Your Biggest Problem
It’s hard to be a CFO. You’re in charge of the financial health of your company. That means you’re juggling regulations and compliance, revenue growth and profitability, and keeping to budget.
Despite those key responsibilities, there’s one thing that strikes at the heart of any CFO in IT Services.
Payment collection.
It robs you of your time and resources – so much so that it crushes your profit margins.
This guide is to talk you through the causes of payment chasing and high overheads. We’ll also cover strategies for how to cut chasing payments and lowering overhead so you can finally concentrate on what you’re supposed to be free to do- future-proof the financial health of the business.
Chasing Payments
Chasing payments hits hard in IT services because its subscription models mean on-time payments are a crucial part of it.
But it’s challenging because it’s common- the more customers you have, the more payments you’re likely to be chasing.
Anything can cause late payments:
- Cash flow problems
- Forgetting to pay
- Not providing customers with their preferred method of payment
- Misunderstanding the payment contract terms
- Disagreements over subscription costs or charges
- Mistakes between your sales and revenue teams
Whatever caused it, you and your revenue team are stuck spending hours and days chasing payments.
What damage does chasing late payments cause?
Operations – Your team won’t be able to do the other things they’re supposed to do if they are busy chasing missing money. That’s less time for budgeting, planning, and strategies for future growth.
Financial – Every second wasted chasing money you’re already owed costs you staff hours, any legal fees, admin, and – the worst – borrowing to cover any cash shortfalls.
Cash Flow – Speaking of disruption, cash can’t flow if your customers’ payments are late. That means difficulty in paying bills and salaries. It also makes investing tough.
Clients – Regardless of whose fault it is, it’s hard to keep up a good relationship with someone whose payments are late. Even if they tell the truth or have a good reason to be late, all you are thinking when you see them is “The AUDACITY.” You’re only human!
Credit Rating – The minute you struggle with your bills, you’re risking your credit rating. And this is an industry that thrives on “investibility.” You lose out on negotiating leverage with suppliers. You lose out on a trustworthy name. Next thing you know, investors won’t touch with you will a million-foot pole.
Legal Risks – Some arguments over payments and bills need to involve lawyers. They’re expensive and a last resort and though you will probably win, nobody wins, you know?
Physical and Emotional – Just because we’re saving it for last doesn’t mean that it’s the least important impact. We saved it for last so it would stick in your memory! Your physical and mental health are extremely important and the stress of chasing payments is the last kind of stress you need. It’s endless and thankless. It can cause burnout and turnover.
Once you can identify the impacts that chasing payments causes you, your team, and your business, it’s a lot easier to justify doing something about it (especially to those C-Suite and stakeholders who dear change and doing things differently).
Because the bottom line (literally!) is this – NOTHING should create overheads that rob you of the present and the future of the company. You know change is way overdue – you just need to know what your options are.
Strategies to Minimize Overheads in Chasing Payments
It’s just one word – automation.
When you leverage the technology available to automate the entire billing and payment process, you cut way down on your troubles.
We know because over the last 2 decades we’ve worked with IT Services CFOs who had struggled to solve their problems alone when they didn’t need to.
The biggest challenge is that many CFOs aren’t aware of just how much automation can change how they and their teams work. We’re talking about a total, end-to-end solution that finally grants you the time to work on financial strategizing for the future. A solution that gives you the correct numbers you can be confident about.
A solution that actually gives even more than this.
The right automation solution gives you:
1. Invoicing
Your system can generate and send correct invoices for you (including the complex multi-month invoices that gauge usage and other factors)
2. Scheduled payments
Automated payments can come out at agreed intervals
3. Reminders
Customers won’t be caught off guard. They won’t forget either. The system can send reminders for you.
4. 24-7 reports
A CFO’s ultimate fantasy is most likely knowing where all their revenue is at any given time. Automation gives you real-time updates, including the rev in and cash flow figures you need. And with your financial information in one place, you can make the informed decisions you need to.
5. Streamlined disagreement
It’s a lot harder to have disputes when everything is clear and automated, but when they pop-up, they will pop up earlier so they can be resolved faster. And everyone loves that!
6. Reconciliation
Silos between sales and finance are finally knocked down. That means there are no longer misunderstandings about customer offerings and contract terms. AND payments and invoices are matched automatically, so there isn’t any manual reconciliation to do.
7. Easy payments
You can have secure payments that are put into your account fast. No, really!
8. Scalability
The magic word! Of course you want to scale, but without automation it can feel practically impossible. With automation it doesn’t matter how much you grow – it can handle the transactions and still keeps those overheads you get with bigger numbers at bay.
And, as a bonus, it automatically gives your sales teams upselling and cross-selling opportunities that not only maximize your product offerings and bring in more revenue, but build confidence and long-term relationships with customers who now enjoy personalised offerings when they’re needed.
It can be yours
You know that your cutting-edge products, services and offerings are specifically designed to help your customers with their needs.
Why shouldn’t you enjoy the same? Especially when a cutting-edge offering SAVES you your precious money and time? And cuts those overheads for good?
You and your team deserve a stress-free life. The time you need to strategize for the future.
And you as the CFO deserve to be able to walk into any meeting with the C-Suite or stakeholders, completely confident in your team’s performance, and the numbers that have turned around thanks to letting something do the necessary work for you.
Give yourself and your team the time it takes to take your company’s finances to the next level. Curious? Why not schedule a free, no-obligation call with it to see how much you can save.
