During 2020, B2B companies that enabled customers to order online fared better commercially, compared with those relying on counter sales and / or telephone ordering or personal sales. In the space of weeks when lockdowns began, online ordering capabilities transitioned from being optional to being essential. In some countries, up to 90% of all eCommerce is attributable to B2B sales. Consumer ecommerce also grew in 2020 but the value traded between businesses outstrips consumer online spending by an order of magnitude
A study taken in August 2020, showed that the number of companies selling online had risen in almost every country surveyed. Evidently, many companies launched an online ordering channel before or during the pandemic, which both accelerated the existing trend towards ‘digital first’ operating models and changed customer expectations of the B2B buying process. Online ordering, however, is only half the story – eInvoicing is also undergoing a major growth surge as customers that order online want and expect an invoicing process with comparable convenience, speed and efficiency.
Two ways that businesses ‘leapt’ into online ordering
To fast-track their business into online ordering, many companies chose to focus on selling a selection of their products through existing online marketplaces. Some did this in parallel to building or improving their own online catalogue and ordering facility. In their haste to keep sales orders flowing in, however, some companies squeezed out their own in-house Accounts Receivable expertise.
Using Third-Party Channels Only
Amongst the growing range of online marketplaces on which businesses can promote and sell their products, Amazon and Ali Baba are the biggest players globally. While providing access to a online buyers, these channels can also erode margins. Product offerings and prices can easily be compared. Price wars can ensue and in the buyer’s eyes, products can be reduced to a set of features and a price, with less emphasis on the service wrap and customer relationship. Online marketplaces do not guarantee that it will be easy to do business with a company – they’re just an additional shop window. Selling only through third party websites may help you reach more customers and win more orders but may have a devaluing effect and throw your business into sharper relief against its key competitors.
Squeezing out AR Expertise
Third party sites often impose their own invoicing systems, giving AR teams less flexibility or involvement with the customer. Customers may be presented with the site’s invoice, not your own, and their restrictions can stimulate more invoice queries and disputes than you are prepared for.
Direct Only B2B eCommerce
Building an online ordering facility and integrating this with an existing ERP system can be a substantial challenge. New business may suffer while your marketing gains traction reaching your target market. Then there’s the process of migrating existing customers to new channels. Many businesses look at combining direct online sales with the use of third party sites, aiming to convert customers won elsewhere to direct account sales in future.
Analysts agree that the B2B buying behaviour has changed and that the rate at which B2B spending is shifting to online will not deccelerate. For Finance teams, this means a new commitment to streamlining the entire order to cash process. In some cases, this involves re-engineering the process to switch from paper invoicing to eInvoicing and manging invoice querying and invoice payment or cash collection processes online too.
Digital vs Commercial Real Estate in AR
Production, stock holding, plant and equipment all require dedicated floorspace unless you can white label products produced and shipped directly by the manufacturer. Back office functions like Accounts Receivable, however, do not need to be tied to a physical location. With the right software and systems in place, all customer invoicing, collections and cash allocation processes can be conducted remotely, either by staff working from home or third party suppliers in shared service centres where the labour and real estate costs are lower.
So does eCommerce pose a threat to AR teams?
Yes, but it does not have to. Offshoring or outsourcing is likely to be considered while cash-strapped companies look for ways to strip out costs over the next few years. The preferable solution for many finance teams is a model in which they retain control over the process and the direct communication with the customer – albeit through digital channels. The choice of solution supplier for digital order to cash processes becomes crucial.
We have found that many large organisations are put off by long implementation times, high up front costs and growing uncertainty about maintaining ongoing compliance with eCommerce, invoice and tax regulations globally. In short, they are scared off. We like to help companies see easier routes to a fully digitised order to cash process that is surprisingly easy to set up, use and maintain.
If your business is struggling with implementing an efficient and scalable eInvoicing capability or a fully digital order to cash process, we sympathise. We still come across leading global brands that are pioneers in their field but effectively have an accounts receivable factory, churning out paper invoices and hand stuffing envelopes. In fact, some of our clients do have areas of their warehouses or factories dedicated to the finance function, stocked with printers, franking machines and the paper-laden desks of the credit team. If your business is selling online but has a rather manual, laborious and personally managed invoicing function, then it’s time to take the leap into the digital sphere. Do it right, and you’ll have a future-proof system that overleaps the basic and limited functionality of PDF attachments and puts your business into the efficiency super league, in which your credit team is known for-profit creation and cashflow generation rather than being a cost centre and a resource drain to the firm.
We believe, if you’re still stuck with paper invoicing, you should overleap the PDF attachment phase and go straight to portal based billing using a combination of secure links emailed to customers, allowing them to self-serve invoices online, and EDI – a machine to machine method that allows the buyer to absorb the invoice data directly into their accounts payable system. What is more, we know that there are still companies out there sending invoices on paper, doing mail merges to send out renewal notices and generally relying on paper. There is a carbon cost to collecting receivables like this. There is also risk and time that you can almost eradicate by moving to eInvoicing with us.
One of my most popular posts on Linked In is an infographic I shared showing the evolution of eInvoicing. Another popular infographic covered the essentials of B2B eCommerce with tips on tying the invoicing process into the online ordering experience.
Interest in these two topics the fact that so many credit management professionals know their business has some way to go in adopting eInvoicing best practice and technology that keeps their margins healthy and causes credit managers far less stress. As Britain and the rest of the world “builds back better” after the pandemic, we’ve been busy rolling out our eInvoicing platform to different countries for our clients. Typically one country or region leads, then other countries they trade-in (and the subsidiary companies registered there) come on board one or two at a time. Next week, a big name in B2B office supplies goes live on Corrivo in Benelux, joining 5 other regions of Europe already using the single platform to manage literally hundreds of thousands of invoices per month. Office supplies is a competitive market, and margins are tight. Still, by cutting their overheads with Corrivo, this company creates more room for profit by doing their invoicing and collections digitally with our help.