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• 3 Automated Systems of Accounts Receivables Get Money Into Your Business

Accounts receivable is just another name for businesses getting paid.

If you wish we can go fancy: The accounts receivable system encompasses the recording, collection and reporting of monies owed to your company by its debtors.

Get a complete picture of your accounts receivables and a disciplined process to keep your cash flow on track. Knowing exactly who owes, how much and when payments are due is essential for any business’s cash-flow management.

“Now I have to collect the money…” I know that’s what you’re thinking, right?

Good news: Getting paid on time does not have to be stressful.

Following three systems are designed to minimise debtor days.

What is Debtor Days, you ask?

Debtor days is the average number of days required for a company to receive payment from its customers for invoices issued to them.

Following three systems are designed to get your Debtor Days to a minimum, aka getting money in your bank ASAP.

Sounds good?

Read carefully or bookmark it for future reading and contemplation. We will provide you with the full list of action points, so you can implement the most suitable system in your own business.

1. The Holy Grail: Subscription Set And Forget System

Wouldn't it be nice if your system could:

• Issue and email invoices automatically.
• Withdraw money from your client’s bank account and/or credit card at the due date.
• Real time reconciliation of the payments.
• Constantly maintain an accurate record of who owes you; how much and by when.

Sounds like a dream? Consistently up-to-date report on your debtors.

Can this really be true?

It is a reality. Hundreds of savvy businesses are using this system, right at the moment.

Subscription business model is the holy grail of all. Just kick back and relax while money is deposited to your business bank account on a regular basis as shown below.

Advantages of using a Subscription based system:

• Smooth cash flow
• Accurate Accounts Receivables Dashboard
• Stability of income
• Admin tasks are almost non existent, the system is designed to be as automated as possible.
• Moving away from an antiquated annual fee model to a more high cash flow payments system
• Automation reduces costs of processing and reconciling invoices manually
• Capacity planning (if applicable) becomes much easier

Disadvantage

• Some business models might find it difficult to implement. The subscription system cannot be implemented just for any business, changes to operations, production and delivery scheduling will need to be made.

Action Points

• Consider if your services or products can be delivered as a subscription model? Remember to think outside the box here. Don’t just say no. Making the change to a subscription system will change the way your business works for you!
• What would it look like and how would you make a subscription model attractive to your customers?
• What features or value proposition will make it attractive for people to stay subscribed longer?
• If you need help, give us a call: 1300 BK KEEP or use chat on the bottom right-hand side.

2. On The Spot Retail/Hospitality/eCommerce Automation System

A lot of businesses in Australia within the Retail/eCommerce and Hospitality area are under extremely low margins. Realistically, managing low margin business require very accurate control of income and outgoing - that is, cash-flow. Business owners need to monitor cash-flow daily. If you are not doing that, you might find yourself looking for a part-time job at night to keep the business afloat.

Sounds like a doom and gloom, but it happens way too often to ignore it.

Without accurately knowing how much you earn and spend daily. It is very easy to be able to lose money without realising it. However, if an automated accounts receivables system is used, control and monitoring of cash-flow is within the reach of astute business owners.

Ignorance is not bliss in this case. To succeed business needs accurate information to improve and optimise its operations. Unless you are capable of constantly holding in your head over 30 critical key financial aspects that will make or break your business and run the business at the same time, you need a good system in place. The diagram below illustrates that the Cloud Point of Sale System (POS) will do most of this for you.

Cloud Point of Sale System integrated with your accounting will:

• Provide accurate sales reports for you, no matter where you are in the world.
• Save hundreds of work hours on admin.
• Ensures tight control over your cash in the till.
• Map income accurately to corresponding revenue accounts.

When EFTPOS is not integrated with POS, human errors are made. People do not realise that employees and tired business owners often make typing errors and end up undercharging clients on a regular basis. Accountants have seen these types of errors accumulating to thousands of dollars of hard-earned dollars lost.

