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B2B Payment Automation for Small Businesses: Everything You Need to Know

8 October 2021

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> B2B Payment Automation for Small Businesses: Everything You Need to Know

According to a study by BlueSnap, most organisations still rely on traditional AR (Accounts Receivable) processes. It’s not surprising, therefore, that over 80% of B2B executives say that late payments threaten the future of their company.

Organisations that don’t receive payments on time suffer from stunted cash flow, loss of valuable time better spent on other tasks, and hindered business growth.

However, there is a solution.

By switching over to automated accounts receivable software, you can simplify your AR process and receive payments by the deadline. In turn, you’ll be able to improve your business finances, maintain your competitive edge in the market and take on more projects in the future.

Sharing BlueSnap’s latest findings on B2B payments, this article will explain how automated accounts receivable software works, how it can help small businesses and why B2B payment automation is a must-have for dynamic finance functions.

How Does Automated Accounts Receivable Software Work?

Automation is changing the way we get paid. In the B2C world, many traditional payment methods, such as cheques, are being replaced with innovative, electronic alternatives.

Now it’s time for B2B payments to catch up.

Businesses that adopt new payment technology can get ahead of the curve by making the most of solutions including:

Submitting invoices via email automation
Automating bill payments
Generating online customer bill payments

But how does automated accounts receivable software actually work?

Accounts receivable automation, or AR automation, transforms clunky, manual payments by processing them electronically. In a nutshell, the system creates invoices based on your company’s data, delivers them automatically to the client, sends payment reminders and resolves payments with accounting systems and bank accounts.

Removing the repetitive, time-consuming and potentially error-prone tasks involved in manually processing an invoice ensures that your business gets paid on time. Less time spent chasing down late payments results in an improved cash flow, happier customers and suppliers, and boosts team morale.

Using Payment Technology to Overcome Top AR Challenges

It’s no secret that the current B2B AR processes employed by many organisations are hurting business. In fact, 93% of companies say they’ve experienced negative consequences due to outdated processing methods.

Using automated accounts receivable software, you can overcome the challenges presented by manual processes and legacy systems. Here are just some of the ways your business could benefit from digitising your AR process:

1. Improved cash flow

Overdue invoices can occur for numerous reasons. Perhaps there was an error on the invoice and the customer is disputing it, the paperwork has become lost or forgotten about, or maybe your company is inadvertently stalling the process by waiting to send invoices out in batches.

Either way, late payments cause significant financial pressure for businesses, with 35% of organisations revealing that they’re unable to grow due to cash flow problems.

Worse still, poor cash flow can do a lot more damage than just stunting short-term business growth. If your customers aren’t paying you on time, the following may suffer:

New Projects:

On average, 30% of an organisation’s monthly revenue is tied up in AR at any given time, straining finances.

Without the funds to invest in new equipment or take on other projects, businesses lose out on opportunities to create new value. Additionally, staff are forced to waste precious time on chasing down late payments, taking focus away from other crucial priorities that keep companies healthy.

Your Credit Rating:

Reportedly, over a quarter (27%) of customers exceed their payment terms, which often leaves businesses in a state of financial limbo.

When you don’t have enough cash flow to cover operational costs, you may have to take out a loan or use a credit card. However, if you’re unable to pay your debts back on time, your credit score could take a hit, making it trickier and more expensive to obtain loans in the future.

Supplier Relationships:

Two fifths (40%) of businesses say they pay their suppliers and partners late. If your customers aren’t paying by the deadline, you’re going to struggle to pay your suppliers. In the worst case, suppliers may refuse to work with you in future due to a poor payment record.

Automated accounts receivable software can significantly lower the risk of late payments. Digitising invoices and storing them in an easy-to-use platform removes the potential for human error and prevents documents from getting forgotten about or lost. Plus, payment technology reduces the amount of time spent on arduous, manual paperwork on both ends. It’s never been easier to receive a payment on schedule.

2. Better Customer Relationships

In a world where innovative B2C payments are the norm, why should B2B payments be any different? Many customers have come to expect a simple, seamless payment experience. Instead, customers are confronted with antiquated and frustrating AR processes.

Consequently, 30% of businesses say they have lost customers and contracts because of their unsatisfactory AR processes.

Businesses must begin adapting to the more common payment methods customers use to fulfil invoices from B2B organisations such as:

Credit cards (21%)
Automated clearing houses (ACH) or local bank transfers (12%)
Wire transfers (13%)

Implementing state-of-the-art payment technology improves the overall customer experience and maintains your relationships on a long-term basis. Positive, consistently satisfied customers may be encouraged to reinvest in your business.

