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The Importance Of Financial Reporting And Analysis

by KC Estoesta | May 19, 2022 | Blog

With the End of Financial Year (EOFY) fast approaching, SMEs are now starting to prepare financial reports. But more than a mandatory report to be submitted to the taxation office, financial reports play a critical role in building a successful business. Financial reporting and analysis offer insights into financial data that will help you make better business decisions, eventually improving the business’s financial performance.

We’re providing you with a comprehensive guide to help you understand how crucial financial reporting and analysis are to your business. In this article, we will explore the importance of financial reports and how they benefit different business stakeholders.

What is Financial Reporting?

Financial reporting is a standard accounting practice that documents the company’s financial data. This data helps companies understand their financial health and performance in a specific period. Based on the report, they can make informed business decisions.

Financial reports are useful for businesses and for, investors and banks. Based on these reports, an investor or a bank invests or gives loans to a company. Suppose you plan to expand your business, and a bank will grant a loan based on your company’s financial report. If the company is financially healthy, then you can expect a loan for your business expansion.

How are financial reports generated?

The use of spreadsheets for financial reporting is widespread across businesses worldwide. However, spreadsheets can fall short of capabilities to generate efficient financial reports as a business grows and more users, data, and formulas are added to the reports. Financial reporting has become more efficient and sophisticated thanks to digital technology.

More and more businesses are now adopting the use of ERP platforms to streamline their accounting, automatically generate financial reports and even provide data-backed insights. Integration with other solutions, such as Accounts Receivable automation, further improves accounting software’s capabilities to create fast and accurate financial reports.

Types of financial reporting

1. Income Statement

An income statement or profit and loss statement essentially show a business’s loss or profit during a specific period. It’s a summary of key sales activities, costs of production, and any other operational expenses within the accounting period. This statement aims to understand if the business is making any money or suffering losses.

2. Balance Sheet

A balance sheet provides an overview of a company’s overall assets, liabilities, and stakeholders’ equity. Broadly, the balance sheet reflects the financial health of a company. By analyzing this sheet, the company’s management can see where the business is heading.

The balance sheet is not only useful for the management but also for investors. By assessing the balance sheet, investors can form an opinion on whether to invest in a specific company or not. The sheet has all the vital information like the company’s finances and other data to help them make an informed investment decision.

3. Cash Flow Statement (CFS)

A Cash Flow Statement (CFS) documents the amount of cash coming into the company and the cash flowing out of the company during a specific period. The statement includes elements of both the income statement and balance sheet. CFS is critical because it tells the business owner or management about the company’s cash position. Businesses need sufficient cash all the time. They require cash to pay expenses, loans, taxes, and equity purchases. A cash flow report tells if the company has sufficient cash for carrying out such activities.

Now that we have seen what financial reporting is let us explore some benefits of financial reporting.

Benefits of Financial Reporting

1. Helps In Effective Debt Management

The poor management of debts can be disastrous for any company, whether small or big. When it comes to debt management, several financial reporting platforms are available that will help you track your company’s current assets, current liabilities, accounts receivables, and liquidity. AR automation software provides data on your customer’s credit scores that can help you gauge how to manage debts effectively.

2. Trend identification

Financial reporting helps identify seasonal trends or cycles that can help you plan ahead. Understanding trends and the historical context of numbers empowers you to improve your business’ performance effectively.

3. Real-time insights

Updated financial reporting provides you with real-time insights into your financial health. Thanks to advancements in technology, access to real-time data are possible and provides you with the ability to take action to either correct issues or take advantage of opportunities. Cash Flow statements, for instance, provide you with information about the company’s availability of funds which will help you ensure you always have money to cover payments.

4. Liabilities tracking

Managing liabilities is paramount for any business, especially if the business is looking to apply for a bank loan for expansion. Defaulting loan payments is seen as a red flag by banks that can reject the application for a loan. A financial reporting template allows for exploring current liabilities. Based on the data, the company can determine if it is required to reduce liabilities before applying for a bank loan.

5. Compliance

Complying with the rules is essential for the survival of any business. Maintaining updated financial reports help your business comply with the regulations set by the governing body.

6. Cash Flow

Management of cash flow is essential to any business. If you face challenges with the cash flow, financial reporting metrics will let you know the root cause of the problem.

With benefits covered, let us get to the crux of the topic – The Importance Of Financial Reporting.

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Why Is Financial Reporting Important?

Financial reporting offers a wealth of insight into financial data that helps make better business decisions. Apart from this, there are many other reasons. Let us look at each one of them in detail.

