With the advancement in technology it becomes very important for business owners to adapt these changes and implement them in their business. Most start-up and growing companies face cash flow problems more frequently as they do not get client payments on time. To handle with cash flow problems most companies invest in generating invoices and sent to their clients but this is an expensive affair. The best thing that you can do is to implement better collection strategies for your business so that that you will get paid on time.
So here in this article we are going to discuss all these aspects:
Invoicing customers is an expensive affair for ERPs
I had the chance to work in the good old ERP golden years, when every company had to deploy the “single source of truth”. If you were a CEO back then, you had full authority to impose your will. I remember the CEO of a famous “fruit” technology company that now dominates both the laptop and phone industry spending $250m in 5 years to deploy SAP. He would tell other software exec companies, that they will never sell their software to the “fruit” company. “Over my dead body” was the expression he used.
Few years after deploying SAP, that same company of a name infamous for keeping doctors away, assessed that each invoice cost the company $4,000 to generate with SAP. Yep, you read it correctly, $4,000 per invoice. That includes of course hardware, software and labor to use the software. SAP is a big beast that consumes servers; requires lots of data entry and it adds up.
Enter cloud billing solution and their invoice automation and it’s game changing
When we started Zuora, the leader in subscription billing, the founder and CEO Tien Tzuo saw a new world that he called “subscription economy” where consumers no longer wanted to pay and own things but pay based on their experience. It is easy to see it now, when Spotify has replaced your CDs, when a real estate developer can subscribe to caterpillar vehicles instead of spending millions to buy them. One of the side effects of the subscription model is the explosion of the number of invoices. Caterpillar was creating one invoice per equipment in the asset buying model; now it creates tens of thousands of invoices every month for all its customers that subscribe to the service.
With automated accounts receivable software, the cost to create invoices is down to a few dollars and even sub $1 when you deal with very large volumes.
It’s great, everybody is happy right? Well….. the big underlying assumption is that customers pay their bills on time.
Enter COVID 19 and everybody wants to preserve cash
So what happens when you create 1,000 or 10,000 invoices per month and 30% of your customers delay their payments? How do you detect customers that will never pay from customers that are just delaying by a few weeks, few months to preserve cash?
One of our customers is a $100m 100% recurring customer and sends close to 5,000 invoices per month, they use Zuora and Oracle-Netsuite for their billing and accounting needs. Only have 3 resources based in the US to generate all these invoices. Their Account Receivable team had 6 agents based in India before Covid 19 that went to 10 agents before they started using our solution.
You might have the best billing solution out there but how do you collect all your payments? Doing it manually? Time to download our free collection software.