Mangaging cashflow to build a better business

A bottleneck in traffic or in a line at the supermarket can be a major inconvenience. But for a business, a bottleneck in its cash flow can be deadly.

Cash flow is the money “flowing” or moving into and out of a business on a monthly basis. According to a recent study by Quickbooks, 60 percent of businesses in the US encounter cash flow challenges.

With insufficient cash flow, a business may not be able to pay its employees and vendors on time or have enough cash on hand to take on a new project. In fact, Investopedia cites inadequate cash reserves and/or running out of money as a top reason that startups fail.

For most companies, managing cash flow falls on the shoulders of the accounts receivables department, which faces an enormous challenge each day collecting payments from customers. While businesses have always struggled to get customers to pay on time, it is astonishing that in 2021, most companies are still manually processing invoices, chasing down late payments, and waiting for checks. This is a tedious, time-consuming process that squanders resources that can be put to better use elsewhere in the business.

Automated A/R solutions

There is no longer any reason to continue this inefficient, cumbersome process.

Automatic A/R collections systems are now available to revolutionize this aspect for all businesses, eliminating the cash flow bottleneck. Today there are platforms that can integrate with any company ERP system and easily adapt to company workflow.  These platforms provide companies with access to a dashboard that delivers real-time metrics, email reminders, customer payment forecasting, and can predict future cash flow. The automated collection platforms use sophisticated AI and smart algorithms to create a prediction model of invoice payment based on past customer behaviors so that companies can have more accurate insights into future cash flow.

An automated A/R collection system can provide an enterprise SaaS platform that automates the collection process, creating a more efficient collections procedure and increasing company cash flow.  The system establishes a streamlined workflow for accounts receivables, creating better communication with customers, reducing reserves, and improving DSO by 30%.

Better customer experiences

As part of the process, the system sends personalised invoices and communications to customers. Customers appreciate the automated process and the ability to pay through the programme’s app. The entire payment process – from creating the invoice until payment – takes place in the automated A/R collections platform. Eliminating the “check in the mail” process increases on-time payments and enters the cash into the business account quickly and easily.

Improved customer communications strengthen the relationship between the business and the customer. A stronger relationship helps reduce the need to resort to a collection agency to obtain outstanding payments, which is costly in terms of customer loss and additional fees and further diminish cash flow.

Cash flow is the lifeblood of a business. Automated A/R collections solutions are modern tools to keep that lifeblood flowing, eliminating any bottlenecks and assure that a business has a long and healthy life.

About the author: Yan Lazarev is the co-founder and CEO of Gaviti, a Tel Aviv-based fintech that specialises in DSO and automated A/R solutions.