THE DIGITAL REVOLUTION:

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1 THE DIGITAL REVOLUTION: What Netflix Teaches Us About Digitization and Automation

2 THE NETFLIX SUCCESS STORY Before 2007, Netflix now a global provider of streaming movies and TV series mailed DVDs to its customers. Netflix made their DVDs available through an industry-startling monthly subscription fee, and processed every single DVD manually. At the height of the DVD-by-Mail trend, Netflix received roughly 190,000 returns per day. Employees opened and examined every DVD they received, one by one. They were also expected to stuff DVDs into envelopes at a rate of 1,000 per hour, with mandatory exercise breaks to ward off carpal tunnel syndrome. In February 2007, Netflix manually processed and delivered its 1 billionth DVD. As a company, Netflix struggled with growth and a plateauing stock price. But new technology allowed them to scale the business in a big way by going digital. They released a new online streaming service which became an instant success. Their streaming success led to funding their creative vision for original entertainment series. And now Netflix is an even bigger threat to television, cable TV and movies. Netflix serves more than 81 million subscribers worldwide, and it s not slowing down. All because Netflix led where others did not - it embraced the digital revolution. 2

3 THE ONES THAT DIDN T MAKE IT Behind every success story are dozens, if not hundreds of businesses that didn t survive. Here are just a few of the big name brands that failed in part because they didn t embrace the digital revolution or waited until it was too late. Blockbuster At its height, Blockbuster had 60,000 employees in 9,000 video rental stores. But a failure to go digital meant a prolonged death for the company. After filing for bankruptcy in 2010, it was sold to DISH Network in 2011, which closed all stores by The shortlived Blockbuster@Home streaming package was shut down in Kodak Kodak engineers invented the digital camera in 1975, but they didn t embrace the consumer digital photography trend until it was too late to gain market share. Kodak struggled behind well established players, losing $60 on each camera sold, eventually filing for Chapter 11 bankruptcy in Borders The first Borders bookstore opened in Ann Arbor, MI in 1975, growing to more than 500 locations across the U.S. by January However, the book megastore pioneer was slow to adapt to digital and online bookselling, initially outsourcing its website to Amazon. Borders didn t sell its first digital book until July 2010, and 7 months later it filed for bankruptcy. 3

4 WHAT CAN WE LEARN FROM NETFLIX? Netflix isn t the only success story to come out of the digital revolution, but it is a stellar example which clearly illustrates why embracing technology is crucial if you want your business to survive. Businesses today have access to a wide variety of game-changing technologies that boost operational efficiencies and automate processes which would otherwise cost thousands of dollars and hours in manual labor. Adopting digital best practices is now a strategic imperative, with some companies going so far as to hire a Chief Digital Officer to oversee the conversion. Another great lesson we can learn from the Netflix story is the importance of customer satisfaction. By transitioning to a digital streaming solution, customers had immediate access to movies, with no fear of DVDs getting lost, damaged or delayed in the mailing process. They were happier. And that translated into dollars for the company. 4

5 DIGITAL SOLUTIONS FOR YOUR WHOLE COMPANY Digital technology has reset customer expectations, creating a new standard for speed of service and user experience. Thanks to Netflix, Amazon, and other digital revolutionaries, customers expect an intuitive user interface and around-the-clock availability. Organizations playing catch-up are scrambling to inject speed and automation into their business practices. While many companies have begun to incorporate automation into operations, accounts receivables has been lagging to catch up to the digital revolution. AR departments continue to print and mail invoices in-house, then process checks and apply cash manually. The truth is that AR teams are in dire need of a Netflix Solution an electronic answer to manual mailings, inefficient remittance processing and the lack of customer self-service. 5

6 IT S NOT TOO LATE TO DIGITIZE The good news is, digitizing your AR processes is not only possible, but also cost-effective with the right strategy and technology. And best of all? You don t have to be a Fortune 500 company to go digital. The following are 5 best practices that you should keep in mind when implementing a successful digital AR strategy. 1. LEVERAGE YOUR EXISTING ERP SYSTEM You ve already taken the first step. Unlike Netflix, you don t have to build a completely new system from the ground up. You most likely already have an ERP system which stores and generates critical data for your business, including invoice information. Using your ERP system as a starting point, you can digitize by automatically feeding ERP data directly into an electronic invoice delivery solution. Next, the system will route to the appropriate delivery channel whether those invoices are being printed or transmitted electronically. Finally, all payment information, whether it originates from an online payment or a paper check payment, should feed right back into your ERP without manual intervention. 6

7 2. MAXIMIZE EFFICIENCY WITH 100% AUTOMATION One wobbly wheel can make it hard to push the cart. To get all of the cost and resource saving benefits of automation, you need an end-to-end digital strategy that automates not some, but all of your AR processes. Automating the only part of AR process will make your system inefficient and hold up your cash flow, defeating the entire purpose. An automated online invoice and payment portal will digitize your process from start to finish with automated invoice delivery, automated payment processing, and automatic cash application. But unfortunately building a system isn t enough. You also need to convince your customers to use it. We should remember that Netflix users didn t immediately jump on the digital bandwagon. It took a year, a few missteps (anyone remember Qwikster?) and incentives to convince customers to try streaming video. But once they tried it, the simple interface, speed, and overall excellent customer experience convinced them to switch. 7

