By Stephen Bedggood Vice President of Product Management at Bluechain 

Earlier this year, findings from the Small Business Index (SBI) found that poor payment practices impacted a third of small businesses. This trend will continue over the next twelve months as more businesses will be focused on free cash flow (FCF) as much as they will on their run rate. 

The recession and growing inflation rates mean that businesses, especially small businesses, will be impacted by lots of customers struggling to pay their bills on time or at all. Making collections simple, easy and a great customer experience will become ever more important. This will help keep on top of your bills and enable more control, insight, and choice for both businesses and consumers.

The challenges of cash 

Payment expectations have changed drastically over the last decade as more consumers and businesses expect platforms to be flexible for their use, whether this is simplicity, ease, flexibility, or enabling them to control when/how they pay. 

Legacy technologies built on siloed systems make it challenging for businesses to support these expectations. The outcome of poor cash flow visibility and high administrative costs ultimately leaves businesses behind if they do not invest in technology to simplify key operational processes. The main two are billing and collections. 

External economic factors are also on the rise. Therefore, businesses must ensure they can be proactive in receivables to meet customer needs faster, reduce delinquent accounts  and protect against potential security risks such as interception fraud. 

New tech, new opportunities

Request to Pay (RtP) is a new, secure way to manage the complete receivables process from billing to collections to reconciliation. It offers customers a flexible way to pay, receiving a notification when their bill is ready for review and the choice to schedule payments in advance, split payments to suit their budget, choosing the amount and method easily.

Truly digitising the billing process (not just PDF!) brings businesses flexibility, making it easier to bill, collect and reconcile payments as well as making things like early payment discounts, extensions, or rewards simpler. Not only does this engage customers, but it offers a personalised approach and transforms the customer experience. Reducing the barriers between businesses and customers enables them to engage in a meaningful two-way dialogue beyond the traditional email bill and chase bill status. The uncertainty around bill payment is removed, businesses have data and insights to support them.

How to manage cash flow

As the world tackles growing inflation and a cost of living crisis, businesses need to be able to manage their cash flows effectively. As a result, RtP is reimagining how to approach the billing and payment experience to turn it into a competitive advantage. 

Businesses can use tools such as RtP to enable customer driven collections whilst knowing what a customer has done with their bill, removing the need to chase. The use of automation to schedule and pay bills can help monitor and manage account systems in real-time. Finally, the two-way communication channel RtP offers helps inform businesses if customers can’t pay their bills in advance, helping to manage cash flow.

Tackling collections using tech

With the uncertainty surrounding invoice status, RtP aims to replace email or phone reminders with real-time information for a new and accurate perspective on customer payment activity. Through two-way real-time visibility, businesses can see when an invoice is sent, viewed, scheduled, partly paid, or paid. Customers can raise queries at the invoice level in real-time, while businesses can support and communicate far more effectively. 

RtP technology opens the door to effective dialogue and gives business future insights that allow an improved customer experience and more efficient management of the collections team. Control over workflow enables straightforward reconciliation and automation for all payments, including part payments, helping business payers with integrations to their key systems.

Mitigating security: becoming the trusted billing partner for SME

The last few years have highlighted the unfortunate, yet accelerated growth in fraud, particularly messaging scams and interception fraud, affecting consumers and businesses. Prevention is at the heart of the solution, and RtP is a secure environment, protected by keys and certificates, which enhance protection from payment fraud. 

Specifically, digital invoices via RtP come from verified billers reducing the risk of push payment or business email compromise fraud. With no sensitive payment data included as part of the request, businesses can’t be exposed to these threats. 

Taking back control

Recessions, paired with inflation, have resulted in an unprecedented demand for trustworthy and effective payment solutions. From managing cash flow to avoiding outstanding debts and security risks, businesses have a lot on their plate. 

RtP helps to alleviate some of this pressure with pay. The UK and the Payment Systems Standards body expressed that it will “allow businesses to make billing less intrusive, more transparent and more efficient.” Removing the previously-existing walls between business and customer will result in a customer experience that supports both needs. This could be the key to taking back control in difficult economic circumstances.