoices every month, 320 of them would contain potentially costly mistakes. These mistakes can cost you more than money, as well. With too many errors being produced, you could be putting your customer relationships in jeopardy. A customer who’s received one too many error riddled invoices is an unhappy one, and an unhappy customer is one who might take their business elsewhere.

3. Supplies and Resources

A lot of money goes into sending a manual invoice. Beyond the paper and ink to print them and the envelopes and postage to mail them, you’re paying your employees’ salaries, and for the office space they need to work in. These expenses will only grow as your business expands.  You need to be streamlining and increasing efficiency as you scale, not letting unnecessary expenses multiply.

4. Payment Delays

A survey from EY found invoices that were processed manually took on average up to 15 days to address and pay. That’s a long time to keep your cash tied up in AR and inaccessible to your business. And this doesn’t take into account how long it actually takes to send and receive the invoices by mail, which isn’t exactly known for its speed (or they probably wouldn’t call it snail mail).  Consequently, when using manual invoicing processes, getting paid is that much harder. According to PYMNTS.com, there is currently a total of 3 Trillion dollars of outstanding accounts receivables owed to U.S. companies.

The good news is, there is a simple solution to reduce your invoice processing costs.

Automate your AR.

Accounts Receivable automation will not only save you time, manpower and customer-relationship threatening errors, it will save you money.

You have been using the old AR processes for years but what was good enough 20 years ago is hindering your business today. The time has come to make the change to a reliable, secure and cost-effective AR approach. Change doesn’t always seem easy, but if you want to keep the change in your pocket, it’s time to give AR automation a chance. So make a change, and save your change.