Oracle NetSuite ERP has multiple benefits and many useful addons that can make life much easier in a growing business. NetSuite SuiteBilling, the platform’s billing solution is among them, especially if you have challenges when your customers pay your bills.
Why late payments can be a major issue for your business?
Unpaid Invoices Are Killing Growing Businesses
U.S. Bank conducted a research study to determine why 82% of small businesses ultimately fail. They found that it all boiled down to problems with cash flow.
What does this tell us? These failed businesses had apparently achieved success in terms of a product/market fit, having grown and been actively servicing customers and clients. But then they hit a brick after running out of cash.
They couldn’t pay their bills or even meet payroll, so they had no choice but to close their doors…
For any business to survive, more importantly grow, it must have sufficient level of cash on hand available to cover operational inputs like overhead. Salaries must be paid, along with rent, utilities, supplies, materials, and many other expenses.
Businesses for the most part need to meet payroll, buy materials, and cover overhead prior to sending out invoices for the products and/or services they are selling. When these customer invoices are paid late it causes liquidity problems for any businesses, putting them in financial jeopardy when the business itself is really not to blame.
But in tough times, many small businesses run on very thin cash reserves. Many even rely on bank loans or other means of padding their finances, which just also adds to all their other costs.
Cash Management In Small vs Large Businesses
Large businesses usually have the resources to manage customer credit with systems set up to ensure that customers and clients pay their invoices in full and on time.
Small businesses typically do not have this luxury and instead find themselves having to chase every unpaid invoice. This ends up taking a lot of time away from more productive tasks, like running or even growing the business.
That is why it is important that advanced systems like NetSuite SuiteBilling can now be affordable solutions for small businesses as well.
Since each customer is so important to small business owners, they are often afraid to risk the relationship by hounding late-paying customers. If you are a small business owner you know how awkward this can be. But the matter of fact is, small businesses are the ones that can least afford a bunch of late-paying customers/clients, however, they are still the ones that typically have this problem.
Sadly, more often than not it is a large business that habitually drags out the process of paying their small suppliers.
A small business who finds itself starved for cash can try staying afloat by resorting to extreme measures to stay liquid. This may involve delaying the purchase or rental of much needed new equipment and/or not hiring new employees, impeding growth.
Owners have been known to take even very risky steps to bring in more cash, like taking out a second mortgage on their homes. An alternative might be to cut employee hours, but that too is risky because their most valuable employees may leave after having their hours cut. They could also consider paying their own bills late, which risks their own credit rating, not to mention simply accruing late payment fees.
When a business has an unsustainable number of unpaid invoices, no matter how well-run or profitable it might be, it could ultimately be forced out of business.
But once you know the reasons why your customers are not paying you on time, you can take the necessary steps to change this pattern and get fully paid.
Let’s check them below, so you can implement countermeasures immediately.
There are a number of reasons why certain customers may have a habit of taking forever to pay your invoices and we are here to help you resolve this matter.
Below I have listed the five most common reasons I met in my practice – some of them may give you an “Aha!” moment:
Top Reasons Why Customers Delay Paying Their Invoices
1. Missing Invoices
Missing invoices can be caused by an incorrect address, either the street address or email address. But what’s more likely is that you sent your bill to the wrong department or staff member. Even though you have been coordinating with a particular department or individual about the job you were hired to do, it doesn’t mean that they are the ones paying the bills.
It is up to you to find out where to send your invoices and to know how your customer’s approval process works. This is essential to getting your invoices paid on time.
You must find out upfront if your customer has a certain email address for Accounts Payable, and if so you need to use that, and make it available for every relevant team in your accounting or ERP system. A platform like Oracle NetSuite ERP can make such important information accessible for all relevant employees. If your customer asks that several people be sent copies of the invoice, then copy them all on every invoice.
If possible, do not send invoices through the post because paper records are much more difficult to keep track of.
2. Incorrect or Incomplete Information
Another common reason why invoices don’t get paid on time is that the information on the invoice is either incorrect, incomplete, or both.
