Cash flow is the lifeblood of any business but it is particularly critical for small businesses. Small changes in cash flow can have a more dramatic and immediate impact on small businesses. Some of the most common causes of cash flow shortages revolve around difficulties collecting payment for services rendered. As more customers delay paying, cash dwindles and bills go unpaid. If this downward cycle isn’t quickly broken, a business can find itself insolvent and steps away from filing for bankruptcy.
In a 2017 study conducted by Bibby Financial Services (BFS), over a quarter (26%) of U.S. respondents said payments were received later than the standard 30 days and 41% cited collecting payments as their biggest challenge in managing cash flow. The 2017 International Debt Collections Handbook (USA) posted similar numbers. Between 01/2014 and 12/2016, the estimated success rate of collections in the United States was just 36.7%
One way to ensure against such poor performance in collecting payments is to have efficient accounts receivable credit controls. Extending too much credit can leave your business constantly short on cash. Not extending enough credit may lead to customers turning away for a better deal. We’ve listed some alterative ways to think about getting your money on time so your cash flow doesn’t suffer.
Automate Customer Payments
The accounts payable process is still cumbersome and takes too much time for most of your clients. Your customers might simply be paying late because invoices don’t get approved by the right people on time, or because their AP process isn’t automated.
The easier you can make paying bills for customers, the higher your chances of payment success. One way to simplify payments for customers is to automatic the process. Roger is a smartphone app that makes paying bills easy, and recommending Roger to your customers makes them much more likely to pay their bills on time. There are three main payment methods:
• Take a picture: An OCR engine will extract the important details and pay the bill for your customer.
• Forward an Email: Customers can send bills to their unique RogerAddress, and Roger will make sure their bills are paid on time.
• Recurring payments: Once your customer has setup their RogerAddress, you can just use that as their billing address, and they will automatically receive their bills for payment in their Roger app.
Your customers can setup approval flows and direct accounting system integrations, to automate the AP process 100%. The best part about Roger is that you don’t have to alter your accounts receivable or invoicing since there is no integration required. Everything is handled on the customer’s side. To learn more about Roger, visit them at roger.ai.
Outsource Debt Collection
For anyone who has been on either side of the debt collection process, there is nothing fun about it. With a number of fintech startups offering debt collection services, you no longer have to be involved in the process. Below are several fintechs that offer debt collection services along with their taglines.
TrueAccord — A data driven debt collection platform powered by machine learning, digital first communications, and delivering great user experiences.
InDebted — InDebted is a leading provider of collection services and technology. We help our clients improve recovery rates, reduce risk, and lower costs all whilst delivering an exceptional experience to their customers.
Symend — Combines workflow and campaign automation with outreach tactics proven to work. The result? You can reach, engage, treat and retain your at-risk customers, for more productive and cost efficient recoveries.
Debt Collection Through Artificial Intelligence
Artificial Intelligence (AI) offers a number of advantages when it comes to debt collection. These include:
• Lower cost since human labor isn’t needed
• The software is able to constantly learn
• The software can be enhanced as new information is acquired
Acima, a provider of instant leases for online shoppers, has built an AI engine to handle its collections.
“The machine learning platform tells us who is past due, who’s most likely to pay, what’s the best time to call them, what time of day we should be calling them, or on what day of the week,” CEO Aaron Allred of Acima told American Banker. “It’s the brains behind our collections efforts, so we’re calling the right people on the right day at the right time.”
collectAI offers AI debt collection through its full service, which includes e-invoicing, dunning and debt collection. By integrating into the entire credit process, collectAI’s software is able to determine which customers are the highest risks and take action.
By taking paper out of the equation, the company is able to examine the full collection workflow of a company. Ultimately, collectAI’s goal is more efficient payments through utilization of its AI engine, avoiding debt collection altogether.
Collect More Payments Through Automation
Manual invoicing and collection of payments is an efficient process. It’s difficult to track metrics and understand how well your credit policy is performing. By digitizing your entire accounts receivable, you’ll have metrics that allow you to make highly informed decisions and create a more overall efficient accounts receivable policy. Using bots and automation to collect outstanding debt enables you to spend way less time on this tedious task, and it might be nice to have a robot be the bad cop once in a while.