Accounts Receivable Automation Boosts Collections at 71% of Advertising Firms

Advertising companies have taken the lead in automating their B2B payments processes. While organizations in many industries began using digital B2B payments in 2020, or shifted to them during the pandemic, advertising companies got a head start.

They made that move early because they needed the benefits of automation. The media and advertising industry is a complex network of entities and workflows, all navigating a variety of systems (digital and manual) to reconcile invoices that could span multiple campaigns, months and buyer clients.

“It’s enough to make your head spin,” Omar Hawkins, director of B2B vertical strategy at American Express, told PYMNTS. “With this in mind, [accounts receivable (AR)] automation solutions can deliver material process efficiencies and improved data visibility to AR, finance, treasury and collections professionals in media and advertising companies to mitigate the complexity and drive improvements to free cash flow.”

In fact, 71% of advertising firms said their collections improved after implementing AR automation, according to the Payments In B2B Advertising Report produced by PYMNTS in collaboration with American Express.

A Variety of Benefits for Common AR Challenges

Despite the benefits of automation, about one-third of U.S. business spend still relies on antiquated systems and physical payment methods, which can create friction and slow payment processes.

The pandemic appears to have served as a wakeup call for companies in this regard, though, as businesses worldwide are investing more to digitize, automate and streamline these payments.

“Automation solutions offer a variety of benefits for common accounts receivable challenges, e.g., reducing longer than desired days sales outstanding, improving operational efficiencies, eliminating payment card data security compliance risks and creating a more customer-friendly payments experience,” Hawkins said.

Preparing for a Surge in Activity

Advertising firms that haven’t adopted these solutions may not be best prepared for the surge in activity that has been seen and is expected to continue in their industry.

Spending in the online advertising B2B category has shown strong growth, advancing twice as quickly as money spent on print advertisements each quarter.

This boost likely reflects the drop in in-person events for B2B marketers during the pandemic but is positive news for ad platforms. Some predict that B2B marketing may never return to what it was before the pandemic began, so these expenditures likely will continue their upward trajectory.

Streamlining AP and AR Processes

One way advertising agencies can streamline payments for ads on websites is by using virtual cards. Several agencies currently use credit cards to cover ad campaign-related expenses, but virtual cards give marketing departments better insight into clients’ budgets as well as a superior level of customization. Clients will set a specific budget for each card, loading the allotted amount onto the appropriate card each month. When the value of the card reaches zero, ad spending will discontinue until the funds are reloaded the following month.

On the AR side, the answer is automation. Advertising firms with automated AR processes have lower delinquency rates and better days sales outstanding (DSO) than companies that rely on traditional paper-based methods. PYMNTS research shows 87% of these firms see these improvements as significant advantages, and more will follow suit as digital innovation of the B2B payments space continues.

“We encourage advertising industry professionals to leverage the capabilities of AR automation solutions to invoice faster, get paid earlier, free up resources and improve [the] client experience,” Hawkins said.