April 10, 2021
Payment automation is a tool that you are much more familiar with that you might think-- Do you use a media platform that automatically charges you each month for its service? Then you already know how convenient it is to not have to worry about writing a check or manually entering your information and payment method each month; and just like customers, the businesses on the receiving end of automated payments experience huge benefits in terms of reduction of monetary and time related costs.
Despite the notion that payment automation is a strictly big-business tool (or only for SaaS companies), payment automation technology nowadays has advanced to allow businesses of all sizes and types (including small businesses, B2B enterprises, and even product companies) to leverage payment automation in order to improve cash flow and quote to cash (Q2C) cycles, as well as reduce Accounts Receivable resources and lower DSO (Days Sales Outstanding).
Early on, only companies with simple recurring subscriptions (think Netflix) could fully automate payments. True, there are some businesses, products and services where payment automation doesn't work. However, that list of "un-automatable" cases has been shrinking dramatically in recent years. Here are a few examples:
Usage based billing: It used to be very difficult to automatically charge customers if what they were paying for changed based on usage. Now, you can implement a "Metered" billing solution. This allows you to connect your internal system that's tracking usage, with a metered billing service via API, it will then calculate billing based on usage, generate an invoices, and automatically collect payment.
Stuck with your invoicing system?: Invoices being created out of another system that doesn't offer automatic payments used to be a huge roadblock. Tools like Armatic have integrations with most accounting and ERP systems (like Quickbooks, Xero and Sage-Intacct) to solve that problem. Armatic can picked up these invoices automatically, and process payments in accordance with the desired automatic payment settings/schedule.
Credit Card costs are too high: This is an easy one, solutions like Armatic allow you to automatically process payments with ACH (or SEPA in the UK) payments to avoid credit card fees entirely. You can also make both credit card and ACH available but automatically pass the credit card fees onto your customers. This gives you all the convenience of automatic payments without paying for someone else's airline miles.
Irregular or non-recurring invoices: Often, even one-time customers/transactions can benefit from payment automation as well. It's common for customers to ask for longer payment terms or to spread the payment out over a period of time, requesting the payment be automatically processed is typically seen as a good compromise. You can simply offer the ability to charge an invoice on it's due date or automatically, based on a prearranged payment schedule.
1. Saves (a lot of ) Money and Time
Standard invoicing costs such as paper, postage, ink or the impact on your AR team may seem relatively small or just chalked up as the cost of doing business. However, automating even a portion of your business's payments could save thousands on upfront costs and the manual labor needed to enter information, monitor accounts, and send out invoices and reminder messages. Finding platforms that allow you to bill and collect payments automatically, helps address two of the biggest bottlenecks in business-lack of resources and cash. The faster this process is completed, the faster you will receive payment for your services; and the more simple and efficient your cash flow process becomes.
2. Better Forecasting
Past behavior is often the best indicator of future behavior. Having a system that keeps records and reports of MRR (monthly recurring revenue) helps easily project cash flow. Additionally, having all or some accounts on automatic payments vs. net billing terms helps companies better manage cash flow. Payment automation also helps identify which and how many customers might need additional attention, allowing your team to put in place the necessary precautions or changes to help shorten the time it takes to get you paid. Knowing which client's are not on automatic payments allows you to take the necessary precautions; such as sending reminders in advance about the upcoming payment date and having more resources available to call the customer when a payment is missed. Being in control and understanding your customers can help you better cater to their needs, and can keep you ahead of game.
As mentioned before, nothing is more attractive in a feature than convenience. The easier it is for you customers to pay, the more likely they will pay; and on time too! Automating payment systems makes it so your customers don't have to go through the hassle of manually entering their credit cards or account numbers every month; so they don't even have to think about it. Now their services go uninterrupted, and so do your profits. Nothing is nicer than being able to rely on a steady intake of cash that you know will come at a pre-determined date every month. On the programming side, certain kinds of payment automation inclusive software like Armatic includes the added convenience of being able to easily edit subscriptions schedules and information (something that other payment automation programs don't offer), which when done manually can become confusing or contain errors. Keeping it simple is what's best for you and your clients.
4. Eliminates the Risk Of Human Error
Companies that do all of their invoicing and payment collecting manually run a huge risk of committing errors. Errors such as sending the incorrect invoices to clients, sending invoices that contain erroneous charges, or overlooking invoices that haven't been paid slow down the time it takes for you to receive your payment, and can cost you the trouble of some very unhappy customers. Automated payment programs like Armatic allow you to prepare invoice charges for a specific date every month (or other time allotted) at the time the contract is created, and will send an email or text message automatically reminding your clients of these charges as well as the actual invoice charges to accounts whenever you'd like. So instead of risking a mistake every time you need to send or remind a client of an invoice, you can simply set up the invoice outline one time, and the program will take care of the rest. Some programs will even notify you when invoices payments fail, and will allow you to set up your rules of action automatically at the time of creation. Precision and accuracy are great indicators for your customers to look to in order to evaluate the trustworthiness and professionalism of your company.
5. Simplified Reconciliation
Come tax time, those who engage in manual invoice charging are pulling out boxes of receipts and records, or filling out spreadsheets from their online data storage about all the money exchanged between them and their clients. Even businesses that implement accounting services such as QuickBooks have a difficult time integrating subscriptions and recurring payments, making things even harder for those who use subscription based systems to collect and report information for their taxes. Those with systems like Armatic get to enjoy the luxury of having already written reports and records of all expenses and profits (including subscriptions); all of which can be easily exported into QuickBooks for you, or directly to the tax preparation website of your choice. Why make tax time even more of a drag than it already is?
Finally, automated payments give you and your clients easy access to past payments, and information on current or past invoices and subscriptions online. Having information readily available to you without having to dig through accounting spreadsheets or boxes of physical records can simplify answering any questions clients might have, or can help you easily locate client profiles to upgrade subscriptions, or add one time charges quickly and easily. Giving customers access to their own payment history and schedule will make them feel included in the process, as well as more in control and confident in where there are sending their money every month.
So how do you get started?
Curious about how payment automation can work for you? Check out Armatic. Armatic provides flexible payment automation solution that can fit any business, plus offers risk free trials and hands-on assistance to ensure their product is easy to use, and applicable to you and your customer's needs. Because the most valuable thing you can do for your business, is to invest in it's future.
BY Casey Griswold
BY Alyssa LeBlanc
BY Max Golovnia
Alyssa is handling content development and content planning for Armatic and works closely with our product and development team.