The ongoing late payment crisis is one of the largest and most prevalent threats to any modern business. Often overshadowed by news of economic downturns or changing legislation, the impact of late payments can be just as destructive and costly for individual businesses.
Late payment of invoices forces 50,000 businesses to cease trading every year. UK small-medium sized enterprises (SMEs) are owed a collective £61 billion in late payments, with a third of SMEs waiting longer than two months for overdue invoices to be paid.
The constant need to chase late payments can have a catastrophic impact on a business and its owner. Over 90% of business owners report that late payment of invoices has negatively impacted either their business, personal life, or both. Around 33% of business owners impacted by late payments have had to pay themselves late, and 17% have had to pay staff late.
The situation is also getting worse, with data from 2022 showing that late payment rates had increased by 25% compared to the year before.
It’s clear that the late payment crisis is a significant problem, but what can be done to reduce its impact?
Technology plays an integral role in accounts receivable (AR) processes and has the potential to significantly decrease the amount of time spent chasing overdue payments.
To give business owners the best chance of recovering their overdue invoices, they must stay up to date with the latest trends in AR technology and arm themselves with the best tools to combat late payments.
The Evolution of Accounts Receivable
The core benefit of employing cutting-edge technology in your accounts receivable process is that it mitigates the common pitfalls of manual chasing and tracking of payments. Some of the most prevalent issues caused by an outdated AR system include:
- Human error - Given the complexity of AR processes and the sheer number of invoices that need to be tracked, it is inevitable that mistakes will creep in. These mistakes can be time-consuming and costly to rectify, slowing an already over-stretched process and costing businesses valuable time and money.
- Lack of visibility - If all records are kept on paper, or if the existing system is not automated, it can be difficult to understand how many outstanding invoices there are and who owes what. This makes it hard to identify patterns in late payments and determine if any corrective action needs to be taken.
- Time-consuming - Manual processes can take up a lot of time. Tracking payments, sending out reminders and dealing with customer queries are all activities that can be automated with the right tools to save businesses time, money and resources. This means that to chase unpaid invoices, staff often have to be diverted from other areas, such as sales and customer service.
The key to staying on top of the late payment crisis is to invest in technology that can automate these manual processes and free up staff time for more critical tasks.
The right AR technology should also provide detailed insights into payments received and outstanding so businesses can improve their understanding of how they are being paid and act accordingly.
The reality is that the traditional manual approach to accounts receivable is labour-intensive, time-consuming and often ineffective.
If business owners want to reduce the amount of time spent chasing late payments, they will need to invest in AR technology that can improve processes and visibility.
Technology Trends Reshaping Accounts Receivable
Given the importance of ensuring consistent cash flow and accounts receivable's critical role in the success of any business, it is essential to keep up with the latest technology trends.
Some of the primary trends that are already influencing accounts receivable processes include:
AI-Driven Automation: Enhancing efficiency and personalisation
While artificial intelligence (AI) is far from replacing skilled staff, it can offer considerable benefits to AR teams who employ it correctly.
AI-driven automation is critical to reducing AR staff's workload and reducing the number of errors that can occur with manual processing.
By automating mundane tasks such as data entry, AI allows staff to focus on more important activities such as customer engagement and creating long-term strategies for overdue payments.
One of the great strengths of both AI and automation is the ability to turn vast amounts of data into actionable insights that can be used to improve processes and cash flow.
The huge amounts of customer payment data generated by the usual AR process are a rich resource for understanding customer behaviour. AI can use this to personalise payment reminders of customers so that they are more likely to respond and pay on time.
AI can also be used to predict future customer behaviour, allowing businesses to identify potential problem customers before it is too late. This allows the company to take steps early on that will help mitigate the risk of late payment in the future.
An excellent example of how AI can be used to improve AR processes is the number of cutting-edge AI features recently introduced by Chaser, including:
- Payer ratings - Customer segmentation can significantly reduce collection times for overdue payments. Chaser’s payer rating feature allows businesses to categorise customers based on their payment behaviour (e.g. prompt payers, slow payers, etc.)
- The late payment predictor - Knowing when customers will likely pay their overdue invoices can be invaluable. Chaser’s late payment predictor uses AI algorithms and machine learning to accurately predict when customers will pay their overdue invoices. This allows businesses to take proactive steps to ensure timely payments are received.
- Recommended chasing time - Knowing when to start chasing overdue invoices can be difficult. Chaser’s recommended chasing time feature allows businesses to set the optimal date to send out reminders, ensuring payments don’t slip through the cracks.
These AI-driven features are just the tip of the iceberg regarding AR technology and demonstrate how this cutting-edge tech can be used to reduce manual errors, streamline processes and improve visibility.
Blockchain Security: Trust and transparency in financial transactions
Trust and transparency are critical in all financial transactions, and blockchain technology can bring these attributes to accounts receivable processes.
Blockchain offers a secure ledger system that is almost impossible to hack or tamper with, meaning businesses can rest assured that their payments are safe at all times.
Furthermore, the distributed nature of this ledger system means payment records are stored across multiple nodes. This ensures that they are virtually impossible to delete or modify, improving transparency and reducing the risk of fraud.
