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Receivables accounting

Why you should leave your receivables accounting to the experts

t3n digital pioneers, 22 November 2019:  When e-commerce companies grow, a certain complexity unavoidably arises in the accounting. The six biggest challenges that this brings with it can be solved through outsourcing credit management and receivables accounting.

The online shop is growing, and with it the complexity of the credit management. All payment transactions have to be monitored – from the purchase in the web-shop to the payment entry in the company account. On top of this come the managing of value- and product-vouchers, the checking of cancellations and credit notes, as well as the processing and sending of dunning letters. The increasingly popular subscription models also have to be billed correctly. In order to accommodate customers in the purchasing process as much as possible, many retailers also offer multiple payment options, working with a variety of Payment-Service-Providers (PSP). The administrative outlay for online retailers is rising rapidly and working with tax advisors also isn’t getting any easier.

Those who try to do everything themselves soon reach their limits. This is where business process outsourcing comes into play – external service providers take on parts of the business process and in doing so reduce the company’s workload, so that it can now concentrate better on its core business. For example, nexnet GmbH, as a specialist in high-volume billing supports its customers in the areas of credit management for e-commerce, subscription billing) and monitoring of the payment service provider, so called payment clearing – regardless of the business sector and at the individual transaction level. For the retailers, this results in six essential advantages compared to self-management:

6 challenges

one solution

1. Managing multiple payment service providers at the same time

With every additional payment partner that pays money out to the shop operator and provides them with settlement data, the complexity of the finance management rises. If you work with multiple PSPs, it gets increasingly difficult to say with any accuracy whether individual payments have already been made by the purchaser and transferred to the retailer by the PSPs. Instead of collating the data with elaborate self-built solutions, it’s more economical to outsource the process. With the automated allocation of payments per shopping basket, the retailer knows immediately whether the money is still with the customer, the PSP, or is already in the company’s bank account. Transaction fees are recorded without input tax and collated with the pay-out amounts. Here it’s important for the retailer that payments and orders from the customer and the PSP are are not aggregated, but are posted at the individual transaction level, so that the aggregations do not create problems for the accountants and the tax advisor.

 

2. Payments always in view

If a retailer loses track of its outstanding debts or doesn’t react in time, this can be a major problem, in particular for young or small companies. Their own liquidity is threatened.

By monitoring the payments of the customers and the payment service providers, the accuracy of all figures in all of the individual and mass transactions is secured, so that the company can stay liquid.

For the receivables management, nexnet offers individual solutions that are aligned with the company’s requirements. Alongside the commercial dunning procedure, nexnet takes over the preparation and sending of dunning letters, the management of dunning fees and the monitoring of the payment history. In the later stages of the dunning procedure, an automated forwarding of receivables to a preferred collection partner is also possible.

 

3. Management of subscriptions and recurring payments

A few years ago, the range of subscription services was still limited to the print media, and items like books, newspapers, and magazines. The music industry followed later. With growing digitalization, the subscription model exploded. Driven by the desire of customers for more convenience, countless products are now available on subscription. Start-ups in particular are have been increasingly targeting long-term customer retention through a subscription model. Customer acquisition costs can be reduced, and revenues made more predictable. Even companies that are well-established on the market have to deal with the issue of subscription models.

The way in which subscriptions work has changed. They have become much more flexible and customer-oriented, and the focus has shifted from the product to the customer. At first glance, the introduction of a subscription model might seem straightforward: develop a monthly price for use, repackage the product or service and get a software tool that issues customers with bills at regular intervals and can process payments. The reality, however, is different – even for companies that have a low degree of complexity. Companies that are successful with subscription models know what effects the changeover to a subscription model can have on the whole business and transaction infrastructure. Yet many companies underestimate this influence. 

 

4. Correct monthly closing statements with a minimum of effort

Communicating with tax advisors is probably an area which could be simplified for most companies. PSPs in particular can give rise to problems in this regard. Outsourcing can also meet a great challenge in this context. Through the die recording in accounts of all transaction events, the customer very conveniently receives a certifiable monthly closing statement.

 

5. No problems with international transactions

Internationalization, together with diverse currencies and tax rates can really leave the accounting department with a headache. For companies with an international focus, nexnet processes and posts all flows of money in any currency with exchange rates updated on a daily basis. As part of this turnover and VAT are of course recorded using international tax rates. For companies based abroad, nexnet will carry out the accounting according to local GAAP.

 

6. Maximum security – with a constantly changing legal situation

Keeping an eye on statutory regulations and changes is very time-consuming, especially as there are often changes in this regard that affect auf credit management and receivables management. For this reason, it’s often necessary to request an analysis and evaluation from expensive specialists like lawyers and tax advisors. When these areas are outsourced, part of the responsibility is passed on to the service provider.

Payment-Clearing-Cloud

for small and medium companies

It’s not only global players that are tied to international standards in their accounting Start-ups and smaller companies also have to comply with a range of guidelines. Yet for them it’s often financially impossible to seek out advice from external specialists. Nexnet GmbH’s Payment-Clearing-Cloud can be the solution here. With cloud computing, entry and operating costs hardly ever arise. Moreover, young companies can set their focus completely on growth, while the complex accounting processes are dealt with automatically in the background.

Because of its cloud-based approach, the Payment-Clearing-Cloud offers the advantage of more transparent as well as lower entry and operating costs. Companies can concentrate on their business and complex accounting processes are dealt with automatically in the background. From as little as 99 euros per month, online retailers can have their payment service providers monitored and a certified monthly closing statement created.

Are the many bills that you generate with your digital business model interfering with your sleep? Then you’d be well advised to opt for business process outsourcing.