The Accounts Payable department in many businesses are quite busy, so trying to make sense of an incorrect or incomplete invoice often takes too much time for them. So, they rather just leave the issue unsorted.
For example, if you have forgotten to include the Purchase Order (PO) number, or the information on your invoice conflicts with your customer’s records, that invoice will probably sit around until someone calls you about the discrepancy. Or you call them demanding the payment.
If Accounts Payable automation is combined with access to a centralised data at your customer’s side, another problem, the duplicate data entry can be solved. That can certainly eliminate the issue of delayed payments.
But overall, when you improve the accuracy of the data you are entering into your invoices, you ensure that these crucial documents have all the required information before they are sent out.
3. Billing Disputes
When you have incorrect information on an invoice, like wrong price, or products or services that are not actually purchased, it causes a lot of confusion. These types of billing errors are far more serious than poor customer service.
They directly impact cash flow in two ways:
- The first is that customers will hold off paying a bill until any errors are corrected, which slows down your cash flow in the short-term.
- The second is that if your billing department routinely sends out incorrect invoices, you will churn through your customers, which has long-term consequences indeed.
By implementing automated invoicing, like Oracle NetSuite ERP ‘s SuiteBilling, you can avoid such (mainly human) mistakes because the system ensures only the correct pricing will be written on every order and every invoice, and customers will only be charged for the items they actually ordered and were in effect delivered to them.
If you bill your customers in periodic increments, you want to send your invoices out on a predetermined schedule or upon the completion of specific tasks. It isn’t easy keeping track of all the details in such arrangements, especially if you have invoicing details spelled out on a standalone spreadsheet. When a mistake is made and a customer is billed too early before a specific milestone has been met, this will cause you issues for sure.
By implementing a smart ERP system that allows your Accounts Receivable personnel to create automated invoicing schedules not only makes your own processes easier, but it also ensures that you are billing your customers correctly.
4. Failing to Credit Check Customers
Doing a credit check on your customers is an essential step in keeping your business free of uncollectible bad debt.
There are plenty of customers or clients who make a great first impression, but if you fail to check their credit, unfortunately you are risking the financial health of your business. In a fast-growing business the last thing you want is to end up with unpaid invoices with no viable way of collecting the money you are owed.
Doing a credit check on every new customer or client must simply be part of being a responsible business leader. That being the case, I also advise you to also do periodic credit checks on existing customers and clients. Routine credit checks can bring to your attention any changes in how customers are behaving, like taking on increasing amounts of debt or constantly missing payment deadlines.
Worth mention here that smart systems like Oracle NetSuite ERP can automatically flag if a customer reached their credit limits and may block to place any further sales orders.
In addition, you should create a policy stating the buyer’s “Terms & Conditions” for your business. This should spell out how to place orders, when customers will be invoiced, and when payments are due. Your Terms & Conditions should also cover the consequences for customers if they fail to pay according to these terms.
You also need to implement a solid “Credit Control Policy” to ensure that your invoices are paid in full and on time. This written policy should regulate, for example, which staff member or department is responsible for following up and collecting on unpaid invoices, what actions to take if these invoices continue to remain unpaid, and how long they must continue chasing overdue payments.
5. Being Too Passive
Many small businesses are a bit too relaxed when it comes to collecting on unpaid invoices. Which only encourages debtors to take their time…
Let’s face it: If you have created a culture of being “okay” with being paid “later”, your debtors will put your invoices at the bottom of the pile…
As a business owner, or senior leader, you must be clear on what your company’s payment terms are and make sure that your customers also know your policies and what it takes to ensure a mutually positive relationship.
To be proactive, typically you can send a reminder to any late-paying customers via email and often that is just enough to get them to quickly send in their payment.
It is also not a bad idea to routinely send to your customers pre-invoice reminders. This alerts them that a bill is coming soon while making sure that everything is in order for them to pay the invoice as soon as it becomes due.
