When reviewing client accounts, some aspects have become more streamlined. All areas, from bank reconciliations to processing Purchase Invoices, have seen improvements in technology such as automated bank feeds and invoice data capture facilities. However, we consistently leave behind one area when upgrading our finance functions – Accounts Receivable.
In the current economic climate, cash management is more crucial than ever. Statistically 60% of new businesses fail within their first three years, with 82% of these businesses citing the reason is due to lack of cashflow.
If this is the case, Fintech Friday asks why are many companies sticking to an Accounts Receivable method which hasn’t evolved? Yes, the client may now be using cloud accounting and emailing invoices out, but the process is essentially still the same; create an invoice, send it out and chase the customer when the invoice is overdue. This whole process of Credit Control can often seem quite sluggish and time-consuming – for every minute on hold, or email typed, it eats into the job margin for your business.
How can tech help?
For some businesses with repetitive work, the option may lie in quickly producing repeating invoices from within your accounting software. Simply setting the repeating timeframe for each invoice and letting the system do the work for you with automated invoicing, approving, and emailing the invoices out.
Though typically, business tends to be less repetitive – with varying quantities, time, and resources, so there still remains the element of producing the invoices within your accounting software. There are, however, time efficiencies to be found in the Credit Control function.
Tech can alleviate the mundane, inefficient Credit Control tasks when chasing invoice payments with automated processes for each step. Automation tools such as Chaser, who have case studies where clients have saved over 15 hours per week in Credit Control (See here).
With the accounts synchronisation, not only is the efficiency increased, but also the accuracy of the process. Human errors are inevitable from time to time – a client may not be sent a statement, or an incorrect invoice amount may be pasted into the body of an email. All of this is eradicated with the automated technology, while also freeing up your employee’s time.
The Personal Touch
Unfortunately, the way technology has previously been used in Credit Control often means payment reminders come across as robotic and therefore get ignored. And so, it’s important to include a ‘personal touch’ in your payment reminders, maintaining a customer relationship and essentially increasing your chances of getting paid on time.
With infinite levels of customisation of templates; from a casual ‘Hi there’ email notification that an invoice is due in 10 days, to a very formal final chase for an overdue invoice – the software allows you to give the perception that it is a personal message. Communications can come from your selected email address, meaning any customer response will be received in a typical email chain.
While doing this, the system records an intricate audit trail on each process – from recording when the client views a reminder, to when the payment is received. This is all maintained in a centralised portal, where you can view, postpone or cancel chasers.
The role of this software is not to replace your client relationship, but merely assist your credit control and free up your time to focus on other tasks. Ultimately, there is nothing stopping you from cancelling an email reminder which is due to be sent and picking up the phone to your customer.
Payment services
In the last few years, the world of banking has gone through a huge transition. Previously, companies relied on monthly BACs and IBAN transfers for their creditors, or maybe even posting out cheques! Yet another time-consuming process, open to human errors.
Many of our clients are moving in to the new ages by integrating with a Payment Services software like Paypal, Stripe or Gocardless – giving them a quicker and more accessible way of payment from customers.
Typically, this involves including an automatically generated payment link on your digital invoice to email out to a client. The client can then click on this link which redirects them to a payment portal. Simply add the card or account details for the payment and the money is transferred instantly – no waiting for periodic ‘pay-runs’ on the customers end.
How can we help?
These are just some examples to help make your accounts receivable function more effieicent. Our dedicated digital advisory team specialises in keeping up to date with what’s available on the market and how it can be applied. We can be involved as much or as little as you need. From help identifying the right apps to suit your business needs to offering specific training or support to get the most from your current set-up. Our role is to free you up to concentrate on doing what you do best… running your business.
If you would like to find out more, please contact our digital advisory team by emailing fintech@haroldsharp.co.uk or call 0161 905 1616.