Top 4 AR Survival Strategies In 2021

As we look back on 2020, the global economic crisis has impacted businesses in ways no one could have anticipated. The sudden shift to remote work and the reliance on ecommerce for everything from daily staples to art supplies has forced organizations to re-strategize and shift objectives for 2021. For finance teams, planning for the future is a challenge. To position yourself for success, consider incorporating these 4 key elements into your 2021 AR planning activities.

A scalable collections strategy

In 2021, maintaining a healthy cash flow will be imperative for businesses across all industries. Since COVID-19 hit in March 2020, collectability, promise to pay, and payment in full is down 38, 12, and 13 percent respectively.[1] As organizations continue to manage remote teams, a strong collections strategy will be critical to secure revenue. Businesses need to develop or enhance their customer communication approach to ensure receivables stay top of mind.

Utilizing an automated AR platform is the most efficient and reliable way to ensure customers receive timely payment reminders and have a convenient way to pay invoices, initiate correspondence, and review account balances on their own time. Best-in-class companies will also utilize an automated communications strategy to deepen customer relationships and boost brand loyalty by sending thoughtful messages that make their customers feel special. After all, customers are the lifeblood of your business. By focusing on optimizing the customer experience, you’ll strengthen customer loyalty and advocacy over the long term.

As Mehmet Shah explains in our recent PEX Webinar,

“Look at your processes and identify your pain points. Know your problems before you go and solve them. My biggest pain point was visibility for our team and visibility for our customers. Being able to show customers very clearly where their invoices are, where their accounts stand – this enables critical real-time conversations that put everyone on the same page.”

Flexible payment options

When it comes to maintaining a healthy cashflow (and getting paid faster) there are a few important factors to consider:

• Invoice delivery. The timeliness of invoice delivery directly impacts the timeliness of payment reception.
• Invoice accuracy. The accuracy of invoices affects not only payment timelines, but also leads to higher operational costs associated with the person hours required to correct errors.
• Payment options. Businesses must adapt to customer channel and payment preferences. They must also show empathy for those who might need extra time or accommodations in 2021. Since March 2020, payment deferrals have risen by 22 percent.[2] Giving customers flexibility, especially around payment goes a long way in securing customer loyalty. Allowing customers to pay with a credit card is one option that may provide extra time while still securing your payment. Other forms of payment like ACH/EFT, wires are typically faster to both receive payment and recognize the revenue, however they do take an investment on your business’ end to manage effectively. If a payment plan is the only viable alternative for some clients, ensuring that these payments are automated will foster trust and ensure the payment process is seamless.

Chris Pearce from Cheetah Digital explains the impact automation of payments has had for their customers: “We’ve been on this automation journey for two years. We had very little technology initially. Customer experience has significantly improved - they have easy accessibility to see statements using the link. Follow up emails are professional and standard in their style. Finance is a service to the customer.”

Careful planning and credit assessment

Pulling clean data about your customers into a single dashboard view and analyzing volumes of information to draw intelligence is a challenge for many finance teams, but it’s critical. Smart AR platforms like YayPay automatically pull structured and unstructured data from a variety of sources into useful reports and dashboards saving countless person hours. This allows teams to be proactive and strategic in supporting the business and customers, rather than reactive.

Actively reviewing your client base and their credit worthiness will be critical in 2021 as we see more and more customers encountering cash flow shortages. Subscribing to third-party providers that alert you to changes in your customers payment predictability can help you get ahead of any unforeseen loses. Staying informed helps reduce exposure and mitigate risk. You should also seek to use the data you have within your own tools. Utilizing a platform that provides insight into your customers’ health will help you understand how your customers payment trends are impacting your business. This will help you and your teams focus on the right customers, at the right time.

Automate or get left behind

Automated workflows allow your company to reduce errors associated with manual workflows. Through artificial intelligence and machine learning, employees can spend their time on critical business tasks and use tools like predictive analytics and data algorithms to better forecast payor behavior and cashflow. Roadblocks and gaps in the back-office operations can also be unveiled which previously would have left companies exposed to risk and poor customer experience.

In 2021, its in the best interests of companies everywhere to keep their cash reserve lucrative, their operating costs low, and their customers happy and loyal. Today’s customers are not only tech savvy, but are loyal to brands that offer them a seamless, self-serve experience with very little baggage attached.

YayPay’s smart platform brings you productivity, predictability and transparency to run a more efficient and more profitable business. Leveraging a smart AR platform will become more important than ever in 2021. By automating as much of the order to cash process as possible, finance teams are able to focus more time on higher-value activities.

Mehmet further explains the following benefits automating through YayPay has brought to his business:

“The digitization of the world economy has increased our company’s revenue because of people being online and dollars being spent. YayPay have been very helpful from the collections perspective of understanding where everything is. Our one-person collections team can scale up and handle the extra volume. We’re also much better able to manage credit risk. YayPay’s reporting has also helped us share updates with our executives.”

[1] AGA, “Collections During Crisis: The Insights on the Impact of COVID and Strategies for Navigating it’s Fallout”.

[2] AGA, “Collections During Crisis: The Insights on the Impact of COVID and Strategies for Navigating it’s Fallout”.