The quote “turnover is vanity, profit is sanity but cash is reality” couldn’t be more the truth than when applied to small businesses. Cashflow is the life blood of a company. Without working capital companies can quickly become insolvent. Being able to invoice customers and get paid timely is a critical part of keeping cash positive and businesses trading. We give our advice on utilising latest technology to aid the debt collection process and ensuring small businesses remain operational.
Defining the terms
Making a sale of your product or service, especially in the early days of your business, feels like a massive achievement in itself. At this stage, it’s easy to forget the finer details of the terms of your agreement. Making sure the expectations regarding invoicing timelines, payment terms and payment methods are clear from the outset is crucial to ensure the process continues to run smoothly. It’s also important to understand how your clients’ processes work, for example do you need to include their purchase order reference on your invoice so you get paid; is there a specific email address your invoice should be sent to; what is the correct billing address etc. Having all the vital information will speed up your ability to ensure the invoice is not only issued to the agreed terms, but your client can effectively process your payment timely.
Automating the workload
At Advisory Gems we ensure we work with the latest technology to automate the debt collection process. Through research and discovery, we now use a software called Fluidly which sync’s with our clients’ cloud based Accounting Software. Fluidly gives us a great overview of our cash collection activities. From the system we can automate invoice reminders, applying custom settings and messages. Statements and overdue notifications can be emailed out on an individual invoice basis or in a multi reminder when customers have more than one invoice falling due in the same time period. Actions, notes, promised payment dates and disputes can also be added to the system which make it a perfect tool for multiple team member collaboration on the task and allows users to obtain all the information regarding a specific invoice or client from one centralised place.
Utilising a system like Fluidly to its full potential saves a lot of time chasing customers manually for payment and removes the hassle of remembering when client’s invoices fall due. We have found customers have also been more likely to pay according to terms, improving the business’s overall cashflow due to the pre-reminders we have been issuing. Having the system in place has allowed us to focus our attention on the genuine non-payers and invoices in query, freeing up our time to resolve these matters and keep the funds flowing into the business.
Predicting the future
Accounting is constantly changing due to technological advancement. What we love about Fluidly is not only has it automated the credit control process, it is able to predict future cash collections using Artificial Intelligence (AI). The system provides valuable data insights to help understand payment terms on the invoices as well as our customers’ historical payment information. This in turn provides a view of ‘predicted’ incoming cash on a weekly basis all from a centralised dashboard, enabling easy planning of business expenditure.
We can look to the future knowing that AI will be more widely adopted in accounting as in all industries, removing the finance professionals from these time consuming and highly repetitive tasks to focus on the added value they can bring to an organisation.