How payable and receivable automations can protect small businesses

Simply halving customer payment times can double an SMB’s growth potential

Successfully managing a business of any size during this particularly challenging time is no mean feat. Unfortunately, it is well documented that the majority of small businesses fail within their first five years, something that is overwhelmingly attributed to poor cash flow management. 

It’s easy to see why this is the case with business owners expected to juggle an ever growing list of complex and time consuming tasks, such as sending invoices, tracking payments, and managing their own payables pipeline, all of which can be a real headache. 

If business owners fail to navigate this successfully, they can incur significant and unwanted costs as a result of duplicate invoices, late payments, unmonitored risk, and inefficient processes. This can ultimately threaten the long term viability of any business. 

However, the technology already exists to enable small businesses to halve their payment times – and in doing so – double their growth potential. 

With small businesses accounting for 60-70% of global employment, it is crucial that financial service providers introduce enhanced process automations to help lighten their burden and ensure their continued success.

The solution

Via Codat, you can help your customers gain complete visibility of both their receivables and buying pipeline, by enabling them to connect your product with their accounting software. 

Codat’s API can be used to view, create, and update the following data types in a SMB’s account:

  • Accounts
  • Bank Accounts
  • Bill Attachments
  • Bill Credit Notes
  • Bill Payments
  • Bills
  • Credit Notes
  • Customers
  • Invoice attachments
  • Invoices
  • Items 
  • Payments
  • Suppliers
  • Tax Rates
  • Tracking Categories

Benefits of receivables automation

Over half of SMBs believe planning is a challenge due to lack of financial visibility. Our integrations enable you to view accurate and up-to-date customer information directly from source and ensure invoices are easily tracked. 

Research indicates that SMBs with a higher days sales outstanding (DSO) typically spend twice as much managing their receivables processes. However, with accounting integrations in place, SMBs can reduce DSO by interrogating the customer ledger to understand which invoices are outstanding and those that are overdue. It can also be used by financial service providers to gather risk related metrics such as customer concentration levels (i.e. if a business is heavily reliant on a single large contract rather than several smaller ones). 

Manual data entry and document handling are huge drains on an SMB’s already limited resources, accounting for 70% of all invoice processing costs. Manual entry leaves room for error and introduces the need for validation checks, both of which can be minimised by automating the creation and updating of sales invoices and credit notes. 

Accounting integrations can also help SMBs safeguard their business against fraud by making it easier to match invoices and avoid duplicate payments, something that 32% of SMBs fall foul of. 

Benefits of payables automation

On average, poor payment processes cost buyers up to $10 per invoices. This can add up quickly, particularly for a business experiencing rapid growth. Automating the process of matching orders and invoices increases accuracy and minimises exceptions. 

Enabling SMBs to improve cash flow by making it easier for buyers to pay outstanding invoices is surely welcome relief for the 60% of businesses that have incurred late payment fees as a result of poor processes. 

In addition to the hefty financial implications, 1 in 5 businesses have also had a breakdown in supplier relationships as a result of late payments, the consequences of which can be severe and difficult to reverse. With Codat, you can help your customers build better relationships with suppliers by ensuring they pay invoices on time – and in doing so – improve long term customer satisfaction. 

Codat in action

Payhawk is just one client that has benefited from payables automation as a result of working with Codat. 

Payhawk is a business spending solution that makes managing company finances easy by combining credit cards, payments, expenses, and cash all into one integrated experience. Codat enables Payhawk to automate expense management and bill pay in one click by pushing transactional data from their NextGen cards directly to their customers’ accounting platforms, allowing for the fast and accurate reconciliation of expenses and bills in a single platform.

If you would like to learn more about how Codat could help, please feel free to contact [email protected] or start your free trial today.