Here is a story of two credit and collection departments: the status-quo team and the data-driven team.
The status quo team has a way of doing things that work, and has worked for years. Their credit risks are controlled, and their collection rates are acceptable to management. Their system may be a green-screen, but it works and everyone knows where everything is. The team is disciplined about meeting and organizing their tasks, and they followup with unpaid invoices on a strict schedule, staying on-top of their aging receivables and going through the motions to handle invoice disputes, mistakes, and other objections.
The data-driven team isn’t afraid to test old practices, asking constantly whether doing things slightly different might yield even better results. Knowing that billions of dollars are being poured into cloud-based technologies across the globe, they search these exciting technologies looking for competitive advantages…and they find them. Data-driven teams aren’t interested in a “controlled” credit risk environment, they want to push the envelope to say yes to every prospect. Data-driven teams aren’t afraid to do hard followup and relationship work, but they also know that a large portion of disputes and problems can be avoided by optimized invoicing, noticing, and communications.
Sending invoices is more than a print mail task, and so too is sending preliminary notices and exchanging lien waivers. That’s the story behind zlien and Billtrust partnership announced last week. The partnership rallies around the tenet that cloud-based technology empowers enterprise companies to leverage these actions for what they really are: moments to communicate and connect with customers and other project stakeholders.
This is an exciting partnership between two organizations strongly committed to delivering value to enterprise organizations in the order-to-cash process.
For building product suppliers and manufacturers, who must navigate the complex mechanics lien compliance landscape, huge value can be acquired by optimizing manual order-to-cash processes in a way that promotes faster payments and builds stronger relationships. As this post will discuss, that’s the exact value proposition offered by the Billtrust and zlien technologies.
Here is what the Billtrust & zlien partnership means to you, the large or enterprise-sized construction industry supplier or manufacturer.
Good Invoicing & Preliminary Notice Practices Are About Connecting Parties Together
Every day, companies print and mail a mountain of paper to one another in the form of invoices, statements, demand letters, and preliminary notices. These mailings are typically a one-way communication, akin to shoving some documents down another person’s throat, who promptly allows the documents to pile up on their desk. A few weeks later, the sending party may make a phone call to “followup” on the document.
Isn’t this a lost opportunity?
Connecting accounts receivables departments with accounts payable departments is a very big deal, and that’s because any analysis of the status quo reveals hundreds of obvious inefficiencies and an enormous number of missed opportunities.
First, sending all of this paper around in an electronic world is simply inefficient. Second, these document exchanges are an opportunity to communicate with customers and strengthen relationships, and not simply a chore.
Billtrust has built an enterprise customer base of 1,000+ organizations who are improving their data, customer relationships, and days-sales-outstanding (DSO) by leveraging technology to improve the billing and order-to-cash process. For those in the building product supply or manufacturing business, the preliminary notice and lien river process is – like invoicing and cash application – an overlooked and undervalued moment that can be leveraged to improve customer relationships and decrease DSOs.
A. The Preliminary Notice Can Connect Parties
Most construction industry participants know the preliminary notice document – just like invoicing documents – well; but are these documents just thoughtlessly sent out to meet a legal requirement?
The preliminary notice is legally required in more than 39 states for a reason. General contractors, lenders, property developers, and other related parties have lobbied their legislatures for over 200 years to receive these notices because they crave the information. These notices are designed to connect suppliers and manufacturers with the construction project’s owners and managers.
The zlien platform is built around this premise, providing tools and insight to the general contractors, lenders, sureties, and property owners. This improves the data available to everyone on the construction project, and that new transparency promotes healthy projects, faster payment cycles, and stronger relationships.
B. Invoice Central and zlien Makes A/R and A/P Interaction Better
Accounts payable people in the construction industry have a challenging role. They must navigate multiple tiers of project participants with varying payment terms, and manage the flow of cash across a portfolio of projects and project participants. Sometimes these accounts payable people are blind to these payment terms, or maybe even blind to who the payees are. All the while, since the A/P person’s job entails not only paying bills but also eliminating double-payment exposure, every payment must get paired with a lien waiver.
Connecting accounts receivables and accounts payable departments in the construction industry is impossible without handling preliminary notice and lien waiver exchanges. Billtrust’s Invoice Central product gets A/R and A/P departments on the same page with respect to invoicing, and zlien’s offering can enhance that connection by displaying a company’s lien exposure, electronically delivering preliminary notice and other RFIs and informational documents, and easing the exchange of lien waivers.
This makes the accounts payable job easier, which makes everyone happy, lowers risk across both sides of a payment, and gets cash flowing faster.
Data Driven Workflows Are Revolutionizing Accounts Receivable Departments
Everyone in the accounts receivables and accounts payable spaces knows about workflows. Workflows have been a stable of ERP and related software products for ages. IT departments are called upon to create a “workflow” based on some specifications, and after months and months of waiting, the workflow is built according to those specifications and those specifications alone. These workflows usually age quickly, and are subject to a high number of corner cases and exceptions. People stop trusting them. They ask IT for a new workflow. Rinse and repeat.
