Top 3 Ways Technology Can Help SMEs Reduce Late Payments and Improve Cash Flow
Updated: Oct 13, 2022
Warren Buffett, the world's most successful investor once said: "cash, though, is to a business as oxygen is to an individual." Managing cash flow effectively is key to your success and could mean life of death for your business. However, millions of SMEs in Kenya and across the world are struggling with cash flow due to long payment cycles. The billing and accounts receivable processes for most businesses is highly manual and cumbersome, leading to frequent late payments from customers. Fortunately, there are new technologies today that can help SMEs accelerate cash collections and better manage receivables. See below top 3 features any modern billing & collections software should have:
1. Online invoicing
Too many invoices are created and managed using manual processes or with outdated technologies built in the nineties. With a modern billing system, you can create or add invoices electronically and access your data from anywhere with an internet connection. Additionally, you can easily send your invoices by email, but also via popular digital channels like WhatsApp. This will ensure that customers get your invoices promptly and that you resolve any potential disputes early.
2. Receivables dashboard
Invoicing is just the first step of the billing & collections cycle. Once invoices are recorded in your accounting system and sent to your customers, how do you make sure you can easily track their status? With a modern billing system, tracking invoices is a breeze. You'll be able to easily track which customer owes you, how much is owed, which invoices are still unpaid, and whether your invoices have been sent to your customers. You'd also be able to get better insights on your collections performance and customers' payment behaviors by getting data on your average collection time and aging receivables, so you make better decisions. Based on this data, you can decide to adjust some of your clients' payment terms and credit limit, or improve processes so you get paid faster.
3. Automated & personalized follow-ups
Now that you know the status of each of your invoices, how do you make sure customers pay you promptly? If you are like most businesses, chances are that you are calling and emailing your customer one by one to remind them of how much they owe you and get them to pay as early as possible. Once your customer list becomes bigger and invoicing volume reaches a high level, chasing clients for payments become extremely difficult, and your small team cannot keep up with all pending payments. Therefore, late payments accumulate, bad debt increases, and cash flow becomes tight. With a modern billing system, you can put your collections on auto-pilot. You can set up personalized automatic reminders via email and WhatsApp, and the system will automatically chase those outstanding payments for you. Imagine being able to send hundreds of reminders and billing notifications to your clients without having to lift a finger. No need to call dozens of customers anymore just to remind them to pay. This will significantly improve your cash collections and help you save time so you can focus on the most critical invoices and highest value customers.
Jasiri is a modern billing & collections software enabling SMEs to better manage receivables, get paid faster, and therefore improve cash flow. Click the button below to start your 60-day free trial or receive weekly tips and advice on financial and cash flow management.