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How entrepreneurs use technology to boost cashflow

Automate where you can, track everything and set rules, advised our expert panel. But don’t forget the all-important human touch

Entrepreneurs should know what is coming in and going out – but should not be afraid to hire help.

Automate where you can

For time-poor entrepreneurs, technology can really improve a business’s efficiency by automating as many administrative tasks as possible. This is particularly important when it comes to chasing those all-too-common late payments.

As business coach Ali Golds put it: “Gone are the days of having to use Excel spreadsheets and paper to record expenses and invoices. Accounting software packages can now be fully integrated with your bank account and, at the press of a button, can update you on who owes what and when it was due.”

Paul Haydock, co-founder of DueCourse, recommends solutions Xero and Sage One: “If you are using cloud accounting to send your invoices, these have inbuilt automated credit control in the form of automated emails to your customers when the invoice is becoming due (and then overdue, etc).”

Set parameters

Asking clients to pay by direct debit can really help when it comes to being paid on time. Chartered accountant Charlie Carne likes using GoCardless rather than going through banks. “It’s very easy to set up – it’ll take you 10 minutes – and cheap (no more than £2 per transaction). You can even link GoCardless to QuickBooks so that, as soon as you send an invoice to your client, the payment collection process starts automatically and will be paid on the date you specify. No more debt-chasing.”

ZooRiot founder Jessica Zoo said that her cashflow has benefited enormously from the rules she’s established using technology.

“I have all my invoices sent to one email address, which is picked up by a super-efficient virtual assistant team. The most important part is setting the right due date – we have 30 day payment terms. We now always know what’s outstanding and I’ve switched doing payroll and accounts from once a month – hefty and bad for cashflow – to once a week, which takes two hours. [Setting rules] is the best thing that’s ever happened to my cashflow.”

Track everything accurately

The panel agreed that having a good understanding of your finances is crucial for entrepreneurs. Technology solutions can help track the money flowing in and out of the business, and identify where savings could be made.

Dr Paul Swift, from the Carbon Trust, says smart meters give entrepreneurs a near real-time projection of their electricity and gas costs, and help future forecasting. “The goal is to try and predict your energy costs based on known factors,” he said. “[And] an energy audit by a reputable firm will give you a costed list of ways you can reduce energy consumption.”

Don’t be afraid to hire someone to help, Golds added. “At any point in time a business owner should be able to say how much money is in their account and how much they’re owed. If you’re not confident … hire someone who is. It’s not a sign of failure, it’s a sensible move. Run frequent financial reports and look at whether you can start invoicing for goods sooner and/or paying later for supplies to give you a cushion.”

If you do find yourself short, Haydock said there are a number of innovative invoice solutions that can help bridge the gap. Sean Drake, founder of The Wealth Project Holdings, also suggested speaking to investors who might be interested in helping your business grow.

Boost sales

Zoo also advised one reader who asked about online tools to help boost sales. She admitted some entrepreneurs may have reservations because of the commission taken by better-known platforms per sale, but says it’s worth it for the confidence they inspire among your customers: “PayPal is trusted, you can pay by credit card, it always works … [and] they have a great set of analytics tools.

“We are starting to see great results [from Facebook Store, too] and Fulfilment by Amazon is a great way to sell your goods without the headache.”

Golds also recommended Pipedrive to keep track of leads, targets and goals, but emphasises that successful e-commerce starts with a great website: “Make sure that it’s looking good, [with] lots of interesting, up-to-date and relevant content, and ways for potential clients to engage with you.”

Don’t forget the human touch

While technology can certainly help entrepreneurs get a handle on cashflow, our panel agreed that the power of human contact could not be underestimated.

Erik Fairbairn, serial entrepreneur and founder of POD Point said: “Good collection is a process – check they are happy with your work, invoice them immediately, confirm receipt and acceptance of your invoice, etc. Explain you are a small business and your lifeblood is the correct payment of invoices. If they can’t pay, ask why. Give them a little bit of flexibility, but be firm.”

And if you can’t do the chasing yourself, there are others who can step in for you. Philip King, chief executive of the Chartered Institute of Credit Management said: “There are many solicitors who will chase for you and only charge based on results. They have the expertise and the resources leaving you free to concentrate on more important things and clients.”

Fairbairn added: “Most people don’t want to cause you trouble – explain what is going on, explain why cash is so important to you and generally people will be open to paying you a bit early or letting you pay a bit late. Over-communicate with everyone when cash is tight. If you get your cash right, everything else follows.”