1. Taxation purposes

The biggest reason for performing financial reporting is taxes. For instance, you need to lodge EOFY tax returns and other financial reports in Australia. These reports are mandatory by law to ensure that a company pays its fair share of taxes. Before filing taxes, an audit is also necessary, and accounting and auditing firms review financial reports to ensure accuracy and credibility.

2. For Attracting Investors, Bank Loans

Financial reports are critical for attracting investments. If you are looking to expand your business, the investor will surely ask for the company’s financial report. The investors will examine the report to see how the company is performing. Is it earning profits? Or is it at a loss? How is the company managing its cash flow? These are some key indicators that investors examine.

If your company’s financial health is not optimal, no matter how excellent your product/service is, most investors will decline to invest in your company. Similarly, when you apply for a business loan from a bank, the bank examines your company’s financial report before lending the loan. Based on the information gathered from the report, banks can determine if the company can repay the loan.

3. For Better Business Decision-Making

A financial report is one of the essential tools for making better business decisions. For instance, if you want to open a new branch, a financial report can help you gain insights. You can assess crucial information like the company’s cash flow to identify if you have enough capital to expand and maintain solvent for daily operations. However, it is necessary to have detailed financial reports based on accurate data to make such decisions.

In a survey conducted by Deloitte, most respondents identified an insufficient level of details as the main issue in financial reporting, as this can affect financial performance assessments. The advent of modern accounting software has mitigated inaccuracies from old financial reporting techniques, leveraging data and automation to reduce errors in financial reports. These software solutions often have an intuitive dashboard that provides businesses with critical information in an easy-to-understand format to help them make better financial decisions.

4. Builds Trust With Stakeholders

Financial reports help in fostering trust with stakeholders. Accurate and transparent financial reports – backed by data – help convince stakeholders about your business’ performance. Leveraging technology helps build detailed, accurate reports that provide your stakeholders with the information they need to understand your business’s financial position and performance.

Who Uses Financial Reporting and Analysis?

Throughout the article, we’ve often mentioned several entities that can benefit from financial reporting and analysis, such as investors or lenders. Here is a list of other entities.

1. Business Managers

Business managers use financial reports to help them track and measure the performance of an organization. With deeper insights, they can then devise intelligent strategies to improve the company’s financial health.

2. Tax Agents And Various Government Agencies

These groups use financial reports to check if the businesses comply with tax regulations. Financial reports are also reviewed as part of the auditing process.

3. Customers

Customers use financial reports to judge whether a company is reliable to do business with. They examine the statements to ensure that the company is financially healthy and determine whether it can stay for a long period.

Conclusion

Financial reporting is essential for any business, regardless of its size. It helps you better understand the company’s financial performance and enables you to make the right decisions that help in the growth of your business.

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5 Reasons Why You Should Use Integrated Direct Debit

by KC Estoesta | May 5, 2022 | Blog

We often talk about the benefits of automating your payments with Direct Debit – and how you can work even more efficiently by using Direct Debit in an integrated way. But what does Integrated Direct Debit really mean? And what problems does it solve that the traditional direct debit system can’t?

In our recently concluded webinar, Amanda Lee, founder of Amanda Lee & Co. and Receivables Management Advisor, Jimmy Cooper, Co-Founder and UX Researcher at ezyCollect, and Tony Gu, Customer Sucess Lead at ezyCollect, discussed the benefits of a fully integrated Direct Debit solution and how ezyCollect is changing the way Direct Debits work for businesses.

Here are the key takeaways from the session.

What is Integrated Direct Debit?

Integrated Direct Debit is a payment solution that is an enhancement from the standard direct debits we all know.

Integrated Direct Debit works by collecting payments directly from customers’ accounts that have granted you Direct Debit Authority. When direct debit transactions are integrated into your AR automation platform, the whole direct debit process is streamlined from collection to reconciliation, minimising friction. You also gain more control over direct debit payments, making extending that flexibility to your customers easier.

5 Reasons Why Your Business’ Cash Flow Will Love Integrated Direct Debit

1. Automatically writes back to your accounting system

For many businesses, the issue with the traditional Direct Debit service is that it doesn’t integrate with their accounting systems. Without integration, AR teams still have to reconcile payments manually.

With an Integrated Direct Debit, payments are automatically written back to your accounting system. When your customer’s account is debited for payment, it will automatically be marked as ‘Allocated’ on your ERP, saving you precious time each day on allocating payments.

