Most businesses, whatever their sector or size, find a large amount of their cash flow is significantly delayed by invoices that aren’t paid on time. The good news is there’s a convenient solution – electronic invoicing. By sending invoices online, businesses can shorten the amount of time it takes to submit their bills and receive payments. For businesses that have been wondering how to reduce DSOs, this is good news.
Invoicing – The Key To Cash Flow
It’s essential for any business to invoice its clients and customers accurately and quickly so prompt payment is encouraged, and more cash is readily brought into the company. However, even in the 21st century, many firms are still using inefficient invoicing processes that rely on postage and print, as well as deployed manpower to ensure these repetitive tasks are carried out. Invoicing is any company’s most frequent touchpoint with its customers. Therefore, putting a system in place that is modern, user-friendly, and, above all, accurate, is a great customer experience boost. It could also improve client relations exponentially. With modern customers becoming increasingly familiar with digital progression and online environments, e-billing is the natural progression for companies of all types to shorten their payment cycles and improve their customers’ experiences.
What Are The Problems Associated With Traditional Invoices?
A study carried out in 2014 revealed how difficult it is for companies in the United States to receive payments on time. Worryingly, the statistics showed businesses that had failed to collect on their payments 90 days past their due date would only have a 50:50 chance of being able to collect in full. Around 52 percent of the invoice value of more than 90 days overdue ended up being written off. That means businesses failed to receive half the money they were entitled to. It’s clear this is a serious cash-flow issue.
What Are The Reasons Give For Late Payment Of Invoices?
There are numerous reasons cited by organizations for why they were late in paying their invoices. Some of the most common include:
- Inability to pay.
- A payment dispute.
- Incorrect invoicing information.
- Invoices being sent to the wrong department or person.
While there is little the invoicing company can do to resolve a problem if the recipient has financial difficulties, there is a way the last two can be avoided: Adopt e-billing.
How Can E-Billing Help An Organization?
Although e-billing isn’t widespread yet, it is being adopted by an increasing number of companies as the benefits are becoming more acknowledged. Here are some of the advantages of e-invoicing:
- Improved billing accuracy – Invoicing processes that are data-driven will remove the element of human error from the equation for more accurate invoices and fewer disputes.
- Ability to handle different formats – Faxes, printed invoices, e-mails, and EDI invoices can all be handled.
- Overheads are reduced – Without the need to print out invoices and mail them, there is no longer any need to invest in equipment for this purpose or to maintain it.
- Speedier payments – Better accuracy in invoicing results in less delinquency, fewer disputes, and lower DSOs for businesses. For companies that are asking how to reduce DSOs, this is the most important element of e-billing.
- Greater profitability – When business owners spend time drawing up invoices and chasing after delinquent payments, they cannot focus on the health and well-being of their businesses. E-invoicing ensures business owners can focus on helping their businesses to grow and thrive.
For anyone who is wondering how to reduce DSOs for his or her company, BillingTree can offer convenient and speedy online billing options. The company’s solutions deliver the opportunity to enhance the customer experience and receive payments quicker while rapidly reducing operational costs. By giving companies unparalleled accessibility from anywhere and at any time, BillingTree can smooth and streamline the invoicing process for greatly enhanced cash flow.