Buy Now, Pay Later (BNPL) payment methods have become indispensable in B2C and B2B sectors: around 80% of Germans trust purchases. The numerous benefits for buyers explain the high popularity of purchasing on account.
On the other hand, allowing customers to buy on account entails risks for businesses: delayed payment, which results in burdensome collection and dunning, or complete default. Companies require an accounts receivable management system to avoid this. This is explained below, along with an example of good accounts receivable management.
What Does Accounts Receivable Management Mean?
Accounts receivable management is a critical function in any business. It significantly impacts the cash flow, working capital, and balance sheet of the company.
Accounts receivable management, in a nutshell, ensures that debtors pay their invoices on time. However, the process is not quite that straightforward. To ensure that payment terms are met, all invoice purchases must be documented and monitored, which requires several steps.
Accounts receivable management allows businesses to alert customers of impending payment deadlines at an early stage. When payment defaults, it takes over the receivables and dunning process.
How Do Accounts Receivable Management Work?
Accounts Receivable Management walks you through the entire invoice purchasing process. All data and payment targets are documented and controlled, from credit checks to invoicing and dunning. This is the only way to protect a company's cash flow.
Why are accounts receivable management so important?
Below are the reasons why accounts receivable management is so important:
- For cash flow
Companies rely on the timely payment of invoices. The ability of a company to pay current costs and invoices is determined by cash flow and liquidity. According to the study "The Domino Effect: The Impact of Late Payments," 9% of invoices in Germany's B2B sector are unpaid within the standard payment period. Companies lose 56 billion euros in cash flow each year due to late payments. In the worst-case scenario, this results in bottlenecks or even insolvency.
- For customer loyalty
95% of online shoppers want to be able to buy on their accounts. When businesses provide their customers with a short-term financing solution in the form of purchase on account, they increase convenience and trust in the payment process, automatically increasing retention. Smooth communication increases customer satisfaction even more: dependable accounts receivable management keeps buyers up to date on open invoice amounts and upcoming payment deadlines.
- For the workload
With a large number of orders and invoices, the internal accounting department of a rapidly growing company quickly reaches its capacity. An external accounts receivable management system is a good solution for relieving responsible employees by ensuring timely customer payments while also saving resources. Accounts receivable management provides relief even for online stores with high sales and invoice amounts by simplifying invoicing and payment requests. This allows businesses to concentrate on their core competencies.
Accounts receivable management with NCRI
NCRI Inc handles communication with buyers in the event of late payment and assumes the risk of non-payment, giving businesses more time to focus on core business.
NCRI benefits for B2B E-Commerce and marketplaces:
- Real-time credit check. Our algorithm checks new and existing customers in seconds - with NCRI, the acceptance rate is greater than 90%.
- Reduced operational burden. NCRI assists merchants with payment allocation and the running process, freeing up time for the core business.
Easy integration. NCRI can be easily integrated into your preferred e-commerce platform or storage system.