2. Simplified customer process and payment experience

We all know how Direct Debit automates the payment process by collecting payments from your customer’s account through a direct debit authority. But the flipside of that is that customers feel like they’ve lost control over their bank accounts.

Integrated Direct Debit work differently in that while it gets you paid faster by collecting payments directly from your customers, it also allows for flexibility. For instance, if a customer requested to cancel the direct debit transaction, you can easily do so on the platform.

An Integrated Direct Debit payment option also helps you stay competitive. It’s another digital payment offering you can make to customers that competitors don’t have. Integrated Direct Debit is another way of offering the customer another great chance to pay you in a different way that your competitors won’t have.

3. Technology frees up business resources

Because integrated Direct Debits automatically collects payment from your customers, time spent chasing payments is reduced. It frees up time for your AR team to do more productive work to contribute to your business’ growth.

It’s also important to note that because you now have more control over when you get paid, your cash flow is more predictable, allowing you to strategize business expansion plans with more confidence.

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4. Focus on customer relationships and experience

Focusing on customer relationships and their entire experience with your business is of optimum importance.

By optimizing the customer experience and giving them opportunities like ezyCollect’s Integrated Direct Debit where you can collect now, or the customer has an option to schedule the payment, it provides the customer with a user-based experience. It starts making their relationship feel more connected with your business.

Another issue businesses had with direct debit was the ethical responsibility that comes with a customer’s permission to access their bank account or credit cards to take payment. A client’s financial situation can change at any time, but because standard direct debits aren’t managed easily by businesses themselves, adjustments take time and money, affecting customer relationships.

The beauty of Integrated Direct Debit is that it factors in the human side of accounts receivables. It gives businesses the ability to make any adjustments through the platform in a split second. Businesses can control how they receive payments and allow for flexibility that enhances the customer experience.

5. Predictability over your business’ cash flow

With Integrated Direct Debit, you are getting your money in the bank on a specific date and time, which gives you a lot more capacity to manage the cash flow in your business.

A predictable cash flow also means that you do not have to find other finance solutions for your business to carry the overdue accounts in your business. Businesses need to ensure they are constantly pushing the responsibility back onto the customer to pay the invoice on time as this directly affects the cash flow. By adding Integrated Direct Debit to your payment options, you offer them a different way to pay you that’s convenient for both parties and flexible enough to adjust to their needs.

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Get the full insights into improving your AR collections with Integrated Direct Debit. Watch the entire webinar on-demand.

Learn more about Integrated Direct Debits

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The Human Side of Accounts Receivables Automation

by KC Estoesta | May 3, 2022 | Blog

Accounts Receivable automation is becoming increasingly popular in the finance sector, having the ability to replace manual processes – from invoicing to credit risk management – to save time, prevent errors and reduce costs.

The global AR automation market was valued at 1891 million USD in 2020 and will be worth 3861 million USD by 2026. That is a CAGR of 12%. An increased focus on cash flow improvement and reduced accounting time are the major drivers behind the growth of this market.

Despite all the latest technologies, the human touch is still essential for any financial automation endeavour. Let’s take a closer look at how automation can emphasize the importance of the human factor in accounts receivables.

How does automation uncover the human side of accounts receivables?

Automation offers numerous benefits to the accounting world, from digital payments to accurate projections to valuable data helping organizations make more informed business decisions.

Some feel that the shift from manual bookkeeping to automation will reduce the need for AR staff. However, automation creates clean and accurate books, helping AR staff be more productive and contributing to customer retention.

Implementation and adoption

Businesses use many different accounting tools for bookkeeping, reconciliations, revenue forecasts, etc. However, if you use an automation platform, it will be only as effective as the data you feed into it. The more accurate the data goes into it, the more accurate the output will be. This is precisely where you need the human touch when implementing an AR automation solution for collections, B2B payments, or more.

Without some amount of human intervention, you may not get the full value from automation. An AR team is still needed for better adoption and implementation of these platforms.

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Data-driven decision making matched with human intuition

Business leaders make critical business decisions based on data and counsel from key stakeholders. A key benefit of automation is that it makes it possible to create a dashboard with key metrics available in one place. Decision-makers would only need to look in one place for financials, sales data, and more.

Automation can help consolidate data – such as credit score insights – in an easy-to-understand format. The final decision still rests with the business leaders. Some leaders may use their intuition in making business decisions, but in the current market conditions, all businesses prefer to make data-driven decisions. With an automation platform, good data helps leaders make good decisions.

