About 99.7% of all businesses qualify as small businesses. Of the small businesses that fail, 82% fail due to cash flow issues, showing a clear ongoing problem. Proper cash flow is the defining factor that can make or break businesses, with many of these issues stemming from outstanding payments. Current economic backlash from the Covid19 pandemic has caused a loss of 26.6 million jobs in the U.S. Based on historical precedent, it is extremely difficult to predict global economic downturns, yet positive cash flow helps businesses stay more insulated against such impacts.
What is cash flow?
Cash flow is the money that is coming in and out of a business. It includes payables, such as expenses like rent and supplies, and receivables, such as incoming payments for a product or service rendered.
Cash flow is to a business what blood is to the human body. Without it, the body, (or in this case the business) dies. The accounts receivable process is the cardiovascular system, which makes sure everything in the whole body is functioning properly. If one part of the system is damaged, it will have negative consequences for the rest of it (the business).
The accounting operation of a business stops functioning efficiently when the cash flow is interrupted or halted. Having too great a percentage of outstanding payments always impacts cash flow. This can lead to more difficult situations such as not being able to pay employees, vendors, and financial obligations.
Thankfully, there are effective solutions that can improve productivity and improve cash flow. One such solution is accounts receivable automation technology. Simply put, powerful technology such as e-invoicing automation can optimize your accounting process, saving you time and money with its numerous benefits.
Automation technology provides businesses the ability to automate aspects of their operations, allowing business owners to focus their limited time on where they can make the most impact – scaling their business. These technologies directly optimize productivity and efficiency while improving cash flow.
Companies that solely used cloud-based accounting automation technology report a 15% year over year growth. Cloud-based automation and e-invoicing software can automate the invoicing process by automatically sending out invoices, payment reminders, follow up messages and more.
These functions reduce administrative load while optimizing accounts receivable. In the majority of the cases where payment is past due, a communication issue is usually the underlying reason. With the technology to automatically send out invoices, payment reminders, and accept payments through multiple channels, businesses can get paid faster, reducing payment friction and overdue balances.
Automation accounting technology has been placed in the spotlight recently with the need for businesses to work remotely. The recent pandemic has shown businesses that have the ability to be flexible with their operations have had an advantage over more traditionally structured businesses. Accounts receivable automation is a digital process, allowing modern accounting departments to operate remotely and efficiently. This allows businesses to continue to operate regardless of external economic pressures.
A recent study estimates that by the year 2020, 78% of businesses will rely solely on cloud-based accounting technology and 70% of accountants see themselves switching to more advisory and strategic roles. This reflects that businesses are rapidly adopting productivity-enhancing products, such as automating the invoicing process. The accounting platforms that provide more value have an advantage.
Some platforms combine the power of cloud-based technology with automation technology, providing a more robust solution that includes a variety of features, each designed for the particular stage of your business. These features not only automate the accounting operation to make it more efficient but also help businesses scale.
The automated accounting platforms that are available today include powerful platforms that provide innovative, time-saving features, such as customer payment portals. These portals encourage self-service by providing a payments gateway where customers can pay at their convenience providing a seamless customer service experience.
While we are experiencing unprecedented times, positive cash flow can make all the difference for a business, dictating whether it sinks or stays afloat. Software that can automate vital operations of a business can help them expand faster and be better prepared during unexpected times. Automation technology provides a sophisticated and scalable solution that can improve productivity and cash flow, quickly becoming a necessary part of every business’ toolkit.
If you would like an automation and e-invoicing solution that can reduce your outstanding balance by 40% and get you paid 15 days faster we wish to help! Click here to learn how Biller Genie can improve your cash flow!
Garima Shah is a noted fintech executive with more than 15 years of leadership experience in the payments industry. She currently serves as president of Biller Genie, a solution that works within a merchant’s current systems to collect outstanding balances, getting them paid faster with less busy work and a better customer experience. In her role as president, Garima leads overall business operations, partnership initiatives and corporate growth strategy.
Cash flow stock photo by Alexander Supertramp/Shutterstock