New tools to make payments easier
It’s not every day you see a group of accountants whooping and cheering for online reporting tools – but according to Greg Moore, Payments Advisory Director with Macquarie Business Banking, it was a typical scene at XeroCon South in Brisbane last month.
Bringing together 2,500 accountants and bookkeepers to discuss the future of cloud accounting, it was a physical manifestation of the ‘thriving ecosystem’ of highly visual business tools and systems that Xero has empowered.
“These cloud-based products give business owners complete visibility of balance sheets, budgets and cash flow – and make sharing that valuable data with their advisors so much simpler,” says Moore. “It’s transformed the accounting profession by automating a lot of the number crunching, freeing up time to do more interesting customer advisory work.”
Using the right tools for your business can not only improve efficiency, but also have a real impact on cash flow.
Make it easier for your customers to pay you
This is the ultimate win-win strategy – it’s good for cash flow but it’s also good customer service.
Remember the last time you received an invoice that was hard to pay? Maybe you had to transfer money into a new bank account, or it even asked for cash or a cheque.
Chances are you took longer to pay that bill than you would if you could pay online with one click of a button. Your customers are no different. The easier the payment, the quicker they will pay you.
Most clients expect to be able to pay online, via direct debit or BPAY®, or by using their credit card so they can earn points on their expenses. And they want to get your invoice off their desk quickly, just like you want to be paid quickly.
Moore says all the cloud-based accounting systems – including Xero, MYOB, Quickbooks and Reckon – are working toward making it easier for the businesses that use their software to accept online payments.
Some give their users a range of bolt-on payment providers to choose from in an online marketplace, while others link up with one provider or even provide the payments service themselves.
“By the end of the year, Macquarie’s DEFT payments system will also be fully integrated with Xero, which means you can accept invoice payments via BPAY within Xero itself,” says Moore. You won’t need a separate BPAY biller code, just a Macquarie Business Bank account linked to DEFT.
Make reconciliation your friend
No one looks forward to reconciling their bank statements, or ticking off incoming payments against the list of outstanding invoices.
Cloud-based accounting tools that link each invoice to a payment can streamline this process, and ensure you have a clear picture of customer outstandings.
“For example with Xero and DEFT, when your client has paid the invoice, you’ll get an automatic notification through Xero that the invoice has been paid,” explains Moore.
Bank reconciliation doesn’t get much simpler than that.
Having dashboard level real-time visibility over overdue invoices is a big deal for cash flow management – but it’s also important for customer service. “You don’t want to be chasing your customers for invoices that have actually been paid already,” comments Moore.
Pay for efficiency
When you make payments to your own suppliers, it’s also smart to choose the most efficient method available. This will help you control the timing of the cash draw on your account, as well as any costs or benefits.
Most businesses will offer electronic options such as BPAY or online credit card payments. If you pay by business credit card, you may also be able to earn rewards for your payments – such as airline points for business trips (or a well-earned holiday).
Your bank may charge different levels of fees for each payment method, so pick the one that costs least but still meets your objective of controlling cash flow.
“As a general rule,” Moore says, “if you are reaching for a cheque book to make any sort of payment, there is an opportunity to save time and expense by upgrading to electronic payments.”
More time for what matters most
A well set up payment and reconciliation system will make it easy for your customers to pay you, and easy for you to know who has paid you. But it will also simplify your accounting and reporting by keeping everything in one place.
“Using cloud-based accounting tools with linked banking and payments systems will give you and your advisers an up to date view of your cash flow at all times,” comments Moore.
He sees addressing cash flow with technology as an opportunity to improve your business for little or no cost.
“You’ll get paid quicker and improve the client experience. Both will improve your bottom line.”