Automating customer payments: better cash flow & customer satisfaction

A significant advancement for modern businesses, automating customer payments not only enhances cash management but also optimises operational efficiency and strengthens customer relationships. Is it your turn to automate?

Every business is pleased to sell its products and/or services, but ensuring timely payment from customers is crucial. Payment defaults and delays are the worst enemies of a business as they affect two critical indicators that can lead to its downfall.

Working Capital Requirement is the money a business needs to cover its operating costs. Calculated from the cash flow gap between expenses and revenues, it is an essential indicator. Managing it effectively helps avoid financial difficulties.

Days Sales Outstanding (DSO) represents the number of days of unpaid sales. Calculated monthly from the days elapsed since invoices were issued, it helps estimate the volume of unpaid receivables. The fewer days, the quicker the money comes in to support working capital.

For most businesses, protecting against late customer payments and accumulating receivables is crucial for maintaining healthy finances. However, reducing DSO is not an easy task and can face numerous issues:

• • Invoices with incomplete or missing information.
• • Duplicate invoices with different amounts or other inconsistent data.
• • Customers forgetting payment obligations or finding excuses to delay payment as long as possible.
• • Others, with better intentions, simply facing cash flow issues, tool limitations, or payment method constraints.

Beyond whether payment is made, after one or more reminders or unsuccessful recovery actions, a supplier failing to provide correct payment information and a customer not paying to buy time or due to inability risk damaging or even ending their relationship, affecting revenue.

To address these issues, businesses must improve efficiency and consider the necessity of digitising and automating processes. A prime example of this beneficial transition is the requirement for VAT-registered businesses in France to issue and receive electronic invoices. According to Article 91 of the Finance Law for 2024, this will be mandatory from 1st September 2026.

Besides invoice digitisation, other approaches can contribute to better customer payment management. One such approach is automation.

By automating payments, businesses can ensure the timely receipt of funds, reducing payment delays. This enables better cash flow forecasting and reduces liquidity issues.

Manual payment management processes are prone to errors, especially during data entry. Automated solutions minimise these risks by ensuring greater accuracy in payment processing.

Invoice entry, matching, and payment reminders are repetitive and time-consuming tasks. Handling these through software or other automated systems frees up valuable time for Finance team members, allowing them to focus on higher-value tasks.

Automating customer payments is a strategic project that impacts the entire organisation. Here are five steps to ensure its success:

To succeed in transitioning to automation, it is crucial to involve all stakeholders from the beginning of the project. This includes finance departments, IT, and even customers who need to understand the benefits of the new solution.

Collaboration among stakeholders helps define all specific needs of the business, considering requirements and constraints related to existing processes. At this stage, it is useful to quantify the financial gain of each proposed change.

There are numerous tools, each with its characteristics and advantages. Defining specific needs will help select solutions offering the best return on investment. At this stage, special attention should be given to:

• • Data security: Businesses must ensure their clients’ financial data protection. Choosing solutions compliant with current security standards, such as GDPR in Europe is important.
• • Integration with existing systems: Businesses should ensure new solutions seamlessly integrate with their existing tools to avoid disrupting operations. Choosing technologies based on APIs, such as Banking-as-a-Service, facilitates the interoperability of new solutions with existing processes.

Optional but preferable, implementing a pilot phase to test the chosen solution will:

• • Ensure compatibility with specific software.
• • Identify potential issues based on user feedback.
• • Adapt the solution before a wider rollout.

To ensure user adoption of the new solution, it is essential to provide training and communicate the benefits of automation as early as possible.
Once the solution is launched, continuous user support, regular training, and technical assistance ensure efficiency and security.

Instead of deploying new software or applications, which can mean heavy investments and long timeframes, there is a flexible and innovative alternative to simplify and shorten your project.

Our platform’s Banking-as-a-Service technology allows you to use our API to integrate your existing tools and processes with our solutions. Three of these are particularly suited to automating payments. This can revolutionise your cash management while minimising change management and impact on your information system.

To facilitate transactions between the business and its customers, virtual IBANs simplify:

• • Customer account identification.
• • Invoice matching.
• • Real-time payment tracking.
• • Automatic reconciliation of payments with invoices.

When a customer cannot pay by card due to a high amount or strong authentication constraints, a transfer linked to a virtual IBAN offers a simpler and smarter payment alternative:

• • The transfer can be regular or expedited with instant payment.
• • Payment is secure thanks to the irrevocability of transfers.
• • The virtual IBAN allows transaction tracking (and all subsequent ones) to notify sender and receiver.
• • The virtual IBAN also automates the reconciliation of payments and invoices.

When a customer needs to pay regularly, traditional methods like sending a cheque or paying by card lack ease and reliability. Direct debit offers multiple advantages:

• • Payment planning and automation. The customer no longer needs to act. Neither does the supplier.
• • Real-time payment status notification.
• • In case of payment failure, recovery is streamlined by automating the reminder process with a more suitable method.