Technology can work wonderfully for the things they’re created for, but its programming is still limited. When it comes to navigating complex and unexpected events, it is hard to replace genuine financial experience.

A tool to build meaningful customer relationships

Automation is perhaps the most popular when it comes to sending out communications. It is easier to set and forget notifications and reminders through various channels, not to mention cost-effective.

But while automation has created efficiencies in communication, this doesn’t mean that businesses should solely rely on it. When it comes to connecting with customers, the human touch is irreplaceable. It is, therefore, necessary for businesses to look at automation as a complementary tool that can unlock areas of focus in communication.

An AR automation platform, for instance, can tell you which customers may need a more personal approach through recorded data on credit scores and payment behaviour. Finding this information is more accessible, but you still have to call your customers to understand their issues with paying on time. Direct communication is necessary to help you make decisions that can impact your cash flow.

With automation becoming so deeply ingrained in our day-to-day lives, it is refreshing for customers to experience genuine connections with their business partners. By leveraging technology, you can create deeper customer relationships that help your business in the long run.

Conclusion

There’s no question that AR automation can drive business efficiencies. The emergence of advanced technologies like Artificial Intelligence, Machine Learning, and Blockchain is likely to transform further the finance and accounting sector further, like many other industries worldwide. However, to truly get the benefits of these tools, you will need some amount of human touch. Combining the accuracy of automation with human experience is a winning recipe.

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The CFOs Guide to Digital B2B Payments

by KC Estoesta | Apr 28, 2022 | Blog

Digital payments are the key to unlocking optimisations in payment transactions. Digital payments have been the way for many B2C transactions for years but haven’t gained the same prevalence in the B2B space until recently. With the COVID-19 pandemic accelerating e-commerce and increasing customer expectations toward using technology, B2B organisations will inevitably march toward digital payments.

But the march has been slow – the reality is not many companies have adopted B2B payment automation yet. A study published in the Next-Gen Digital Payments Report shows that 51% of the B2B respondents are yet to digitalise their accounts receivables and accounts payables, which means more than half of the respondents do not have a solid payment digitalisation plan.

Here, we discuss what digital B2B payments are, the challenges of B2B payments and how you can start to leverage digital technology to improve your payments process.

Contents

What are Digital B2B Payments?
B2B Payment Methods
1. 2.1 Paper cheques
2. 2.2 Direct Debit
3. 2.3 Wire Transfers
4. 2.4 Credit Cards
B2B Payment Terms
1. 3.1 Instalments
2. 3.2 Milestones
3. 3.3 Net Terms
Challenges of B2B Payments
Benefits of Digital B2B Payments
Steps to digitalise B2B Payments
Transform B2B Payments

What are Digital B2B payments?

Any payment or receipt of money for goods or services made between two businesses using an electronic medium is a digital B2B payment. B2B payments can be a one time or recurring transaction depending on the contractual agreement between the buyer and supplier.

Digital B2B payments include online payment platforms and use technologies such as APIs for integration with other software and automation to streamline workflows. Advanced technologies such as blockchain and artificial intelligence (AI) are also making their way into the B2B space. It won’t be long before we see these technologies further redefine digital payments.

Economies worldwide recognise the importance of digital technology in improving business efficiency and profitability. In Australia, the latest tax break incentive for businesses adapting digital technology – including payment systems – emphasised just how crucial it is in building healthier businesses.

Additionally, giving your B2B clients an automated payment system will ensure you:

Receive your money on time, every time.
Protect your financial details and the safety of your clients.
Have less to worry about defaulters.
Have sufficient funds to ensure you can supply your goods to your buyers.

B2B payment methods

There are different options available for businesses regarding payment receipt methods. Here are the most-commonly used B2B payment methods with their pros and cons.

Paper cheques

Paper cheques are still one of the most popular payment methods today. It is much safer than direct cash transactions, and they are also the easiest to adopt – being used for years as a standard B2B payment method.

Pros:

Cheques are a great way to encourage conservative or old-school companies who haven’t digitised yet, to do business with you.
Since cheques don’t charge convenience fees, they will be inexpensive for your clients.

Cons:

Clearing a payment using cheques is time-consuming.
Start-ups and businesses run by millennials and younger cohorts may not be as familiar or interested in paying you through paper cheques because they’re accustomed to digital payment systems.
Both the paying and receiving companies need always to keep a minimum balance at all times.

Direct Debit

Direct Debit authorises another party to collect payments from an account when they are due by completing a Direct Debit Authority Form. Direct Debits are used for any kind of payment, but it’s most often used as a safe and convenient way to make recurring payments.

