Transactional disputes can harm the relationship between trading partners. See how working with a third party solution provider can relieve the friction.
This blog first appeared on the Corcentric website.
Last year, a Wall Street Journal article noted that the move towards outsourcing finance and accounting functions was growing as a way for CFOs to realize better efficiencies. Although cost definitely factors into the equation, CFOs and finance managers are finding great value in streamlined processes, real-time visibility into transactions, data and reports that enable accurate benchmarking, and business intelligence gleaned from transactional data.
Yet one of the rarely addressed, yet valuable benefits for companies using a third-party to perform finance functions, especially when it comes to accounts receivable in the B2B realm, is the removal of friction between trading partners. Disputes over payments, long approval processes, and inconsistent billing can create unnecessary stress between buyers and sellers throughout the transaction chain. That’s why smart companies who first were simply looking to automate simple processes are now asking their providers to do much more. Doing this enables CFOs to turn their AP and AR into nimble revenue-generating departments by focusing on more strategic tasks and goals.
The more complex the transaction chain, the more a solution that’s simple, flexible, and scalable is needed. We often work with communities of sellers and buyers where transactions take place across thousands of locations throughout North America. The complexity and lack of centralization can lead to a variety of issues, including pricing that’s inconsistent with agreed-upon contracted pricing, purchase orders and invoices that are not standardized, collections, and disputes. And all of this, if handled between the parties themselves, can have a deleterious effect on the relationship. That is unacceptable.
The selling parties may not have the resources to allow them to maintain control over all of the necessary processes; nor should they. Their focus should be on satisfying their customers’ demands and maintaining the necessary inventory to do business. Our CorConnect solution normalizes all documents, including POs, ASNs, and invoices; guarantees and validates pricing regardless of where the product is purchased; and gives selling and buying parties real-time information into the transaction status.
But there’s something smart companies look for besides an advanced software solution; they understand that there still needs to be a human factor. That’s why it’s essential to look for a provider who has transaction experts on both the AP and AR sides of the equation; people who can intercede in disputes and exceptions and smooth over any disagreements between any of the trading partners. And since one of the finance functions, credit and collections, is an area filled with “landmines,” a company looking to outsource its billing function should look to a company that can do both, relieving the manufacturer and distributor of an unnecessary burden.
What’s clear is that this deep-dive involvement by an outside provider necessitates a true partnership between the solution provider and the manufacturer/distributor. No longer is outsourcing a matter of doing business with a blank-faced company on a distant shore. Smart CFOs understand that finding the right provider, one that can provide innovative ideas and solutions, will enable them to turn their attention to focusing on their company’s growth.
See how you can transform your AR department into a strategic asset.