Three years ago, Baxter Lanius received an email from a large software vendor, a company worth close to $50 billion, telling him he hadn’t paid his invoice. The invoice was a year old. Baxter checked his records, found proof of payment, and sent it back. The vendor responded, “Can you send me the PDF proof from the bank?” They’d received two wire transfers on the same day for the same amount, and they couldn’t figure out which one was his.
“I was like, oh my God, this is crazy,” Baxter recalled during a recent Earmark webinar, Build Predictable Collection Workflows That Improve Client Cash Flow. “How is a company this large having such a difficult time reconciling the transaction?”
If a $50 billion company can’t match a wire to an invoice, imagine what’s happening inside your clients’ businesses (or your own firm).
Baxter, the CEO and founder of Alternative Payments, has spent the past decade working with service-based businesses, including accounting firms, business process outsourcing companies, IT services, and even fast-casual restaurants and logistics companies. They all share the same problem. They struggle to get paid. And the costs are far higher than most realize.
The reality is, service-based businesses leave tens of thousands of dollars on the table each year because their accounts receivable workflows remain stuck in a manual, check-driven era. But as Baxter demonstrates in the webinar, by using four specific automation levers—autopay enrollment, automated reminder sequences, dynamic customer segmentation, and integrated reconciliation—firms can cut average collection times from 35+ days to about five, boost online payment adoption from 30% to 70%, and transform cash flow from a headache into a competitive advantage.
Accounts receivable is broken, and it’s costing you
This number should stop you in your tracks: $25 trillion. That’s the annual volume of B2B payments in the United States alone. And about 40% of that money still moves by check.
You swipe your credit card at the drugstore and use Apple Pay to order dinner. Consumer payments have been frictionless for years. But when one business pays another, we still stuff paper into envelopes.
Baxter pointed out this isn’t universal. In Brazil and India, most B2B transactions happen fully online. The U.S. banking system was so advanced so early that it created inertia. Countries like Brazil and India skipped the desktop generation and went straight to mobile, which forced their technology to accelerate faster. Meanwhile, American businesses built their workflows around checks decades ago and never fully let go.
The fragmented software stack makes everything worse. Consider your typical services-based business. There’s practice management software, a CRM, billing platforms, accounting or ERP software, and maybe a point-of-sale system. Each one handles a different slice of the client relationship. Data ends up stuck in silos, and reconciliation becomes a nightmare.
Then there’s the actual cost of processing checks. On average, each one takes more than ten minutes to handle and costs between $7 and $10. But the real damage is the stretched-out cash flow cycle. Your client writes a check and mails it. It arrives days later. You open it, deposit it, and wait for the funds to clear. Every step adds days to your working capital cycle.
And then there’s the fraud risk. As Baxter put it, “Everybody’s focused on cybersecurity and compliance and risk, but when you actually fill out a check and mail it, your account number and routing number are on the check.” You’re basically handing anyone who touches that envelope the keys to your bank account.
So what does this actually cost? The industry average time-to-pay for service businesses is 35 to 40 days. If you carry $1 million in accounts receivable and get paid in 40 days, reducing that to zero would put the full million into your bank account immediately. Even cutting it by 50% makes a huge difference.
Invoices typically get pushed to collections agencies in the 90- to 120-day range, though nobody wants to send a client to collections. The estimated annual cost for a typical firm is about $35,000, split between manual billing time and the cost of delayed payments.
The current economy makes this more urgent. Rising bank fees, increasing debt defaults, and inflation-driven labor costs are squeezing margins. As Baxter framed it, “This is the time to ask what we’re doing as business owners, what we’re doing as operators, what we’re doing with our clients to help automate some of these workflows.”
Four levers cut collection times from 35 days to five
Alternative Payments has worked with over 1,000 customers, processing more than $1 billion in payments. Its team identified four specific strategies that produce real results.
Lever 1: Autopay enrollment
If you ask Baxter for the single most important thing you can do, his answer is immediate. “If anybody asks me, what’s the secret sauce, it’s autopay.”
Get a client’s credit card or bank account on file and get their permission to pull funds automatically when an invoice is due. You can set this up during contracting or offer a small incentive to encourage enrollment.
The numbers are clear. Manual online payers who receive a digital invoice and choose to pay it themselves still pay an average of 9.5 days after the due date. For autopay customers, it’s just 1.7 days. That’s about an 80% improvement from one workflow change.
