The late B2B payments are a real problem across the globe- according to , the market size is around $130 Trillion worldwide. This results in cash flow struggles, stalls in growth, and bankruptcies. Proper accounts receivable management is an answer to the growing problem. However, once manual and monotonous tasks now can be performed with more efficiency, accuracy, and success rate thanks to advance Artificial Intelligence (AI) and machine learning technology.

Kolleno has built an Accounts Receivable (AR) automation platform that helps to solve the late payment issue and improve the cash flow of businesses of any size around the globe. Find out more and register https://bit.ly/3tCGZZj to a brief webinar on 12 July at 11:00am.

Late Payments Are a Major Stall on SMEs’ Growth

Late B2B payments are not just annoying, they are one of the major reasons why businesses experience problems with cash flow. When the cash is not circulating freely through a business’s operations, it might experience problems paying its expenses, its suppliers or even wages.

The cash flow struggles are a major reason why small and medium enterprises fail. The data shows that “poor cash flow” was named the major reason why smaller businesses fail by 82% of respondents.

Some Businesses Are Affected More Than Others

Late payments “epidemics” is spreading across different industries and geographies.

Currently, in the UK 58% or 3 in 5 SMEs are owed money according to Barclays.

If we look at medium-sized enterprises (50 to 249 staff) the statistics are 94%!

The construction industry is one of the worst affected ones, due to the long supply chains and network of subcontractors. It is estimated that the cost of slow payments in the construction industry has reached a whopping $64 billion in 2019 alone. Moreover, around 30% of work was delayed as a result of late payments.

Making your Business Stagflation-proof

While “getting paid” on time is always an important goal for the financial teams, it becomes a pressing issue during a crisis. As the world is preparing for stagflation (period of low GDP growth and high inflation) businesses also need to improve their cash flows. Cash flow can be treated as a source of internal liquidity, especially during a time of crisis. Usually, when an unforeseen situation happens businesses can quickly apply for a business loan, however, the lending to the SMEs is at an all-time low according to fsb.org.uk, with 6 out of 10 businesses affected by late payments.

To make your business recession-proof during unstable times it is essential to look within. Cash flow can be a source of internal liquidity. To speed up the cash conversion cycle it is important to monitor the invoices and send customers timely reminders, your hard-earned cash hits the bank account as fast as possible.

Manual vs. Automated AR Management

Manual accounts receivable management can be time-consuming and is prone to errors. Despite the wide adoption of the accounting software among businesses of all sizes, they are still not enough to effectively manage AR. The credit controller or other members of the team must constantly go over the excel spreadsheets monitoring which clients have paid, which clients responded to payment reminders, and how many reminders were sent out overall.

Moreover, some staff, especially those who were involved in making the sale happen feel uncomfortable reaching out to their clients with payment reminders. The good news is that machine learning technology can suggest all the actions that need to be performed based on the past customer behaviour and even offer messaging and tone-of-voice for better collections.

Fixing the cash flow is a vital part of any CFO and business owner. When the problem lies in lower sales or excessive inventory purchases, the strategy could be adjusted internally. However, if the company is managing its operations efficiently, and sales are growing, the late payments are not something a company can fix quickly without the help of digital tools.

Kolleno decided to change the way B2B payments are handled. With the help of technology, they have built an AR management platform that helps to automate the chasing of payments without compromising the customer relationship and as a result speeding up the payment cycle.  Find out more and join our webinar https://bit.ly/3tCGZZj on 12 July at 11:00am.

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