Automate Cash Collection Process for your Business

How can Cash Collection Automation Software keep you out of Trouble?

Every organization has a cash collection team that controls incoming and outgoing cash daily and other accounting work. The cash collection process cycle starts as soon as a customer orders. The collection team must update the daily transaction accounting database while maintaining the security and privacy of financial records. Manually doing this process will take more time and be prone to error.

Understanding the challenges in the cash collection process and addressing them with optimal solutions is essential. Many organizations seek help from technology, as technology saves business from many challenges in the modern market. Cash collection software can save the collection teams from various problems.

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Challenges faced by cash collection teams

Here’s a list of common problems that a cash collection team faces during the cash collection process.

Poor cash visibility

Organizations require high cash visibility to make decisions. An efficient collection process can result in high visibility. Also, data distributed across ERPs, TMS, sales order systems, and bank portals limits visibility. Low cash flow visibility can also reduce the accuracy of the projection, making it difficult for companies to make effective decisions.

Lack of security

Companies that perform cash collection processes manually are at more risk of cyber threats. Since manual systems lack data encryption that prevents hackers from getting into your system, you should protect the sensitive data your customer shares during a transaction, so your customer, business partners, and merchants maintain trust in your company.

Slow speed

Manually processing the collection is time-consuming. If you can speed up this workflow, you will avoid hitting delays or failing to capitalize on early payment discounts. Sometimes, companies need help keeping up with the payment due dates and loan collections. For instance, banks and money lenders face the problem of bad debt due to the slow speed of the cash collection process.

Higher borrowing costs

When a company gets money late from their customer, they must pay a higher interest rate to banks for borrowing their money. It can reduce the profit of a company significantly.

Lack of data analytics

Improper use of idle cash and increased cash buffers can result in a loss of opportunities in value creation. The cash collection team can only access cash for investment when they know how much money they have. Hence, the collection team must track the money flow to check for potential errors and maintain visibility during the transaction.

How does Cash Collection Automation Software help in the cash collection process?

Cash collection automation software can address all the problems that may arise during a cash collection process. Automation software offers the following benefits to an organization:

It enhances control over cash and working capital

Knowing your cash position and improving the cash collection process improves working capital. With the help of automation software, you can manage your working capital more effectively, which helps you get insight into what you need to make strategic investment decisions, like hiring new employees, purchasing capital equipment, and expanding your workplace. Improving your invoice collection process helps you invest in the right place to help you grow your business, and your organization still has more cash on hand after investment.

It shortens the sales to the payment cycle.

Generally, manufacturers or distributors need to pay for the cost of labor and inventory when producing or distributing a good or service. When a service organization invests in the raw material and resources to provide the service, they need to collect cash for their service and product as soon as possible. Automating software means you don’t have to worry about creating sales orders and invoices. It also sends the invoice to respective customers automatically. It also allows your customer to pay you via various modes, including credit cards, ACH, and more.

It lower bad debt risk

Many banks suffer losses from bad debts because the organization knows the customer will not pay them. It happens because the cash collection team cannot collect cash at regular intervals. Several other reasons also lead to delays in Loan collections. Collecting software can help the collection team to stick with a definite schedule of collection tasks and generate daily tasks for employees to keep up with workflow. It helps collect debt more quickly and reduces the risk of bad debt.

It improves your cash position

Knowing how many bills you must pay helps you understand your cash position. Pay your due bills to avoid owing more money than you are taking in. It would help if you focused on utilizing the best cash collection practice, reminding your customer to pay, providing customers with easy ways to pay you, and identifying invoices earlier in the process. Some automation software comes with a statistical cash forecast based on your customers’ payment history. It helps you know whom and where to receive cash soon.

It improves customer communication

Communication with your customer is an important part of the business. Cash collection automation software makes it easier for you to communicate with your customers. It allows you to review the necessary information about the customer, like account information. It also helps you create emails, attach invoices, log phone calls, and create mail merge documents. Automation software stores every communication with customers for future review and analysis.

It makes the cash collection process efficient

The cash collection process is time-consuming and inefficient because it is performed manually. The account managing team has to call each customer required to pay their company. Other factors also affect how much time you need to resolve issues with your payments. Companies using automated cash collection software can organize and automate mundane tasks. It helps reduce time spent on managing disputes, prioritizing, and preparing fo4 calls. It provides more time for your team to solve customers’ payment issues.

It minimizes administration costs

Automation software is designed to automate every activity that shouldn’t require human intervention. In the banking industry, organizations have to generate task lists for employees which requires a workforce. However, automation software can save banks from paying high administration costs by shrinking the size of the cash collection department. The collection software automates most of the process, which increases efficiency and minimizes the company’s administrative costs.

It improves customer service and satisfaction.

Sending an invoice early to your customer helps them pay you on time. However, it is common for companies to face problems with their customer invoice, such as missing or incorrect purchase orders. Resolving the issue with your customer invoice as soon as possible help provide your customers satisfaction. An automated cash collection software can automate invoice delivery to customers and alert you to problems with invoices and offer practical solutions. It helps you serve your customer better with fast and improved service.

In Conclusion

A smooth cash flow is essential for any organization. You must get paid on time to avoid a situation where you owe more than you are taking it. Slow speed, human error, lack of data analytics, and inefficient payment methods are common problems that a cash collection team face. Fortunately, automation software is a perfect solution that can address all the issues of cash collection and save you from getting into trouble.

MIMOIQ offers excellent cash collection solutions and helps organizations collect money faster, reduce bad debt write-offs, increase the economy, and maintain good customer relationships. You can choose from multiple cash collection models that suit your business needs.

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