There is a ton of buzz about “cloud based technologies,” and that’s partly because these technologies have the ability to make workflows more intelligent, usable, and effective.
Sales departments have been using these technologies for years. You may have heard of Salesforce?
The same technology isn’t as prolific (yet) in the finance world, which is still in the grasp of complex accounting platforms and ERPs. In fact, a recent Wall Street Journal article talked about how terrified IT departments were about switching their companies ERP infrastructure to the cloud. However, as highlighted by that article and by examining the practices of forward-thinking CFOs and finance professionals, cloud-based technologies are extending the functionality of traditional ERPs. One way they are doing this is through data-driven workflow tools.
Sending an invoice to one type of customer is different than sending to another type of customer. These differences can be driven by how the customers actually receive the invoice, but what’s more exciting is that the differences can be driven by how quickly the customer will pay the invoice, the customer’s capital situation, the customer’s payment terms with their customer, etc. There’s a lot of variety, and machines can figure out these variations to automatically optimize the underlying process.
The Billtrust / zlien partnership promises to enhance the Queue’s functionality, because it enables companies to alter workflows based on key Billtrust invoice data (i.e. invoice delivery status, promises to pay, invoice disputes, etc.), and further embeds key A/R information for the decision maker such as invoice images.
The above example talks about invoicing, which is relevant to the Billtrust technology, but think about preliminary notices, lien and bond claims, and lien waivers.
Traditionally, construction organizations print and process these documents in-house, or use a “notice and lien service” outfit. This requires credit professionals to analyze these hyper-complex rules and make manual decisions constantly about how the documents should be used. Who should receive the notice, and who shouldn’t? Who should get a lien, and when? How and where should the notice or lien waiver be delivered?
zlien‘s Queue enables organizations to manage these lien and notice decisions through intelligent, custom, and machine learning workflow engines. This results in better use of these important documents, less risk, and smoother payments. Put more simply, paying parties (GCs, Owners, Lenders) can significantly reduce their double-payment and lien exposure while ensuring that everyone on the project is getting paid smoothly and fairly. Parties receiving payments (suppliers, subcontractors) eliminate non-payments and slow-payments, improving their DSOs and reducing bad, and relationship-damaging situations.
The Billtrust / zlien partnership promises to enhance the Queue’s functionality, because it enables companies to alter workflows based on key Billtrust invoice data (i.e. invoice delivery status, promises to pay, invoice disputes, etc.), and further embeds key A/R information for the decision maker such as invoice images.
Further, the partnership aims to leverage one of the cloud’s most transformative features: APIs. Getting data from one platform to another is super important, and doing it with Excel sheets and FTP transfers is error-prone and inefficient. Billtrust and zlien have complementary implementation needs and similar APIs, which makes it simple for mutual users to quickly and accurate adopt both tools.
Billing is Part 1 of a 2 Part Job
Billing and invoicing is really, really important, and Billtrust users know that a good technology can really improve the practice. Just take a look at the business case for Billtrust. While stronger billing, invoicing, and cash application processes can really improve accounts receivables performance, billing and cash application is just part 1 of a 2-part. The second job is making sure all of the invoices get paid, and mitigating the risk of non-payment and lowering default allowances.
It’s common for invoices to get paid smoothly and timely. Billtrust improves the odds of this smooth and timely process happening. Nevertheless, some invoices will age, and some will go into default. Every collector and credit professional knows this to be true, and a significant component of their day-to-day job is to track these accounts, mitigate them, and to get these accounts eventually paid.
The construction industry is particularly challenging in this area. Unlike the traditional supply chain, where payment depends simply on a single company (the payor) paying another (the payee), the construction industry has a few extra layers of complexity. There are oftentimes more parties involved, such as the general contractor, lender, developer, and surety. There are also cross-cutting contractual obligations surrounding payments, such as pay when paid and pay if paid provisions, retainage requirements, and more.
Invoices in the construction industry, therefore, age in spite of great invoicing and billing practices.
Billtrust users already know about the benefits in using a cloud-based technology product to improve their billing and cash application process. It’s natural for them to turn to the same type of technology for part 2 of the task: getting paid.
In construction, getting invoices paid and protecting against non-payment risk circles around mechanics lien and bond claim rights. zlien’s platform gets every construction participant involved to promote a fair and transparent payment process.
So, What Does It Mean To You?
The title to this post promises to explain what the Billtrust and zlien partnership means to you. If you are a construction building product supplier or manufacturer, the partnership means that you can improve your receivables performance by leveraging innovative cloud-based technologies to optimize the billing, invoicing, cash application, lien notice, and lien waiver process. These optimizations make the traditionally manual processes more efficient, but more importantly, they strengthen relationships with your customers and get your company paid faster.
Learn more by viewing the joint webinar presented by Billtrust and zlien, the partners, and ThyssenKrupp Elevators, a mutual user. The webinar explores the case for using both products to improve receivables performance and customer relationships.
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