3. Improved Morale Within the AR and HR Teams

Traditional payment processes take a significant toll on AR teams and human resources, who currently have to spend around 11 hours managing a single invoice across an average range of five different systems.

Unsurprisingly, the root cause of the issue stems from the fact that 38% of businesses still require manual input at some point of the payment lifecycle. In some cases, the AR team must manage the entire process manually, from creating and sharing invoices to customer communication and payment.

As a result, 29% of businesses report that they have difficulty keeping their most talented employees.

Long and frustrating payment processes steal time away from work that motivates employees. When the team has to spend their days posting out invoices or taking lengthy calls that online portals could easily replace, staff turnover increases and ignites a vicious cycle of costly recruitment, job dissatisfaction and resignation.

Furthermore, the unanticipated pandemic’s impact on staff members’ ability to process cheques throughout office closures served as a wake-up call for companies with an ongoing reliance on manual invoicing. If anything, the COVID-19 crisis highlighted the benefits of technology in maintaining business-as-usual, regardless of the situation.

Accounts receivable automation not only frees up your employees’ time, boosting productivity and motivation, but it also mitigates any risks associated with traditional, paper-based payment methods.

4. More Visibility Over Budget

As it stands, around 37% of organisations are unable to forecast cash flow accurately because of the uncertainty that manual AR processes cause. Subsequently, many business leaders are left in the dark about their company finances.

Modern payment technology gives you far better visibility over operational spending and other key metrics. By handling your AR processes through software, you’ll always have access to the latest and most accurate data whenever you need it.

Real-time reports lead to greater transparency and better decision-making because you won’t have to rely on uncertain cash flow forecasts. Instead, you can quickly visualise exactly how and where your business is spending money, calculate how much you’re owed and analyse customers’ behavioural trends including repeated late payments.

5. Increased Profits

According to research, the average cost of processing a single invoice in the UK is between £4-25, and the cost increases further with human error. The current lifecycle of an invoice involves around 15 people to process. It’s clear to see how staff can inadvertently raise the cost of processing an invoice.

However, there are other auxiliary expenses that soon add up over a more extended period. For example:

Office Supplies and Postage:

You need to consider the cost of pens, paper, printer ink, envelopes and postage charges when mailing out a physical invoice.


If your invoices for accounts receivable and accounts payable are physical, you need to store them securely for auditing purposes. The cost of manually filing and storing these paper documents contributes to the overall expense.

Late Fees:

Companies that employ an entirely manual AR process may find that late invoice payments delay them from being able to pay suppliers. As such, you could be paying late fees that are completely avoidable.

Here’s a simple calculation to determine how much your AR process is costing you:

Staff costs + office supplies + postage + storage + late fees / number of invoices = cost per invoice

Companies that want to survive and thrive again in a post-pandemic world can’t afford to be flippant with their finances. By breaking free from the obsolescence of manual AR processes, you can potentially save thousands of pounds each year.

How You Can Leverage Accounts Receivable Automation to Progress Payments

In order to unlock future business growth and stay ahead of the competition, organisations must be willing to modernise their AR processes.

Here are three ways you can begin your journey today:

1. Acknowledge What Isn’t Working

Companies need to be honest with themselves and recognise when processes are causing issues. For example, 98% of organisations struggled to process payments during the pandemic as a direct result of using paper cheques in their AR process.

Unfortunately, if you ignore the need to modernise, your business’ cash flow could be at risk, directly causing negative knock-on effects further down the line.

2. Embrace Automation

Companies that are willing to invest in the payment technology they need to overhaul their legacy systems and manual AR methods will flourish. Implementing automated accounts receivable software is cost-effective and easy.

In truth, more businesses than ever before are choosing to rejuvenate their AR processes. In fact, 99.7% of surveyed senior decision-makers are optimistic and open to AR automation because they believe that digital transformation will benefit their organisation.

3. Research the Right Solution for You

The most significant barrier to adoption is education. 40% of B2B companies claim that a lack of understanding of what solutions are available prevents them from investing more in AR automation and payment technology.

The good news is that there are lots of readily available tools and technologies on the market. But choosing the right B2B payment solution for your organisation is critical. To be successful, you must establish your pain points and select a system that will help you overcome them and achieve your business goals simultaneously.

Discover More About How B2B Payment Automation is Revolutionising Business

B2B payment automation software accelerates the payment process and alleviates the strain on your company, leaving you free to focus on the more crucial aspects of running a business.

Discover the ways your organisation can prosper and grow by automating your AR process.

To find out more, download the ‘Progressing Payments Report’ here.

8th October 2021



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