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Ultimate receivables collection: e-invoicing + direct debiting + dynamic financing

Fact: late bill payment is still a major problem world-wide, e.g. in Asia-Pacific 14% of payment are over 90 days overdue. Fact: the majority of businesses have 80% of their B2B trade with the same, well known and trusted customers.  The ultimate receivables collection system needs to combine the most efficient transaction processing system with the most efficient payment collection system, and provide receivables financing as and when needed to ensure financial health of your supply chain. 

Use the most efficient processing systems

There are many efficient A/R systems, such as those from Oracle and SAP, which need to be used in conjunction with an e-invoicing system, e.g. Tungsten OB10 network partnership with DocuSphere All-in-One for Accounts Payable solution, so that the buyer receives a fully detailed electronic invoice. 

Use the most efficient payment collection system

Businesses have long understood that direct debiting is the most efficient way of collecting receivables.Direct debiting is increasingly accepted by consumers world-wide with the highest acceptance in Europe. However, business-to-business (B2B) direct debiting has had far less success, even in Europe, as businesses have been nervous of being debited for a payment they haven’t approved. However, attitudes are changing in Europe as a result of the SEPA B2B DD scheme having a six indemnity limit and companies like Bottomline Technologies are talking about 2014 being ‘The Year of the B2B Direct Debit’.

There are now systems and solutions for upfront bank account validation and full DD life-cycle management, which companies can use to integrate with e-invoicing to create a seamless, end-to-end invoice and collection model that only requires manual intervention to manage exceptions. This solution will minimise risk, reduce processing costs and improve day-to-day cash flow management. 

Another benefit from the use of direct debiting is that it can, handled carefully, reinforce B2B relationships.

Exploit the dynamic financing opportunity

Well established, regular payments between businesses represent an important opportunity to release working capital for the benefit of both buyer and supplier. Standard financing techniques used in Supplier-Centric and Buyer-Centric asset financing are shown below.

Types of Asset-based Financing

But corporate treasurers could usefully consider using dynamic discounting to release working capital for their entire supply chain, as shown below:

Source & Copyright©2014 - J&W Associates 

C2FO have shown that dynamic discounting can be an efficient, easy and risk-free way for cash to flow vertically to your extended supply chain, providing cash where it is most needed. 

Manage the whole collections process

The final piece in the Ultimate Receivables Collection Solution is a system that manages the overall collection process, such as SunGard’s GETPAID, to help the collections department focus on the accounts that have the highest likelihood of delinquency and the largest amount of cash at risk, rather than prioritising collections based on the age of the receivable. Fortunately, using direct debits will have already helped to minimise the number of delinquent accounts.


CTMfile take: A combination of these type of solutions is required to holistically to ‘optimise’ with the overall collection process which is not just about processing efficiency, it also needs to include looking after the financial health and relationships in your supply chain.


This item appears in the following sections:
Order-to-Cash Cycle in WCM
Accounts Receivable Management
Billing Systems & e-Invoicing

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