Direct Debit used to be the privilege of bigger and more established businesses with many customers, but technology has democratised and simplified the systems involved. Now any business – big or small – can benefit from the Direct Debit payment’s speed, convenience, and security.

Pros:

Automatically collects payments from customers, so payments are never forgotten or delayed.
Direct Debit payments integrated with your accounting system can save you a huge time in reconciliation.
Cost-effective – Direct Debit transactions fees are much cheaper than credit card fees which charge around 3-5% for transactions.

Cons:

Possibility of payments not being collected due to insufficient funds.
There’s a certain level of trust required for customers to authorise direct debits. Customers might need some time to feel comfortable approving suppliers to collect automatic payments.

Wire transfers

A wire transfer is a bank transfer wherein your client has your bank account details, and they make the payment directly from their account to yours.

A wire transfer is different from a Direct Debit in that it is not limited to the currency of a business’ local banking system. Wire transfers are also usually processed within the same day, whereas Direct Debits can take a couple of days.

Pros

Wire transfers help you receive same-day payments.
You can receive wire transfers from both domestic and overseas bank accounts.
Wire transfers are safe, and you can track your receipts using the ID generated for each transaction.
For businesses dealing with international clients, wire transfer payments can easily be converted to your local currency.

Cons

Wire transfers are expensive compared to ACH or Direct Debit due to processing fees, service tax and foreign currency conversion fees (if applicable).
If your client wants a refund, you will be unable to reverse the transaction.
If your payment receipt transaction ID becomes known to someone else, it is easy to manipulate the wire transfer.

Credit cards

Credit cards are a borrowing mechanism that banks give both B2C buyers and B2B companies. Any business using a credit card can borrow money from their bank to make payment to you for the products/services they have purchased from you. But you will always be assured of your payment since the bank pre-pays you on your buyer’s behalf.

Many banks offer credit cards that are specifically designed for business payments. These cards also offer desirable deals that enable users to waive certain fees, earn bonus points, allow business savings and avail of a cash advance facility, amongst other features.

Pros

Easy set-up for suppliers and adaptable to digital payment platforms
Convenient to use for your clients.
You receive payments quickly since your clients borrow money from their bank to pay you.
Banks always share a credit card receipt report with their B2B clients, helping you track who made payments to you and when. You can also identify any clients who have defaulted their payment to you.

Cons

Merchant fees can be expensive. However, there are online payment platforms that will let you surcharge the fees at checkout, or absorb all or part of the fees.

B2B Payment Terms

B2B Payment Terms sets the payment agreement between you as the supplier and your clients. While creating a standard agreement across all of your clients is ideal and is the simplest option, the reality is each of your clients may require different terms depending on their financial situation.

Instalments

Instalment payments allow your customers to choose a plan and pay in portions rather than paying full price up-front. With this agreement, you can receive consistent payment amounts to your business over the time period you’ve agreed upon, thereby reducing your financial risk by not waiting for your client to pay the total amount.

You can sync your instalment payments to a milestone met. We’ll touch upon milestone payments later in this article. But to illustrate, let’s say you receive the first instalment of your entire bill when you deliver the first batch of raw materials to your clients. Then you continue to receive each instalment as subsequent deliveries are made. You can choose even to charge interest on instalments, but that’s not mandatory. An equated monthly instalment (EMI) is an example of a commonly-used B2B instalment scheme.

Instalments are essentially a flexible payment method and can help with customer retention. You can offer your clients the payment technologies mentioned earlier to make each instalment payment.

Milestones

Milestone payments are frequently used in the services industries and help buyers build trust with suppliers. Payment upon delivery is a good example of milestone-based payment. For suppliers, milestones help you retain your end of the deal—you receive the payment only when you make any progress to the service/product you have to deliver.

Net Terms

In B2B transactions, it’s common for suppliers to extend their payment terms to their customers – called Net Terms. Net Terms allow businesses to pay for orders within a certain period after invoicing instead of paying it upfront.

The most common set-up is for businesses to be allowed to pay 30, 60, or 90 days after they receive goods or services, with no interest. From a buyer’s perspective, this can be beneficial to their working capital as they have a chance to resell goods or to use the raw materials for manufacturing and send the goods to distributors before the bill is due. Some suppliers may even offer discounts if the invoice has been paid before they are due.

As net terms are important to buyers, it will do well for suppliers to offer them. Suppliers benefit by providing a more attractive payment scheme, thus improving customer retention, and that is reflected in an improvement in sales and an increase in order volume.

