AmEx: Why It’s Go-Time For Automating B2B AR Functions

The great digital shift is spurring a revolution in consumer commerce — but it will also change the way businesses pay one another.

In an interview with PYMNTS, Dan Puleri, vice president of B2B supplier strategy and enablement at American Express, said invoicing and payments are ready for increased automation.

B2B certainly is ripe for change and reinvention. As PYMNTS research has found, more than 72 percent of firms receive paper invoices by mail, and roughly 81 percent of companies still make payments via paper check.

In an example of the continued drive to modernize and automate payments and back-end processes, American Express said in May that it had teamed up with accounts receivable (AR) software company Invoiced to offer access to automation software at an exclusive discount to AXP merchants, intending to transition AR to the digital realm. Through the relationship, focused on a “plug and play” model geared toward small- and medium-sized businesses (SMBs), American Express enterprise clients can improve cash flow visibility, offer a self-service billing and payment portal for their end customers and automate collections across a variety of channels such as email, text and phone.

In another collaborative example, announced Tuesday (Aug. 18), American Express said it had teamed with HighRadius, a software as a service firm specializing in order-to-cash and treasury management. The relationship brings mutual upper-mid and large companies access to an integrated AR management platform marked by app-like functionality.

As Puleri told PYMNTS, the linkup between American Express, HighRadius and Invoiced is illustrative of advances that are underway — and still to come — in accounts receivable processes.

“It would be fair to say that AP automation has kind of been leading the way” when it comes to digitization, Puleri maintained — chiefly because cards, and especially virtual cards, have been gaining traction in a market that is estimated to be worth as much as $5 trillion.

“There’s been a lot more activity with AP automation. And now there’s an opportunity for AR automation to catch up,” Puleri said.

Getting there requires a bit of education (for merchants) that AR automation need not be as expensive or require as much technical heavy lifting as some firms might assume. Those assumptions have effectively served as barriers to the more widespread deployment of AR automation solutions. Smaller firms, after all, must be judicious when spending capex on new technologies, as they have less money in hand compared to their larger brethren.

As so much of daily business life goes online, merchants are focused on the front-end experience and websites, ensuring that interactions with buyers are optimal. But now more than ever, they are finding that AR management is a critical part of running successful companies.

“The deployment component is critical here,” Puleri said, explaining that cloud-based solutions geared to SMBs are “plug and play — and they integrate with existing processes as simply as possible.”

The great digital shift to AR automation is gaining particular urgency as so many firms adopt a work-from-home existence, and there’s no ability to conduct back-office operations on-premise. And merchants are finding that in the current economic climate, there’s value in automating account management. Buyers want to extend terms, and they may even be asking for credit extensions. Suppliers, of course, want to keep their buyer relationships in place.

Especially for larger firms, marked by complex back-end processes, “a successful AR automation allows you to pick and choose which one of those things you want to address first,” said Puleri. In terms of the payments themselves, when buyers are using instruments offered by American Express, “that’s a burden that is taken off the suppliers — they are not extending credit to the buyer,” he said. 

 Automation, added Puleri, allows firms to couple card acceptance with prudent management of outstanding balances. Suppliers can shift debt risk to outside financing institutions, for example. Automated controls can also ensure that both creditors and borrowers adhere to the payments terms that have been put in place. As has been illuminated in recent PYMNTS reports, during the pandemic, credit check activities have been on the rise, indicating that risk management has been in sharper focus.

Drilling down a bit more granularly into payment choice, Puleri said it is important for AR automation to offer a range of options, from ACH to cards.

“Expanding the range of payment options on offer,” Puleri said, “translates into a better customer/buyer experience and ensures that transactions are settled quickly. AR automation capability provides this level of functionality.”

“Even if a supplier is still evaluating AR automation,” Puleri told PYMNTS, “having the option at their discretion to ‘turn on’ [more payment options] when they are ready provides them control over a process in which visibility is a key pain point.”

And with a nod toward the longer-term roadmap, “clearly, we think tokenization and virtual payments are going to be a big part of helping suppliers or merchants unlock AR spend,” said Puleri. “It’s not one-size-fits-all.”

Against the larger backdrop of the ongoing pandemic, AR digitization waits in the wings. As Puleri told PYMNTS: “If you’re a merchant or supplier, how would you feel if you’re already hurting — and then you hear, ‘the check is in the mail?'”