Across Alternative Payments’ platform, 62% of all payments are now fully automated, meaning no human touches the transaction from invoice creation through bank reconciliation.
Lever 2: Automated email reminder sequences
This lever sounds simple, but the data tells the story. When companies enable automated reminders, payments arrive 1.8 days after the due date. Without automated reminders, payments arrive 6.1 days after the due date.
“It’s pretty intuitive,” Baxter said. “If you receive an email from your vendor that says, ‘Hey, you owe us money, obviously that makes it very top of mind.”
Think of it as Mailchimp for collections. The customized email sequence runs automatically. Different customer groups can receive different messaging. Reliable payers get gentle touches. Slow payers get more frequent follow-up. The system handles everything without your team drafting a single email.
Lever 3: Dynamic customer segmentation
Instead of treating every client the same, you tag customers into groups based on their payment behavior. Frequent, reliable payers get fewer reminders with lighter language. Clients trending toward collections get a weekly follow-up with customized messaging.
“Nobody wants to manage payments. I get it,” Baxter acknowledged. “But cash flow is the lifeblood of your business. And if you can take a data-driven approach to really target your customers and segment your customers, you can get paid much more quickly.”
You set the rules once, adjust as needed, and the system runs the campaigns automatically.
Lever 4: Integrated reconciliation
This lever eliminates the most tedious back-office work. Full-cycle reconciliation means marking invoices as paid while also matching bank deposits to specific invoices with supporting documentation.
Without this, a payment hits your bank, you pull it into QuickBooks or your ERP, and you manually match it to the right invoice. Multiply that by dozens or hundreds of transactions, and you’ve got a full-time job that adds zero value.
Baxter shared that earlier in his career, “Every single time we won a new deal, we would hire people offshore to do this manual reconciliation for us because we didn’t have a system that owned the process soup to nuts.”
The platform can pull accounts receivable data from multiple systems, including practice management, accounting, and ERP systems, into a single consolidated view. Automations then run against that complete picture.
These four levers together typically drive online payment adoption from 30% to about 70%. S1 Technology reduced its days’ sales outstanding by about 70% by increasing electronic payment adoption from 15% to 90% in three months. Triada, a company with no prior collection systems and 100% check payments, cut collection times in half.
The estimated time savings is about ten hours per week on billing alone.
What’s next: AI collections and beyond
During the Q&A, a participant asked, “Do you see AI eventually helping with things like predicting late payments or prioritizing collections?”
“A million percent,” Baxter answered.
Alternative Payments is deploying an AI collections agent that reads incoming client replies and drafts appropriate responses. Payment confirmations, scheduling conversations, and even basic dispute resolution can all be handled without a human drafting emails.
“Often, these emails that you get back are pretty monotonous,” Baxter said. “Hey, I’m going to pay my bill. Hey, thank you for the reminder. I’m paying in 15 days.”
The platform is also building predictive late-payment scoring using multiple data signals, including historical payment patterns, invoice characteristics, external news about clients, and even Dun & Bradstreet business data checks. You’ll know which clients need attention before invoices go overdue.
For the 30% of revenue that still arrives via direct wire or check, AI can now read bank feeds, identify deposits, and automatically match them to outstanding invoices. That last chunk of manual reconciliation work starts to disappear.
Looking ahead, Alternative Payments was preparing to launch accounts payable at the time of the webinar. The vision is a unified financial operating system with AR on one side, AP on the other, and reporting and analytics in the middle, all integrated into your existing software stack.
Many firms are discovering a new revenue stream. Those who previously avoided AR management because it was too painful now offer it as a service, charging clients hundreds to thousands of dollars per month for work that’s largely automated on the platform.
The company also offers a referral program with 10% revenue share for partners who bring in new customers, complete with a dashboard to track referrals and earnings.
Time to automate the monotony
Returning to the story that kicked off the webinar, if a $50 billion company can’t match a wire transfer to an invoice, it’s almost certainly happening inside your firm and your clients’ businesses, too.
As Baxter asked during the webinar, “Where do you want to focus your time? You want to focus your time on providing the best service to your clients. You don’t necessarily want to focus your time on the monotony of collecting, sending out emails, reconciling cash, and reconciling invoices.”
Watch the full on-demand webinar below to see exactly how these automation levers could transform cash flow for your firm and your clients.