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17 Jun 2024

Streamlining A/R management in the face of billing complexities - Blog

Subhasis Sahoo (Founding Member - Marketing)

In the dynamic landscape of Communication Platform as a Service (CPaaS), efficient accounts receivable (AR) management is paramount. CPaaS providers offer diverse services, ranging from SMS and voice communication APIs to video conferencing solutions, often resulting in complex billing structures. According to an Aberdeen Group study, companies with complex billing processes experience 20-30% higher billing errors while IDC research suggests that B2B companies lose an average of 5% of their revenue due to billing inefficiencies. In this blog, we delve into the intricacies of CPaaS billing and explore strategies to streamline AR management in the face of these complexities.

Understanding CPaaS Billing Complexities & Challenges in A/R

CPaaS providers navigating the complexities of A/R management often find themselves tackling well-understood challenges like complex invoicing with diverse pricing models and sporadic usage patterns, high transaction volume demanding meticulous record-keeping, and unstructured collections lacking segmentation and prioritization. While these issues are crucial to address, they represent the tip of the iceberg.

Beneath the surface lie hidden depths that can significantly impact A/R health. Discrepancies between billing ID formats used in CRM and ERP systems create confusion in payment matching and dispute resolution. Invoice cancellations, disputes, and credit note misallocation disrupt cash flow, strain customer relationships, and complicate collections, demanding robust verification processes and effective credit note management. Integrating AR systems with ERP, CRM, and ticketing tools for seamless data flow can be hindered by compatibility and synchronization challenges. Reconciling payments and applying cash to invoices becomes a complex task due to the diverse nature of customer business units and service offerings. Manual processes in this area are error-prone and time-consuming, highlighting the need for automation.  

Finally, inadequate credit assessment during onboarding and throughout the customer lifecycle can lead to bad debt, impacting cash flow. By acknowledging the full spectrum of challenges, CPaaS providers can move beyond just addressing the surface issues and implement solutions that optimize the entire A/R process, ensuring efficient collections and a healthy cash flow.

Driving A/R Efficiency with Modern Technology

  1. Real-time invoice tracking and audit trails for better visibility: Real-time invoice tracking and audit trails provide CPaaS providers with visibility into invoice status and actions, facilitating proactive management of AR processes. By monitoring invoice status in real time and maintaining detailed audit trails, CPaaS providers can identify and address issues promptly, ensuring timely collections & other actions.
  2. Automated invoice verification to minimize cancellations & disputes: Automated invoice verification mitigates cancellations and disputes by seamlessly aligning invoices with quotes, actual deliverables, and contracts. This meticulous process ensures invoice accuracy, significantly reducing the occurrence of mismatches and errors that commonly lead to disputes and cancellations.
  3. Automated collection workflows to reduce DSO: Automated collection workflows streamline the collections process, empowering CPaaS providers to efficiently manage outstanding invoices. By automating follow-up and reminder activities, CPaaS providers can enable their collection teams to focus solely on priority accounts, while the workflows handle the rest. This accelerates collections, reduces DSO, and enhances cash flow.
  4. ML-based credit scoring mechanisms for accurate decisions: Credit scoring mechanisms help CPaaS providers assess customer creditworthiness accurately both during onboarding & reviews, enabling informed credit decisions and risk mitigation strategies. By analyzing customers’ past payment behavior and leveraging market intelligence data, CPaaS providers can segment customers into risk categories and tailor credit terms accordingly, minimizing bad debt and improving cash flow.
  5. Dispute resolution workflows & centralized communication to close disputes faster: By implementing automated dispute resolution workflows with predefined steps, designated owners, and specified turnaround times, businesses streamlines the entire dispute resolution process. More importantly, making sure that there is a centralized communication platform that can connect seller AR and buyer AP teams is equally important
  6. Automated cash application to reduce manual errors & save lockbox fees: Utilize smart OCR to process diverse formats of bank statements and remittance advice from multiple sources including email bodies, attachments, and buyer portals to auto-match invoices with incoming payments and post it back to the ERP. With this, you not only eliminate manual errors but also save a lot on bank lockbox fees.
  7. Choosing a platform that can scale & integrate seamlessly: In the rapidly expanding CPaaS sector, transaction volumes can multiply within months. Businesses need a scalable platform that can manage this growth while seamlessly integrating with ERP, CRM, and other systems for real-time data synchronization. This ensures smooth data flow across systems and prepares businesses to handle the complexities that come with growth.

Conclusion

In conclusion, effective accounts receivable management is essential for CPaaS providers to navigate the complexities of billing and ensure optimal cash flow and financial performance. By understanding the challenges inherent in CPaaS billing and implementing strategies to streamline AR management, CPaaS providers can mitigate risks, improve efficiency, and enhance customer satisfaction.

With modern technologies and solutions like FinFloh, CPaaS providers can overcome AR management challenges, achieve operational excellence, and drive sustainable growth in the competitive CPaaS landscape. By leveraging automation, ease of integration, and data-driven insights, CPaaS providers can optimize AR processes, minimize risks, and capitalize on new opportunities in the evolving digital communication ecosystem. If you are a business leader in the CPaaS industry grappling with similar challenges – talk to us today and let’s discuss how we can help you overcome them.