The wholesale distribution industry plays a key role in making the economy successful. An integral link of the supply chain, between manufacturers and retailers, wholesale distributors were uniquely impacted by the global pandemic and the resulting significant disruption. As an industry that facilitates B2B transactions across the supply chain, every process and department, not just operations, were affected. Administrative processes including accounts receivable (AR) had to manage the transition to remote work, supply shortages and increased late payments and DSO.

Wholesale distribution is a complex, high-volume business that can greatly benefit from innovation and digitalization to give them an edge in a very competitive market. Those organizations leveraging AR automation were better able to adjust to the “new normal” and reduce the impact on cash flow. AR automation increases efficiency, collections and cash flow and enhances customer experience, vital improvements for the wholesale distribution industry.

Digital Advantage to Improve Data and Processes

Data-driven decision making reduces the guesswork in making business judgements. It helps to provide the data needed to analyze and adjust business processes and tactics. AR automation makes it possible to gather and analyze information to make fact-based decisions. This time saving element is crucial for an industry that has such a high number of customers, materials, distribution channels, and location-specific pricing requirements, like wholesale distribution.

AI technology applications in AR automation use data gathered from business transactions to reduce human involvement in time consuming business processes. Customer history, profile data and account information can be used to automatically decide on follow-up timing, send alerts, and trigger email reminders. The time saved on manual tasks can be spent on higher priority AR tasks. In a time when B2B purchasers are expecting omnichannel experiences, AR automation can help streamline and improve that customer experience.

Customer Experience as a Game Changer

Positive customer experience helps to increase customer retention and order volume. Omnichannel marketing helps to enhance customer experience by streamlining the handling of customer calls to eliminate disconnects between the different departments involved in customer transactions.

With an omnichannel approach, departments that touch customer transactions are linked internally so one team member can access the information needed to solve customer problems. If a customer has an order problem, the same team member has access to the information on the order, shipment, delivery, and invoicing. Customers are not bounced around between departments to get answers, saving the customer and team member time, while improving the experience for the customer.

Closing the Cash Flow Gap

In the last 18 months, wholesale distributors have seen a significant increase in days sales outstanding (DSO). When customers are slow to pay outstanding invoices, it can be difficult for wholesalers to meet essential expenses and purchasing inventory.

An online customer portal makes it easy for customers to make electronic payments, report disputes, access copies of documents, manage customer profiles, and communicate with AR team members. A customer portal saves time that can be spent on customer contact, facilitates payments and dispute resolution, and enhances customer experience. Improved experience and access leads to increased payment frequency and reduced DSO. Adding electronic invoicing to the mix significantly reduces errors.

Electronic invoicing is more efficient and reduces billing errors and the Order-to-Cash (O2C) cycle. It eliminates the need to create invoices from scratch, automatically generating invoices from customer templates. Electronic invoices with hyperlinks to electronic payment options facilitate on-time payment. Time spent manually producing invoices and resolving errors can be used for high priority AR tasks.

Automated reporting and analysis helps companies better manage their finance departments, and keep stakeholders informed of KPIs, AR quality, and problem accounts. Dashboards with KPI reporting and drill-down capability give stakeholders the big picture and the ability to access the underlying accounts. Performance reporting by individual collectors helps to mentor and coach team members to increase cash flow.

AR automation best strategies for the wholesale distribution industry can help to improve performance and flexibility in the new normal. Award-winning Lockstep is an experienced software partner that can help increase efficiency and accelerate cash flow. With a connected accounting solution, finance teams can better coordinate work with customers and vendors.