insights from Pat Phelan
Chief Customer Officer and Managing Director, UK & Ireland, GoCardless
Benefits of switching to online financial management solutions
Switching to online financial management solutions can offer major efficiency and productivity benefits for small businesses as well as bringing new clarity to payments.
Predictable cash flow is a significant aspiration for small firms in a world where late and failed payments create major accounting issues. With UK small and medium enterprises (SMEs) said to be owed £26.3 billion in overdue payments — and cash flow responsible for up to 90% of business failures, according to the Office of National Statistics — the scale of the problem is obvious. Changing how firms collect payments can ease some of the pain, and integrating the process with existing accountancy tools offers clear benefits.
Financial management that transforms cash flow control
Speaking to delegates at the recent Xerocon accounting conference, Pat Phelan explained how changing the way payments are collected can put “business in control of cash flow, rather than customers.” Measures include automating payment collection via direct debit to deliver healthier cash flow, predictable revenue and growth scalability. Phelan is Chief Customer Officer and Managing Director of UK and Ireland at global bank payment provider GoCardless, which believes direct bank payments are the most straightforward way for small firms to get paid. A critical step for small firms lies in moving to “one of the new breeds of clouding accounting platforms.”
Why switch to online financial management?
Companies using Excel, paper files or traditional desktop accounting software waste time, hinder productivity and lack system integration. Switching to an online financial management solution improves efficiency and productivity. It also offers access to round-the clock accounting in an integrated system built on business apps and fintech tools. Significantly, it delivers better collaboration with accountants and advisors. “Cloud accounting is rapidly gaining a foothold as the solution of choice for businesses that want an improved level of control over their finances,” he says.
Cloud accounting is rapidly gaining a foothold as
the solution of choice for businesses that want an
improved level of control over their finances.
Cloud accounting boosts integration Cloud
Industry Forum research shows that 38% of UK businesses are using cloud-based accounting solutions, with that figure increasing to 46% for the SME market. The GoCardless direct debit solution integrates with all major cloud accounting platforms, with pre-authorisation of amounts and automation of recurring invoices and cash collection. Accountancy firm Blu Sky was an early adopter of cloud accounting technology. On switching to the direct debit solution and seamless integration with Xero, a reconciliation process that previously took two days a month is now done daily. Meanwhile, Maslins Chartered Tax Advisers estimate it saves a day of payments admin each month, with the risk of human error massively reduced.
Customer-centric solution
Phelan says their direct debit solution means no more late payments; reduced receivables; offers a cash flow boost; facilitates easier payments; better visibility; and seamless integrations and communication. “We also respond to failures in the right way,” says Phelan. “When something does go wrong, we have a process that recovers well, with a retry in a customer-centric way.” Their Success+ system uses payment intelligence and machine learning to identify when each payer is most likely to have funds in their accounts and automatically retries failed payments on those days. About 70% of firms using Success+ credited it with improving their relationships with customers, removing the need to chase for unpaid funds.
Streamline payments, enhance client interaction
Having accounting software and payment tools that are available online 24/7 is great, but there is a further step firms can take to drive greater efficiency. Integrations between software and payments can save businesses time and money, manage payments in one place and provide better visibility over payments by choosing providers that work together. “Having your invoices paid automatically by direct debit is a real time-saver, but one additional benefit of connecting GoCardless to your cloud accounting is automatic reconciliation,” he adds. When assessing which systems or providers to use, looking at their integration offering is a vital step. Managing payments entirely in one place, one dashboard and one report will save infinite time and costs later down the line.
