Steady cash flow is critical for business owners to avoid borrowing capital. But, with more and more federal rate hikes, everything from credit cards to loans is costing you more than ever! If your sales are not growing at the same pace as your debt, you’ll find yourself upside down unless you can streamline receivables.
In this economy, collecting and processing in the most efficient manner is absolutely necessary to encourage steady cash flow and easier planning — and that almost always means implementing technology to automate your payment processing. Manual payment processing and delinquent payments delays just make it harder to keep your operations running.
It’s important for businesses to be proactive in understanding the financial environment so they can make informed decisions about how much and when to borrow, as well as finding ways to minimize costs.
While federal rate hikes may mean more expensive capital for field service businesses, there are still ways that owners can take advantage of technology and other factors in order to minimize costs, stay financially competitive and be successful within their industry.
The Importance of Accounts Receivable
Accounts receivable (AR) is a crucial element of running any business’s finances. When AR is running smoothly, it ensures that cash flow remains steady and enables businesses to accurately set expectations and budget accordingly.
For field service companies, this is especially important, since they rely heavily on customer payments to keep operations going. Staying on top of AR provides financial security for these businesses and keeps their cash flow moving so that they can plan with more certainty and confidence.
Perhaps the most important task that falls to AR is quickly and accurately tracking unpaid invoices and following up with customers to ensure payment is received in a timely manner. While the importance of this process can’t be overstated, it’s always in a business’s best interest that customers pay promptly; the time it takes to get in contact with a delinquent customer and chase down their payment eats up costly labor hours that could be much better spent in other areas of their business.
Keeping Current With Recurring Payments
While getting customers to pay on time has traditionally been a challenge for just about any business, modern payment methods have the potential to greatly reduce that strain if approached the right way.
Providing customers with more ways to pay is the strongest foundation when it comes to prompt payments. Facilitating payments via card, check, digital wallet, SMS text and ePay link, for instance, can all have a big impact on the ease with which customers pay, making them more likely to complete payment sooner when they receive an invoice.
The best tool for preventing delinquent accounts by far, however, is to provide an auto pay option for customers. With this convenient payment option, invoices are automatically paid on time without any manual action required by the customer. This is beneficial to both parties: it saves customers from having to remember when and how much they need to pay each month, while providing business owners with a steady stream of cash flow that helps them remain financially secure. Moreover, there is no longer a need for manual reconciliation or collections management processes — everything is handled quickly and efficiently through automated systems.
To enable auto pay, you’ll need the ability to store customers’ payment information on file and to update those credentials as time goes on. More than a third of consumers report forgetting to update their card information with at least one merchant after an update, with even more reporting that doing so led to a negative experience with the merchant in question.1
In order to put customers at ease and avoid unintentional churn, it’s best to pair with a trusted partner that can store payment credentials securely and ensure the information is automatically updated when there are any changes. The result is fewer cash flow interruptions, more consistent recurring payments and significantly less need to borrow capital at potentially crippling interest rates.
Without proper accounts receivable management, cash flow can become unpredictable and businesses won’t be able to plan for their future. With the right strategies in place, businesses can ensure that they always have the funds they need to grow and succeed. To learn more about how the right integrated finance tools can equip your field service business for financial success, visit workwave.com/financial-services today.
1 U.S. statistics, cited in Credential-on-le Pain Point Research conducted by Engine Group, Inc., June 2018