How to automate B2B back office for more efficient billing, invoicing

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Small- and medium-sized enterprises (SMEs) in the B2B space face tighter margins than ever. For example, any “friction” in the Accounts Receivable function, such as the unaffordable manual process of submitting and collecting on invoices, can increase overhead and negatively impact the bottom line.

However, B2B companies that automate this über slow invoicing process can come out ahead, keeping up with their larger corporate cousins.

“Many companies approach the opportunity-to-cash cycle in a disjointed way, which is the crux of the problem,” says Tom Brennan, senior vice president of marketing, FinancialForce.com, a leading cloud ERP provider on the Salesforce platform. “They have different systems for selling and invoicing, often rekeying or reconciling the two.”

This can lead to inaccurate and untimely invoicing, which creates customer dissatisfaction, delays cash collections and raises administrative overhead costs to correct invoices, according to Brennan.

Sales-accounting synchronization more important than ever

The importance of B2B back-office automation in the billing space has never been greater for B2B firms to stay on top of profitability and drive faster reconciliation and more timely payments. It is also paramount that cloud solutions streamline invoicing and for firms to synchronize delivery of goods (i.e., Sales) and presentation of invoices (i.e., Accounting) because customers hate it when they get a bill and their stuff has yet to arrive.

For example, Dirxion, a digital publication solutions provider, deployed FinancialForce.com’s Billing and Accounting applications to improve data timing and accuracy and foster a stronger connection between Sales and Accounting.

“Connection of (FinancialForce.com) services to Salesforce with direct billing provides legitimacy to the customer and project profitability; (it’s) a CFO’s dream,” says Rusty Mitchener, CFO, Dirxion. “It enables us to respond to our customers in a timely fashion and gives us a competitive advantage.” With eased communication across departments and with the customer, Mitchner perceives that the departmental silos at Dirxion have been broken down and everyone now gets the same financial message.

B2B firms want to pay differently

Whereas consumers (i.e., B2C) generally accept the standard vendor terms and conditions of the goods and services they use, B2B customers expect flexibility in how they utilize their solutions.

“In addition to traditional ownership, (B2B) customers want the (option) to subscribe to a product and only pay for actual usage of that product,” says Sean Joyce, director of strategic markets, Apttus, provider of SaaS-based quote-to-cash solutions.

So much so that billing has become more of a front-office function because it is another touch point where B2B can demonstrate willingness to work with customers and deliver value on their terms, according to Joyce. “What we have seen is that companies want to package and sell their products much differently than what traditional back office systems typically expect,” he says.

Speed and accuracy

Among all the items that B2B vendors and their customers value, they covet speed and accuracy in billing most of all. “The essence of the problem, speed and accuracy: those are critical,” says Nick Fera, CEO of financial technology company Firm58. “With advances in technology and cloud solutions that make professional billing and financial solutions cheaper and more accessible to any sized firm than ever before, those that continue to use outdated manual or spreadsheet processes will be seen by customers as less than progressive in running their business.”

This could make customers wonder if the company is someone with which they want to do business. That is the signal it sends to third parties, according to Fera. In fact, research studies have shown that B2B companies intuit this issue and see robust back office billing as part of the solution to projecting not just proficiency but mastery of a seamless, hassle-free payment process.

For example, in a 2015 research report, Software Advice, a Gartner advisory service to IT buyers, found that desire to automate processes was a top purchase driver for businesses investing in accounting software solutions.

“SMB buyers sampled for this report recognize the impact,” says Eileen O’Loughlin, market research associate, Software Advice. “Automating this process can increase efficiency, improve customer relationship management and ultimately grow their businesses.”

Inside scoop on EDI and e-invoicing

With all this talk about automating back office invoicing functions, the average B2B professional can be forgiven if she mistakenly takes it as a new concept in financial mechanization. When in reality, electronic data interchange (EDI), the forerunner of electronic invoicing (i.e., e-invoices) traces its heritage as far back as the 1948 Berlin Airlift where so much material was delivered to the Soviet-blockaded city that a 300 baud teletype was sometimes used to transmit shipping information.

Then in 1996, the National Institute of Standards and Technology officially defined EDI as “the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments.” Since then the industry has employed it for paper-free B2B transactions.

For example, at Savi, a supply chain and logistics pioneer, they capture and match the shipper’s ERP system generated transactions (e.g., “Goods Received”) with the corresponding carrier’s generated EDI messages (e.g., “Carrier Departed Pickup Location with Shipment”).

“With that capability we gain end-to-end visibility of shipped goods from the shipper’s ERP system, the carrier’s reporting perspective and the actual carrier’s location,” says Jim Hayden, vice president, solutions, Savi.

Now e-invoices have become a B2B category unto themselves, with competitors such as Basware, Invoiceware International and others moving a mid-20th century idea into the post-Information Age, “fill-in-the-blank-as-a-Service” era.

For example, some large companies have adopted the “as-a-Service” model with encouraging results, such as when consulting firm Accenture helped Deutsche Bank transform its on-premises procurement platform to an on-demand, cloud-based solution.

It also fully automated its source-to-pay process—including invoice processing, according to an Accenture spokesman.

“This resulted in the bank achieving a 15 percent savings in both procurement operations and operational IT costs,” he says. Overall, Deutsche Bank gained more business value through greater cost control, faster procurement processing and streamlined transaction processes, according to the spokesman.

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Derek Handova

Derek Handova

Derek Handova is a veteran journalist writing on various B2B vertical beats. He started out as associate editor of Micro Publishing News, a pioneer in coverage of the desktop publishing space and more recently as a freelance writer for Digital Journal, Economy Lead (finance and IR beats) and Intelligent Utility (electrical transmission and distribution beats).