In a billing and payment program, the mystery of how to maximize B2B profitability is often a simple question of functionality. This paper addresses the common pitfalls of a consumer payment program that hinder commercial growth and goes on to identify value opportunities that can make B2B relationships more profitable.
3. Your Days-Sales-Outstanding (DSO) is
unforgiving, but attempts to improve it
only strain customer relationships.
A survey of more than 2,000 credit professionals identified “slow pay or delinquencies” among their top
business concerns for year 2010.1
With commercial customers, though, a past-due payment is not usually the result of an inability to pay.
Often delinquent payments are caused by the customer’s individual data requirements for processing
the invoice in question. Many companies, for instance, cannot release payment without an appropriate
purchase order number, authorization number, or the cost center associated with the transaction.
Difficulty collecting payments from commercial
customers may be caused by consumer-targeted
collections practices. This is a problem best
solved by separating the collections for your
commercial and consumer customers and
developing specific policies and procedures for
each group.
4. Despite offering credit, you spend a
small fortune accepting P-Cards.
A P-Card is among the most expensive forms of payment for a
merchant to process, but it is a payment method that has grown in
popularity among government and commercial entities for good
reason. P-Cards provide the user with various levels of purchasing
controls and reporting options on purchases made. Additionally, card
issuers often incentivize card usage by allowing customers to earn
significant rebates on their purchases. While some companies
mandate universal use of P-Cards for corporate purchases, many
companies that use P-Cards still regularly opt-in to use private label
commercial accounts that offer similar purchasing controls and rebate
options.
If your consumer-oriented private label program is not drawing commercial customers away from P-
Cards as a form of payment, it’s likely that you need to differentiate your incentives for this market.
5. Purchase disputes seem to be the rule
rather than the exception.
According to a survey conducted by the National
Association of Credit Management, the vast majority of
companies correct anywhere from 0% up to 10% of
invoices for disputes, corrections or other issues2. This
particular survey did not identify commercial invoices
versus consumer invoices, but in business-to-business the
cost differential between handling 0% disputes and 10%
disputes is substantial.
When classifying invoice processes, be sure to separate legitimate disputes from other
disputes. If you see your dispute numbers creeping above 2%, it may suggest that your
customers are missing some point of information (P.O. Number, Authorization Number, Proof of
Delivery, or Price Verification) to confirm that the transaction is authorized or has been
conducted appropriately. By implementing these data points into the transaction process at the
point-of-sale, you can avoid unnecessary disputes and improve your DSO as well.
6. You receive regular requests for
specialized billing options.
When working with commercial customers, your relationship shifts dramatically from a
relationship with a single individual to the responsibility of satisfying the needs of multiple
individuals and departments within a single company. Large corporate accounts may have
multiple offices, all of which utilize a single credit line but need to be billed separately.
Additionally, commercial customers are becoming more and more likely to have their own
electronic billing requirements. The U.S. Government, for instance, has implemented a Wide
Area Work Flow (WAWF) system through which vendors are required to submit invoices directly.
Alternatively, some commercial customers may request their bills be submitted in a specific
electronic format compatible with their own accounting system. Both requirements provide a
cost savings to your commercial customers by removing manual billing data entry from the
accounting process and, also, quickly identifying missing or inaccurate billing information.
These specialized billing options are a requirement unique to commercial customers.
7. A Useful Solution.
The best way to achieve commercial buy-in for your billing and payment solution is to build a
program that is useful to the commercial customer, first and foremost.
• Research. Understand commercial customer needs, develop credit profiles, purchasing
controls, and billing options that can be adapted for their individual procurement
requirements.
• Design. Exclusive credit, collections, and customer service groups that are trained to
handle business-oriented concerns promptly and professionally.
• Incentivize. Consider the value of incentive programs targeted specifically to your
business clientele.
• Analyze. Utilize transaction data to identify trends in procurement practices, target your
marketing and sales initiatives more effectively and maximize the purchasing power of a
valuable market segment.
The oversight your commercial customers obtain through a payment program also provides
exceptional value to their businesses while decreasing your company’s dispute management costs.
8. Multi Service. Innovation Where it Matters.
Multi Service invoicing specializes in the design, implementation, and management of custom
billing and payment solutions. The company collaborates with clients to isolate specific
commercial credit and payment issues, identify measurable portfolio growth goals, and design
a tailored private label payment solution to optimize customer loyalty. The company’s expertise
in business-to-business sales processes assists clients in maximizing the lifetime value of
individual commercial accounts and optimizing their overall commercial portfolio.
Thank you for your interest in this free presentation. We welcome your comments, feedback,
and suggestions. Please consider sending us a note about how this paper has helped you.
Check out the Multi Service Commercial Payments blog at multiservice.com. If would like to
contact a private label business development analyst directly, you can call +1-913-451-2400 or
email contact-private-label@multiservice.com.