8 Digitizing your AR department is no different. You ll need to convince your paper-loving customers to try something new. The best way to get your customers to adopt electronic presentment and payment is to take a holistic approach to your digital strategy. Automate all aspects of your digital invoice-to-cash process invoice delivery, invoice payment and cash application at once, especially if the ultimate goal is to increase cash flow. By giving users a seamless experience and a few incentives (such as early payment discounts), you can convince customers to go digital too. Once your customers try features only automation and digitization can provide, such as next-day invoicing, scheduled electronic payments, and 24/7 account access, they will never want to go back to paper invoices and checks. More important than the cost savings with Billtrust, is the tie the digital connection makes with our customers. David Webber, VP Credit at Capital Trisate, a Sonepar Company 8

9 3. USER EXPERIENCE IS THE KEY TO SUCCESS Make your customers happy and they will stick with you for life. Few of us can live without Netflix on our TVs, tablets, and even phones. The same thing applies to your invoiceto-cash process. With a great user experience, you ll get paid faster, and your customers will be happier and more loyal when you create a digital experience that is surprisingly easy and intuitive. If customers consistently see errors on their invoices or find your process to view and pay invoices is inconvenient, you ll experience payment delays. Your customers will also get frustrated and you ll run the risk of losing their business. Automated invoicing takes human error out of the equation, providing a better, more convenient user experience. Your electronic delivery and payment channels, including , payment portals, and any other EIPP channels, should also offer an intuitive user interface and experience. A customer should be able to enroll, view, and pay their invoice within a few minutes. 9

10 4. DIGITIZE DATA REPORTING It all starts with a smart dashboard. When physical and manual processes are reduced to key data, you re able to easily understand what is happening to your money. You can manage, search and analyze important information everything from customer invoice information to critical business metrics. This analysis is vital to making intelligent business decisions. Dashboards also simplify day-to-day AR processes. Giving your team permissions-based access to information allows them to easily solve customer issues and dive into accounts using a wide variety of parameters like business name, account number and address. AR managers and CFOs will now have the ability to run reports on electronic payment volume, DSO and more. When you give everyone easy access to the tools and data they need, your business can grow, be more transparent and cash can flow faster. 10

11 5. MIGRATE CUSTOMERS TO YOUR ELECTRONIC SOLUTIONS If you build it, they will come unless they don t know about it. Your digital strategy doesn t end once you ve implemented an automated invoice-to-cash solution. You need an effective marketing strategy to convert your customers from their traditional paper invoice and payment methods to electronic. Leverage all of your customer contact points to educate customers receiving print invoices about the benefits of electronic invoicing and payments. Target customers receiving invoices and tell them they can now pay online through your payment portal. your customers and let them know that the future of bill payment is here. Whatever method you choose, the goal is to progressively move your customers away from print invoice delivery, to electronic delivery, and finally, to electronic payments with a seamless transition. 11

12 BILLTRUST HAS STARTED THE DIGITAL AR REVOLUTION At Billtrust, we ve created solutions to help digitize and transform businesses. We improve cash flow by automating and accelerating the invoice-to-cash process. We also speed up the process by integrating invoice delivery, invoice payment, and cash application using a flexible, cloud-based solution. We call our solution Payment Cycle Management, and it involves automating the invoice-to-cash process: STEP 1 - Invoice delivery, including mail, fax, and STEP 2 - Payment, from paper checks to EIPP solutions STEP 3 - Cash application, with intelligent payment matching Billtrust automated digital solutions are simple to implement using few IT resources, and are even easier for customers to use. Our eadoption team will work with you to convert your customers from paper to electronic faster for even better results. After implementing Billtrust s Payment Cycle Management solutions, CFOs report improved client satisfaction rates, accelerated cash flow, and reductions in DSO every single time. 12

13 DIGITAL SOLUTIONS FOR YOUR AR CHALLENGES Want an automated, digital AR invoice-to-cash process and increased cash flow? Billtrust s Payment Cycle Management solution will reduce your DSO when you collect and apply payments faster. Faster Invoicing Automatically send invoices via print, , and online portal within 24 hours More Payment Options Securely accept ACH, reduce fees with Level 2 and 3 credit card processing Reduce AR Costs Save on postage, send electronic invoices, automatically pull invoices for small amounts, and set other custom preferences to save money Reduced Staffing Needs Automated invoice-to-cash processes requires no manual data entry and fewer expert AR staff members Data Security Billtrust cloud-based solutions are secure, reliable, and redundant, protecting you and customers. Your invoices go out on time, no matter what! Grow your business without limits! Increase your revenue and customer base with the same size AR department. With Billtrust, you can reduce AR operating costs overall by up to 35% or more, with a customized solution that s right for your business. 13

14 To sign up for a personalized digital analysis today, contact a Billtrust Solutions Consultant at: info@billtrust.com or Follow Billtrust!