However, Net Terms can also affect the supplier’s cash flow. The supplier must monitor payments via Accounts Receivable automation to ensure that payments are made on time as agreed upon by the two parties.

Challenges of B2B Payments

Choosing a B2B payment option isn’t always easy. Here are a couple of challenges that you need to look out for when evaluating which B2B payment method to offer your customers:

Interoperability between businesses – Check if the payment method is compatible with your client’s preferred method. Or, select two or more payment methods that can support all of your current and future clients.
Security issues – When receiving money, your payment method should offer you and your client security. It’s best to check what security features each method offers before selecting one.
High transaction fees – Depending on the payment method, your transaction fees can range from 2% to 5% per transaction. This may drive away budget-conscious buyers who don’t want to pay these processing fees.
Lack of visibility and efficiency – Some payment methods aren’t transparent, and it can be hard to identify which stage of the transaction your payments are in during processing periods.
The disparity in fund payment days – While some payment methods offer a 24-hour payment cycle, others can take up to 30 days to clear. It can be challenging to keep track of what is owed to you and when you may receive it.

To address the issues surrounding B2B payments, the efficiency and reliability of systems used are essential, and the ability of payment systems to accept various payment methods.

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Benefits of Digital B2B payments

Understanding the nature of B2B payments and the issues that can arise during transactions has paved the way for B2B payment automation. And with digital technology becoming more sophisticated yet accessible, automation takes a step further with digitalisation.

Indeed, Digital B2B payments are increasingly becoming the payment method of choice for many businesses in today’s economic landscape. Here’s why:

B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
Modern B2B payments automation technology has safe authentication measures. From credit card pins to 2FA on mobile/desktop payment management apps, you can safeguard the financial privacy of your client and yourself.
Digital transactions are easy to track, with payment details stored in easy-to-access databases – reducing duplication and ambiguity.
Digital B2B payments are less expensive in the long run. Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.
Automation helps you maintain good relations with all of your stakeholders because of the ease, efficiency, and promptness of digital payments.
Many digital payment systems integrate with AR automation software that can generate detailed reports about your financial health. You can use these reports to gain insights regarding customer payment behaviour to help your collections strategy.

Steps to digitalise B2B Payments

According to new predictions made by FIS in the latest Global Payments report, only 2.1% of payments will be made by cash in Australia by 2024.

There’s no doubt that there is an ongoing shift toward digital payments. With the benefits accompanying it proving to be substantial, now is the right time to start planning how you can digitalise your payments. Here are some tips to help you get started:

Think of your B2B payments experience as a B2C experience. Consider what people may prefer in a payment system and try to make it happen for your B2B needs. Features such as a digital ‘Pay Now’ button on your invoices and SMS reminders can make the payment experience better for your clients.
Identify the nature of your B2B payments system. Figure out what may need changing and how you can improve your payments management system. For instance, you may need payments to automatically write back to your ERP so you don’t have to worry about reconciliation. Also, identify what you wish to retain from the old system if it is good.
Think of which payment methods your clients are most likely to use and try to offer multiple payment methods. Some clients might prefer credit card payments, while some may prefer a direct debit payment. The easier it is for them to send payments, the more likely they will do business with you and pay you on time.
Make available digital offers that provide your clients with the buy-now-pay-later options, helping you improve client loyalty. Consider financing solutions to offer to your clients for them to be able to complete payments.
Implement identity-management protocols and premium security measures to safeguard your payment system users.

Transform B2B Payments with ezyCollect

Contact an accounts receivables automation expert to help customise a digital payment system for your business. Book a free demo of ezyCollect and discover how AR automation and B2B digital payments can work for you.

An Analysis of the 2022-23 Budget for SMEs

by KC Estoesta | Apr 11, 2022 | Blog

As the world shifts towards all things digital, it has become increasingly important for small and medium enterprises (SMEs) to adopt digital technologies. Technology adoption can drive efficiencies to your business operations, which will allow you to provide better value to customers. Besides, the diffusion of new technological innovations and tools in the SME sector can significantly aid economic development and growth.

Many businesses in Australia have already transitioned to this digital space by adopting accounting automation, digital marketing, CRM, and other such tools. These technological tools have fundamentally changed the way these businesses operate.

Incentivising digital transformation further, the Australian Government released the Federal Budget 2022-23 on 29 March 2022. The budget consisted of special provisions for SMEs, including increased tax breaks for those businesses that invest in new technologies and skills. Let’s take a look at these provisions in greater detail.