Even though sending out automated reminders via email certainly helps, there are always going to be situations in which you have no other choice but to call a customer on the phone, or visit face-to-face. Often these really are the only way to go when you have a customer who habitually pays late.
I can understand how nerve wracking this can be and why you would want to procrastinate on these tasks. But I cannot emphasise enough how important it is to have a conversation with these types of customers. It is amazing how well this can work in getting them to pay you on time.
How NetSuite SuiteBilling Solves These Issues
If you don’t issue and manage invoices to your customers efficiently, your business could lose substantial amounts of cash flow. Once that happens, you will likely have trouble paying your own business expenses and debts.
That could put your business in great turmoil.
You need a viable solution for invoicing your clients and getting paid faster, so you will sustain your company’s weekly and/or monthly cash flow. For a fast-growing business, Oracle NetSuite SuiteBilling can be the best solution. Why?
SuiteBilling is a professional automated billing software program that will increase the speed, quality, and accuracy of your company’s invoicing to clients. Fast-growing businesses would not find a better billing software program on the market.
It is rated the number one billing solution in the market because SuiteBilling is an efficient cloud-based billing platform that simplifies payment transactions both for businesses and consumers. Companies can easily issue even complex invoices with it, while clients can easily receive and pay the invoices. It works out wonderfully for both parties.
Below are the most important ways your business can benefit from using NetSuite SuiteBilling:
NetSuite SuiteBilling has all kinds of helpful features and functions to streamline your invoicing and business cash flow, such as automated invoicing and numerous currency options for payments. So if you want to do online business with someone overseas, NetSuite SuiteBilling makes it easy to accept their currency and convert it into your own.
Automated Subscription Invoicing
Does your business sell recurring services? If so, you can utilise the subscription system built into the NetSuite SuiteBilling software to collect subscription payments from your customers regularly. To improve collection, automated invoices and reminders will be sent to your customers at the appropriate times you schedule.
Manual billing can often lead to human errors. Aside from your business suffering financial consequences from billing inaccuracies, your customers might not trust your company if they struggle from your invoicing issues.
Because of its automation and integrated functionality within NetSuite ERP, SuiteBilling makes it easy to create and submit accurate invoices and process refunds quickly. As a result, your customers will position your company as highly professional.
NetSuite SuiteBilling creates invoices with complete details about the transactions on them. That way, customers will quickly understand why they receive your invoices because the products or services will be listed in full details on them.
Your customers would not have any confusion about why they are getting your invoices.
Efficient Billing Management
NetSuite SuiteBilling efficiently manages all the invoices and billing statements you send to customers, whether they’re outstanding or paid. It even streamlines for you to generate billing reports at the end of a particular billing cycle you set.
For a fast-growing company with an increased number of customers, it is most important that the whole invoicing process can be automated, so you don’t have to send that many individual invoices manually. NetSuite SuiteBilling also lets you add numerous options to your automated billing, such as high-volume price discounts, special promotional deals, and fixed customer rates.
If you want to add more than one pricing model, you can do that too. The software will minimise errors when charging different price rates to different sets of customers. And if you need to change the details of a subscription or combine several outstanding charges on one invoice, the software makes it easy to do so.
Automated renewal invoices are another beneficial feature of NetSuite SuiteBilling because they help ensure you retain your existing customers, so they don’t go to one of your competitors.
Wrapping It Up
NetSuite SuiteBilling automates all the repetitive billing tasks of your company, such as sending invoices, collecting payments, tracking invoices, generating billing reports, etc. With such accurate and efficient billing software at your disposal, you can save time and increase your company’s cash flow simultaneously.
In addition, you can access any customer account information and invoicing details from any computer with just an internet connection because SuiteBilling is built into Oracle NetSuite Cloud ERP, a cloud-based system to store data securely. So, if your company’s computer were to suffer a hard drive crash, the billing details of your customers would not be affected because they are stored on NetSuite ERP cloud server.