The Internet business requires new approaches to receivables management and debt collection

On the Internet, the focus is increasingly on commercial offers through online shops, trading platforms, fee-based services and advisory services for use by consumers. Efficient billing and debt collection solutions for Internet offers and content are therefore more in demand than ever. Only those providers who offer their customers simple payment methods for online purchases and services – such as payment by invoice or bank transfer – will be able to hold their own in this growth market in the long term.

There are some critical success factors for these payment methods in online marketing on the Internet and a general rethinking of receivables management is required:

01

Data validation

In online business, new customers are initially anonymous and unknown to the providers. The contract with the customer is usually concluded in real time. The service is sometimes also provided directly online or is initiated very promptly. This results in special requirements for receivables management and payment processing. The central challenge on the provider side here is to ensure the quality of the customer and transaction data provided by the user in every case. To minimize misuse and bad debt losses, customer data must be validated directly with the help of connected reference databases and check routines. In some cases it makes sense to include additional online security modules such as Mobile-TAN procedures etc. in the online checks.

02

Payment processing

Widespread on the provider side are online payment methods such as PayPal and ClickandBuy as well as online bank transfer solutions such as Giropay and credit card payment. Direct debit and bank transfer are also used. From the end customer’s point of view, the most popular method is still the classic purchase on account. However, this procedure is rarely used by providers due to the existing risks. Studies confirm, however, that this payment method in particular generates very high sales growth on the provider side due to end customer acceptance and increases customer satisfaction immensely. The primary goal is to achieve the highest possible initial payment rate (= payment security) for the respective online provider and to minimize losses.

03

Receivables management

If a customer fails to pay or the transaction is cancelled, the claim must be asserted very promptly, as simply and securely as possible with the customer by means of automated legal reminders. If the debtor is in delay, a lawyer’s reminder letter is created and sent directly by the law firm. If it comes nevertheless to debts, the claim can be taken over directly into the lawyer’s debt collection. By means of databases the economic efficiency of a collection is checked and afterwards further collection steps are initiated by the law office. For this purpose, there are specialized law firms with system solutions for cost-effective and efficient receivables management. In comparison to conventional dunning and debt collection, a significantly higher net payment success rate is achieved with transparent fees based on the legal fees ordinance. The latter is often precisely not the case with independent debt collection agencies and consumers are sometimes confronted with horrendous collection fees.

04

Factoring

As an alternative to outsourcing receivables management, Internet providers and web shops can also sell their receivables simply by means of a factoring procedure. Factoring can be applied either from the time the receivable arises and becomes due or from the time of reminders or collection. The topics ‘payment security and liquidity for service providers’ and ‘transparent billing channels for end customers’ are always in the foreground. Factoring for online offers is currently only offered by a few specialized financial partners in the market.

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