3 customer-centric KPIs AR teams need to focus on in 2022

March 11, 2022 10:46 AM

The challenges of the past two years have required every business to reexamine how it maintains cash flow. Between remote working, postal service delays and, of course, supply chain issues, the movement of cash in B2B has been more challenging and has led many organizations down incredibly difficult paths.

But with the industry as a whole rebounding from the COVID crisis — or at least learning to adapt to it — many B2B organizations’ priorities have shifted from immediate cash in the door to other more programmatic efforts that have positive bottom-line impacts. Businesses are continuing to reevaluate how they measure success, suggesting that the KPIs to which they hold their AR teams accountable will look a lot different than in years past.

Front and center to this is an emphasis on the customer. In fact, according to recent research from Billtrust, many AR teams are shifting to more customer-centric KPIs versus measures like days sales outstanding (DSO). And those who have switched focus are reaping the rewards: increased satisfaction and an improved customer experience. Here are three of these KPIs that we can expect AR to prioritize in 2022.

The customer experience

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The importance of the customer experience has become a boardroom conversation for the majority of B2B-focused businesses as consumer expectations are not occuring in B2B settings. According to research conducted by Marketing Charts, nearly seven in 10 business buyers say they expect vendors to deliver Amazon-like buying experiences, while 67% say they’ve switched suppliers for a more consumer-like experience. Elements of this “consumer-like experience” include seamless digital integrations, consistent brand design across the customer journey, and digital communication channels across devices.

This represents a huge opportunity for B2B organizations to capitalize on a crucial component of what’s becoming a key differentiator within the industry. But the truth is, developing a reputation for consistently great customer experiences is something they've historically struggled to achieve until now. This is something McKinsey uncovered back in 2016 when it found that 65% of B2B customers don't think their experiences with other businesses match their experiences as consumers.

Perhaps one reason for their struggles was a lack of buy-in from leaders, which fortunately is becoming less of an issue as customer-centricity increasingly proves its financial value. For example, one study found that 75% B2B professionals who are “leaders in CX” have positively impacted their organization’s financial performance year over year, compared to only 37% of CX “laggards”. So, it’s no surprise that more AR teams are including CX and customer satisfaction as a KPI.

Cash conversion

How efficient their organization is at turning investments into cash flow from sales is also something AR professionals will focus on in 2022. In one sense this is nothing new — companies have always placed a focus on accelerating cash flow. But in an environment where supply chain disruptions and the overall impact of COVID-19 have created additional barriers when it comes to cash conversion, we can expect organizations to begin supercharging these efforts.

To do this, we expect to see more businesses attempt to speed up their cash conversion cycle (CCC) by automating some of its most critical parts like invoice delivery and cash application. In fact, 29% of the industry’s most modern AR professionals say they’re tracking CCC as a top three benchmark this year.

What’s more, by leveraging automation, organizations can strengthen their relationships with customers by making it easier for them to pay their outstanding debts, minimizing common strains and allowing them to maintain a clearer picture of their own cash flow. This showcases how interconnected KPIs are in today’s modern business environment, with the success of one (cash conversion) having a direct impact on another (CX).

Collections effectiveness

With late payments dramatically increasing during the pandemic, the collections function has never experienced a greater sense of urgency. Indeed, collections have been an incredibly unpredictable process for AR teams thus far, making it a great challenge for them to receive payments in full the longer an invoice goes unpaid. With a tremendous bottom-line impact — and so much room to improve — it’s easy to understand why AR teams want to place more emphasis on their collections effectiveness.

The good news is that technology can allow them to achieve a prescriptive and timely collections approach. It can also have a significant impact on customer satisfaction, with machine learning and automation helping AR teams deliver a more empathetic experience to their customers.

AR teams play a critical role as the financial stewards for their organization. As such, the onus is on them to meet the metrics that will guide their business on a long term path of success. In an increasingly uncertain world, this means leveraging the power of technology to not only make smarter decisions, but to elevate the customer experience in a way that makes cash flow and the overall health of their organization stronger and more predictable.