How Billing Automation Can Improve Cash Flow

December 6th, 2023 by Felix Cheruiyot

How billing automation can improve cash flow

If cash flow is king, ensuring you get paid on time is key to running a successful business. Learn how billing automation can improve cash flow and keep things ticking over nicely at your business.

Cash flow is the movement of money in and out of a business. It measures the net flow of money in and out of a business at a given time, which can be negative or positive depending on which is greater.

Cash flow is, thus, the best indicator of a business’s health. If you have less money coming into the business than you need to spend to keep things ticking over smoothly, your business cannot grow.

Soon, you will struggle to make payroll and service customers.

What can you do to improve the flow of revenue into your business? In short, you have to find a way to get paid faster, and there is a consensus that automating the billing process is the best way to do this.

So, this article looks at how billing automation can boost revenue collection and improve cash flow.

How does billing automation improve cash flow?

Billing automation is the use of software to automate the creation, sending, and processing of invoices. It has many benefits for businesses, including:

However, the most significant impact of billing automation is on cash flow. Here are some of the ways billing automation improves cash flow:

1. Reduces the time it takes to get paid.

The constant graft of chasing overdue payments can bog you down, mainly if you use a manual billing process. The tasks that move the needle can get drowned out as a result.

Billing automation can help businesses get paid faster by removing the need to create and send invoices manually. Instead, invoices are automatically generated and sent to customers, speeding up the payment process.

2. Eliminates billing errors.

Billing errors can erode customers’ trust in the business. But that’s if you still have a business to start with.

If you constantly under-invoice, your revenue decreases, even to the point of trading at a loss.

Keeping customers will be the least of your concerns if you are trading at a loss. You will be battling even to keep the lights on.

Billing errors that you can eliminate by automating the entire billing process can also lead to payment delays if customers dispute the invoice amounts you claim from them.

When payments are delayed, your cash flow slides into negative territory, making it harder to pay creditors and fund operations.

3. Improves billing efficiency.

Billing automation improves efficiency by automating repetitive tasks. This frees up employees to focus more on cognitively demanding tasks that aren’t as easy to automate, such as customer service or sales.

The net benefit will be a more predictable revenue flow since you know exactly when invoices will go out. Customers, too, can plan their payments more confidently as they can more accurately predict what day of the month you will send invoices.

4. Eliminates late payments.

The sooner you send your invoices, the faster you can get paid and the healthier your cash flow will be.

However, because of billing errors and the general inefficiency of manual billing, where you can fail to send invoices on time, payments can often be delayed.

Automating the billing process ensures that invoices are sent on time and without errors, meaning customers have more time to arrange payment and less reason to dispute invoiced amounts and delay payment.

5. Improves customer satisfaction.

If customers are more trusting of your billing processes, they are more likely to treat your business more favourably. This can extend to giving you priority status when paying invoices.

The average company has so many creditors and suppliers that they can’t pay them all at the same time, usually because of cash flow challenges.

So, automating your billing and ensuring your invoices are always accurate boosts your integrity as a business. That cultivates a more positive relationship with individual customers that they can reward with more favourable treatment when choosing which invoices to pay first.

6. Improves reporting for delayed payments.

When your billing system is automated, it is easier to see which customers have yet to pay their invoices. You don’t spend hours looking through your accounts and bank statements to check receipts.

With data collected and processed at every stage of the billing process, you can pull reports on completed and outstanding payments at the click of a button.

Thanks to the real-time reporting, you can see at a glance what your cash flow position is at any given time without exchanging countless emails with your accounting team.

Maximise cash flow and supercharge your growth with a recurring revenue model.

Revenue is the engine for business growth, but only if you can collect the cash.

Cash is the fuel and gauge of a business’s ability to fund day-to-day operations.

If the flow of cash into your business is erratic, you will end up with no product for your sales development reps to sell. You can generate more cash and keep everyone motivated and the business growing if your customer payments are recurring and automated.

A recurring revenue model allows you to collect customer payments at regular intervals and without asking for the customer’s authorisation every billing cycle.

You only ask for the customer’s authorisation and payment information once. With their payment information on file, you can automatically charge them at the agreed frequencies until they cancel the arrangement.

Recurring payments are the ultimate cash flow solution for delayed payments. You can even go one better and pivot to a subscription billing model that allows you to collect automatic payments before supplying the product.

A subscription business model puts your cash flow on steroids, ensuring you avoid dealing with delayed payments and actually get paid in advance.

Overall, billing automation can be a valuable tool for businesses that want to improve cash flow. By reducing the time it takes to get paid, eliminating errors, and improving efficiency, billing automation can help businesses collect payments faster and improve their bottom line.

Ready to automate your billing process, collect automatic, recurring payments, and boost your cash flow?

Consider Intasend’s automatic payments and subscription billing software. Our automatic billing software is designed with the needs of Kenya’s digital-first businesses in mind.

Sign up here or request a demo to get started with automatic payments and subscription billing.

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