For emerging brands, managing B2B payments is an incredibly messy process.
Nearly 50% of the payments we process on behalf of our merchant are paid by paper check, while almost 90% of payments are completed using a combination of paper check and ACH.
When B2B vendors pay by check, they’re essentially paying asynchronously. As a result, your brand will get paid several days or a week later, in turn creating a credit tracking headache.
In addition to this tracking issue, invoices that are paid can still be subject to change, as discounts, credits, or fees are applied after the initial payment is sent. For instance, if a product is broken in transit, then a credit will be applied to the late payment.
In situations like these, a credit will be created when there’s a positive balance, while in other situations, a balance will be owed on the invoice. As a merchant, managing these credits and balances quickly becomes difficult for two primary reasons.
First, merchants are responsible for sending refunds, which often require additional processing fees on top of the payment itself. Refunds for paper checks are doubly difficult as your team needs to request information as to where to address the refund. Refunds also create an issue for the accounts payable team on the receiving end to keep track of.
Second, the process of credit and payment tracking is a manual operation, requiring an additional time commitment from accounts receivable and finance teams.
To our surprise, this credit creation issue was more common than we anticipated. While we assumed underpayment might be common, we never realized how large of a problem overpayment would prove to be. As a result, we decided to tackle this problem head-on.
After months of test driving a feature to solve this issue, we’re excited to officially roll out Credit Tracking by Merchant Candy. Our goal with Credit Tracking is to automate the entire credit tracking process from end-to-end and remove the overhead complexity in its entirety.
We’ve taken a full step forward from reconciliation itself, building a system for brands that allows them to track credits at the customer level and auto apply them to the next invoice.
With Credit Tracking, merchants will now have a direct line of sight into the specific payment that comes through when they receive an invoice.
The tool automatically updates the invoice at an ongoing cadence, in turn saving merchants additional time. Critically, it acts as an unbiased third-party to validate payments in real-time, ensuring quality and accuracy of end-to-end invoicing for both parties.
Credit Tracking doesn’t just make it easy to scale your invoicing system. It also reduces your company’s dependency on a single person to keep track of which vendors have paid and who has what credit.
This dependency removal not only automates the entire payments process, but offers the first step towards an end-to-end decentralized invoicing system for your brand.