April 30, 2020 | Printing Impressions
As a wave of acquisition and consolidation reshapes the printing industry, the landscape is changing. Many companies are expanding client offerings by moving to new markets, including digital, commercial printing, and packaging. To remain competitive in this business environment, print service providers (PSPs) will need to leverage technology to improve operational efficiency and drive growth.
This is particularly true when it comes to PSP’s accounts receivable (AR) processes. Like many companies, printing businesses grapple with the challenge of how to collect outstanding invoices. Late payments, a threat to any business, are an ongoing cash flow hurdle. According to the Accounts Receivable and Days Sales Outstanding Industry Report conducted by Dun & Bradstreet and the Credit Research Foundation, printing is one of the industries getting paid severely late with 60.7% of their accounts receivable dollars delinquent at more than 90 days late.
The high-volume, low-profit-margin nature of printing businesses – coupled with the large AR balances many of these companies carry – makes a compelling case for PSPs to invest in technology that automates the accounts receivable and invoicing process. This technology, which can function as a virtual accounts receivable department, takes care of everything from sending the initial invoice, to collecting payments and reconciling invoices back into accounting software. Cloud-based accounts receivable and e-invoicing software can do the heavy lifting, which creates positive cash flow, improves efficiency, and eliminates payment friction.
Cash Flow Management
A global study by Intuit QuickBooks on The State of Small Business Cash Flow clearly shows that managing cash flow is an ongoing struggle for many businesses. The study found that:
- 69% of small business owners are kept up at night with concerns about cash flow
- One-third of small businesses have more than $20,000 in outstanding receivables
- The average outstanding accounts receivable per business is $53,399 annually
These statistics add up to a pressing need for companies to reduce late payments and mounting receivables. Those companies that don’t take steps to update AR management processes may find that they are unable to pay vendors, make payroll, and/or invest in growth.
Accounts receivable automation can help PSP owners sleep better at night by speeding up incoming payments. Automating the AR and invoicing process eliminates busy work, shortens the invoice-to-cash cycle, and collects money owed faster.
Cash is the lifeblood of any business, and leveraging technology to make cash flow faster and more efficient is key to ensuring a company does not become one of the 82% of businesses that fail because of cash flow issues.
Managing AR processes manually is a major time sink and drain on resources for companies. The decades-old practice of using spreadsheets to approve and track invoices has proven to be a slow, error-prone, labor-intensive process.
Digital technology can help PSPs accelerate AR and make manual processes a thing of the past. AR technology introduces an automated billing assistant to the process that is always ready to invoice customers, follow up with reminders, apply appropriate late fees, and keep accurate records. Faster invoicing can reduce Days Sales Outstanding (DSO), improving cash flow management and overall payment collection efficiency, which can reduce bad debt expenses and AR write-offs.
Powerful automated technology streamlines and simplifies the billing and invoicing process from start to finish, allowing businesses to work smarter and faster, reduce administrative costs, and improve cash flow. The net result of this is more time for PSPs to expand services and attract new customers with greater efficiency.
Eliminate Payment Friction
Automated accounts receivable and invoicing technology can also help improve relationships with customers by offering a better, more frictionless payment experience.
An automated AR system that offers a company-branded customer portal can help drive this frictionless payment experience. The branded portal provides self-service options to customers, allowing them to view invoices, review payment history, store payment information, and set up automatic payments online. The anytime, anywhere access of the portal gives customers the convenience they want while saving PSPs time.
The ability to offer customers flexible payment options is another benefit of automated AR technology. Customers today expect to be able to pay for products and services how and when they want. By leveraging an automated AR system, PSPs can offer clients multiple payment options, such as credit and debit cards, ACH, or Apple Pay, providing customers with the convenient payment experience they expect. Automated AR systems with an advanced payment gateway baked into the technology can also tokenize and encrypt all transactions to give customers peace of mind.
Technology will play a key role in helping advance the printing industry and drive growth in the digital era. Automated accounts receivable technology should be an integral part of any PSP’s growth strategies to improve cash flow management, enhance operational efficiency, and eliminate payment friction.