Federal Budget 2022-23: Tax Incentives for Small Businesses

In releasing the Federal Budget 2022-23, treasurer Josh Frydenberg announced that this year’s budget would contain special tax provisions for small and medium enterprises (SMEs). The Australian Government believes that small businesses are the driving force of the economy, and it wants to help the businesses in what they do best, which is:

Running their business
Growing their business
Creating more jobs for Australians.

SMEs that invest in skills training and digital adoption will be able to benefit from tax relief. This tax relief would allow small businesses to invest in better tools or hire an extra skilled worker.

The Government hopes that the tax breaks will provide Australian businesses with the necessary incentive to adopt digital technologies like B2B digital payments and automation systems, among other advanced tools.

What is Technology Investment Boost?

The Australian Government has allocated $1 billion for Technology Investment Boost, providing small businesses with the necessary encouragement to go digital. SMEs will have the provision to claim 120% of their annual expenditure on technologies and digital systems like cyber-security software, digital payment systems, B2B automation tools, etc. However, there will be a $100,000 annual cap on this expenditure, and only businesses with an annual turnover of $50 million or less will be eligible for it.

Over 3.6 million businesses will be eligible for the Technology Investment Boost. The scheme has come into effect immediately and will continue until 30 June 2023. Any expenditure incurred by qualified businesses before 30 June 2022 can be claimed in the coming tax years.

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What are the other incentives for SMEs?

Skills and Training Boost: As per this scheme, SMEs will be able to claim 120% of their annual expenditure incurred in providing external training to employees. The total tax relief for this scheme will be around $550 million, and businesses with an annual turnover of up to $50 million will be eligible for it. SMEs also need to ensure that the training takes place in Australia by organizations registered in the country to be able to claim the tax relief. The Skills and Training Boost has come into effect immediately and will continue until 30 June 2024.

PAYG uplift rate: The Government is also planning to change the GST instalments and Pay-As-You-Go (PAYG) rate by only 2%, instead of 10%. Through this move, the Government aims to provide cash-flow support of an estimated $1.85 billion to small traders, SMEs, and other businesses using instalment methods. However, the legislation still needs to be passed in Parliament for the changes to take effect.

Economic Support for COVID-19: The Government has also allocated an extra $53.9 million for Business Support Payments.

How will these tax incentives benefit your business?

It is a well-established fact that small businesses are the lifeline of the Australian economy. However, many have struggled to stay afloat with the changing technologies. With the tax incentives provided in this financial year’s budget, your small business will be able to get the support it needs to build a sustainable and resilient infrastructure. Leading economists believe that the initiatives to support SMEs in the new budget are more targeted to their growth. It will allow you to improve your digital capabilities by using new technological innovations like accounts receivable automation tools, cloud subscription services, and more.

It is amply evident that this is the time for the growth of small businesses, and digital transformation makes that possible and lucrative too.

For more information on the 2022-23 Budget, visit budget.gov.au

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Top 10 Accounts Receivable Tips to Get Paid Faster

by KC Estoesta | Mar 23, 2022 | Blog

Accounts Receivable (AR) Managers often have to perform a juggling act regarding their work. From managing teams, building efficient processes and optimising the business’ cash flow – there are a lot of responsibilities that come with the role. All these aspects of the job must work in sync to deliver the business objective of getting paid on time.

In our recently concluded webinar, “Top 10 Tips Every Accounts Receivable Manager Should Know to Get Paid Faster” we invited Susan Jersky, AR Manager at The Better Food Distribution Co., to speak with Arjun (AJ) Singh, co-founder and CEO ezyCollect. In the session, Susan shared her insights on best practices to help AR Managers and teams work efficiently.

Here are the key takeaways from the session.

Top 10 Accounts Receivable tips to get you paid faster

Managing your AR Team

While everyone can implement best practice methodology, and there’s now more good technology available, the key to success in accounts receivable management is still the human factor that orchestrates efficiencies. Based on Susan’s experience, the AR Manager’s responsibility is to create a positive and uplifting environment for her staff.

1. Focus on reward and recognition

Recognising your team’s efforts and hard work is one of the most proven ways to motivate staff. Benchmarking your staff’s salaries according to their skill is one way to do this, but you can use many other incentives and methods.

In the webinar, one of the tools discussed is time, which can come as giving time back to your staff if they completed their tasks for the week earlier than expected or achieved a great goal.