The potential impact of blockchain technology on AR processes is huge, as it allows businesses to quickly and securely track payments from start to finish. This reduces manual processing and improves visibility and trust in financial transactions.
Additionally, blockchain underpins the use of smart contracts, which are self-executing digital agreements that can be used to automate the release of payment when certain conditions are met.
This increases security and accuracy in AR processes by ensuring payments are released on time and in line with negotiated terms. Smart contracts can also be used to automate payment reminders, further reducing the amount of manual work required by AR teams.
Digital Invoicing and E-Payment solutions: Accelerating cash flow
Cutting down on the amount of time between invoicing and payment is essential for improving cash flow. This is where digital invoicing and e-payment solutions come in.
Digital invoicing systems allow businesses to email invoices quickly, reducing the time it takes for customers to receive them and make payments.
Digital invoice templates can also be customised so each customer receives an invoice that looks personalised and conveys a brand image that is consistent with the company's overall brand.
E-payment solutions such as Stripe, PayPal and Apple Pay can also be integrated into digital invoicing systems to make it easier for customers to pay quickly. This creates a smoother customer experience, reducing the time it takes for payments to be received.
Chaser's Payment Portals are an excellent example of how digital invoicing and e-payment solutions can be combined for maximum efficiency.
The Portals allow customers to pay their invoices directly from the invoice, with no additional steps required. This makes it easier for customers to pay and ensures that payments are received more quickly than if they had to manually enter their payment details.
The ability to quickly and securely accept payments from customers is critical to improving cash flow, and digital invoicing and e-payment solutions can help make this process smoother, faster and more secure.
Chaser: Revolutionising Accounts Receivable
As you can see, a wide range of innovative AR technology is available to help improve cash flow and reduce manual errors.
Chaser's suite of AI-driven features is one of the most comprehensive accounts receivable solutions on the market. By implementing Chaser, businesses can benefit from increased automation, improved visibility and faster payments, leading to a more efficient AR process.
In today's competitive marketplace, it is essential for businesses to make the most of their AR processes in order to stay ahead of the competition. With Chaser, companies can reduce manual errors and accelerate cash flow, giving them a clear advantage.
Automated Payment Reminders
Foremost among the benefits of employing Chaser to improve Accounts Receivable is the ability to send timely and personalised automated payment reminders without adding to the workload of your AR team.
The ability to remind customers of upcoming payments or overdue invoices without taking time away from other vital tasks is critical to improving cash flow and reducing manual errors.
With Chaser, you can set up automated payment reminders based on pre-defined rules, ensuring that payments don't slip through the cracks.
They can also be personalised to reflect your relationship with the customer and your brand image, helping to create a better customer experience.
Reminders can be sent by email and SMS, increasing your reach and ensuring your customers receive payment reminders wherever they are.
Speed up customer payments
As already mentioned, giving customers the widest range of payment options is key to ensuring that payments arrive quickly.
With Chaser, you can include direct links to a personalised payment portal within your automated reminders. This provides customers with a quick and easy way to pay their invoices without finding the payment details or entering them manually.
You can also provide customers with the option to pay via debit credit cards, Paypal, and other online payment methods to make it as easy as possible for them to pay.
With Chaser's late payment predictor feature, businesses can also identify which customers will most likely miss their payment deadlines. This allows AR teams to follow up with those customers quickly and provide them with the options they need to make a payment.
Analytics and insights for informed decision-making
With customer segmentation options, built-in analytics and customizable reports, Chaser provides businesses with the insights they need to make informed decisions about their accounts receivable processes.
Advanced analytics tools allow you to monitor customer behaviour over time, giving you valuable insights into what works in your AR process and what doesn't.
This allows you to optimise your payment strategies for maximum efficiency and ensure that payments are received as quickly as possible.
Case Studies: real-life transformations
Chaser's clients are already seeing tangible results from using Chaser's AR technology, significantly improving cash flow, customer experience and AR team efficiency.
Take a look at some of their stories to see how Chaser has revolutionised their accounts receivable processes:
- LoveBrands - By adopting Chaser, LoveBrands saves an average of 15 hours per week on credit control tasks and no longer has to pay external contractors to help with their credit control. The time and money saved on their AR process have allowed them to focus more on customer service and growing the business.
- TaxAssist - In addition to saving a total of three weeks of valuable staff time per year that was being spent on chasing unpaid invoices, Chaser's payment reminders allowed TaxAssist to recover £20,000 in outstanding invoices in just 20 minutes!
These success stories demonstrate the real-life results that businesses can achieve by adopting Chaser's AR technology.
Supercharge your AR with Chaser!
Adopting innovative AR technology is essential to combat the cash flow issues that are plaguing businesses impacted by the late payment crisis.
By using Chaser's AI-driven features, businesses can significantly reduce manual errors and accelerate cash flow to improve the overall health of their accounts receivable processes.
The best way to see how much of an impact Chaser can make on your AR is to try it for yourself - book a demo or sign up for your 14-day free trial today and experience the power of Chaser's cutting-edge AR technology!