Advantages

• Reduce the time and money recording the large volume of micro transactions this type of business makes every day
• Keep reliable control of your cash flow
• Automation reduces the risk of human error
• Reduced risk of theft and employees fraudulent activity
• Allowing business process optimisation and operational improvements.

Disadvantages

Your cash flow is dependable on how many people you can bring in and how fast you can sell on a daily basis.

Action Points

• Ask your POS provider if they can integrate your cash register to your accounting system.
• Ask your EFTPOS provider to integrate it with your POS.
• If any of the above cannot be performed by your providers, consider changing POS or EFTPOS to a Cloud Based system.
• If you need help, give us a call: 1300 BK KEEP or use chat on the bottom right-hand side.

3. Easy Invoice Payment Automation

Collecting overdue debts can be a daunting task. Business relationships can be ruined, if done incorrectly.

The key secret of getting paid is to make it convenient and easy for your customers.

Do not give them reasons to postpone the task. Make the process fast and easy.

They know the invoice reminders will keep on coming and it is easier to pay than to be nagged all the time.

An automated invoice payment system makes it really effortless for your customers to make their addition to your smooth cash flow.

It is very quick to add a “Pay Now” button, allowing your customers to pay the invoice electronically. Alternatively, a direct debit system (see System 1 above) can be implemented to enable recurring invoices to be paid automatically with no effort from the customer. Remember, make it easy for them to pay.

Advantages

• Know who owes you and how much in real time.
• Getting paid faster becomes the norm in your business.
• Reduction in time and money on administration tasks.

Action Points

• Contact your bookkeeper to implement efficient “Pay Now” system for your invoicing.
• Have an in depth conversation about lowering bounce rates through offering a particular subset of payment options.
• What can be improved within your invoicing processes to make it faster and easier?
• If you need help, give us a call: 1300 BK KEEP or use chat on the bottom right-hand side.

Why businesses are begging for automatic accounts receivable

Are you a part of the vast majority of small businesses that encountered late or unpaid invoices in the past year?

Not surprising, almost 2 out 3 businesses are waiting to for unfairly late payments, according to the data analysis by the Australia’s most popular accounting software provider Xero.

Fact: Knock-on effect infects your ability to pay bills and staff.

It is like a disease that spreads through your business.

Taking into account a simple fact that 62% of businesses cannot survive a month if all the invoices currently owed to them are to left unpaid.

Is this something that can kill your business?

You may wonder why businesses would allow this to happen, there are multiple reasons for that:

• Larger businesses, love using small business as a source of free finance. A lot of small business owners cannot afford to drop large clients, even though they are bad payers.
• Business model that encourages late payments, for example:
  • unnecessary restrictive payment options
  • giving credit without doing due diligence
  • manually reconciled payment system
• No automatic follow-ups. Some businesses just forget. They use their email as accounts payable system. It is usually based on: ‘Let he who shouts the loudest be paid’
• Very poor control over accounts receivable. Not knowing exactly who owes you, how much and did they pay already or not.

Sometimes market dictates what we can and cannot do. 71% of businesses saying that their payment terms are longer than their own. If in your industry you cannot close all cash flow gaps, at least consider closing some of them:

• Implement sales CRM integrated with accounts receivable.
• Do not give credit just to anyone.
• Implement credit policy. Revisit your policy on a quarterly basis.
• Implement automatic (or semi-automatic) accounts payable system.
• Implement automatic invoice follow up system.
• Introduce some services or products that are delivered on subscription based model.
• Learn how to read receivable reports.
• Implement easy payment options for your clients and customers.
• Optimise payment options, encourage payment methods conducive with timely payments (e.g. offer special pricing or a small discount for using direct debit request).
• Introduce late payment fees and enforce them.

Subscribe by email and instantly get FREE Illustrated eBook. Adequate ‘positive’ cash flow is essential for the survival of any business, yet this is something that over 50% of small business owners struggle to manage.