2. Focus on strengths and improve weaknesses

Everyone has a different way of working. Knowing your team’s strengths, weaknesses, and quirks helps minimise conflict and encourage productivity. When you got processes in place and utilise accounts receivable technology to back them, it’s easier to focus on the people to improve their skills and leverage their strengths to ensure an efficient, high-performing team.

3. Lead by example

Leading by example is an effective way of managing people. But it’s not just about setting a good example in doing good work but also encouraging a rich and meaningful life. Achieving work-life balance is crucial to happy and healthy individuals and lays the groundwork for productive teams.

Tips for Enhanced Productivity

Many consider Accounts Receivable management as repetitive work of sending invoices and chasing payments. However, as technology like accounts receivable automation becomes more prevalent, the role of the AR Manager and staff is also changing. Here are just a few tips to help your team focus on constant improvement and how technology can provide you with accurate information to achieve that.

4. Customise client communications

Understanding clients becomes crucial as accounts receivable teams move towards a more advisory role. Customising your communication is vital to help you gain a deeper understanding of your client’s unique needs. While, at the surface, this may seem time-consuming, leveraging technology can enable your team to create customised communications much more efficiently.

5. Consistent messages to clients

Aside from customising communications, your message must be consistent to ensure understanding and avoid any future disputes between you and your clients. Online credit application forms can be a great way to ensure this right from the beginning. When you’ve got the whole process in place from onboarding, you can start instilling the information and the terms and conditions by which you wish to conduct business with your customers. This message is constantly reinforced to any payment reminders, ensuring that there are no surprises for customers in how you do business.

6. The entire company focus on data integrity and process

Keeping data up-to-date and ensuring its integrity should be a key focus in accounts receivable management. The correct data can enhance communication with clients and produce better results. However, it’s not only the AR team that needs to be concerned about client information and data. It’s the whole company – from sales to admin to management.

An efficient client onboarding system can help eliminate data entry errors and check for information accuracy. This can significantly save the time and effort it takes for your team to rectify incorrect information and prevent future disputes with your clients.

Get more tips on improving your AR team's productivity

Tips for Better Cash Flow

The key to a healthy cash flow starts with building good customer relationships. Good communication and empathising with your clients give you a clearer picture of issues and help you provide a feasible solution that helps them improve their payment behaviour.

7. Provide multiple payment options

Getting paid accurately and on time is your goal in accounts receivable, so it’s essential to make this step easy. When you provide multiple ways for clients to pay their invoices, you also give them the flexibility to pay you in the way that they can.

On top of this, leveraging 24/7 online payment platforms also make payment transactions more convenient for your customers. Providing this option to pay whenever they want removes another hindrance in receiving payments on time. With a payment platform, your clients also can download their invoices and statements, saving your team a lot of time from answering invoice copy requests.

8. Client onboarding and risk mitigation

Risk management is one of the most critical steps to improving cash flow. According to Susan, she has seen a decrease in their defaults by adapting good risk management practices. With the help of digital credit applications and risk management tools, you can protect your business from bad debts and minimise future problems in your accounts receivable collections.

Assessing and monitoring credit risk also allows you to set up credit terms based on reliable information, giving you that right balance to maintain good client relationships whilst protecting your business from unnecessary risks. An excellent example of this is if a customer has slightly higher risk levels, you can provide a direct debit option. Providing this alternative allows you to manage your risk without rejecting a customer outright.

9. No charge CC if possible

Credit card payments are just one of the many options your customers can choose from, but credit card fees often scare businesses away from offering this payment method. While you can always charge your customers for the fees, you can also consider absorbing the fees. In the webinar, Susan shared her perspective on credit card payments.

“The 1% that we are paying on a credit card is pretty much nothing compared to the collection efforts and the late payments that we receive,” said Susan adding that this is especially true for their smaller customers who often don’t pay on time.

With more and more customers looking into credit cards to make their payments, exploring the option of not charging credit card fees can be beneficial when measured against other costs involved in the AR collection process.

10. Communicate with problematic, late paying clients

While automation can provide you with the speed to collect payments, the human touch is still important to effectively get paid – especially from delinquent customers. A considerable part of automation in communications is to sort out customers that need more attention. Most customers would want to maintain a good relationship with suppliers, but certain situations might’ve happened that affected their ability to pay on time.

Clients appreciate it when you talk to them personally and discuss the problem. Having that direct information from your clients gives you more control over the situation instead of relentlessly chasing them without any concrete plan to solve the problem.

Watch the webinar

Get the full insights into improving your accounts receivables collections.

Watch the entire webinar on-demand.

Learn more about AR automation

See how AR automation can transform your business cash flow

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