6 Reasons to Use Payment Collection Software in Your B2B Business
Oct 5, 2022
Payments are crucial for B2B businesses: it’s what brings in cash, the lifeblood of any business.
However, payments can get overwhelming. You have to handle the payment itself, but also track them efficiently, make sure they happen on time, and deal with recording your transactions.
If you don’t have the right processes and tools set up, it can get out of hand (that’s especially true if you’re growing fast.)
That’s where payment collection software comes in. Designed to help you streamline your payment processes, they bring many benefits to your business.
How does payment collection software work?
What are the reasons all B2B businesses should implement payment collection software?
Keep reading to find out!
Upflow is a payment and debt collection software that helps your business get paid faster. We help you streamline your collections management, from invoice tracking to financial reporting.
Optimize Your Collection Management.
Debt collection software allows you to automate all or a part of your receivable workflow.
You can choose to send automated payment reminders, set up internal notifications for your team to follow up on an outstanding invoice, or even track your relevant A/R metrics on your dashboard. All from one software!
Payment collection software is here to help you manage the whole collections process more efficiently than your manual processes, which are time-consuming and error-prone.
Since your payment-related tasks are automated, they all get done on time. That in itself already reduces your invoice-to-cash timeline. It also limits the risk of bad debts occurring.
Using a debt collection platform also encourages you to map out your processes to make them more efficient. That reduces the overall time spent on dealing with payment collection.
Automate Your Payment Collection to Scale.
Because your debt collection process is clear and efficient, your company is able to handle an influx of incoming invoices effortlessly.
Scaling is virtually painless because it doesn’t put a strain on your financial or accounting teams. All the heavy lifting is done by the payment collection software and the workflows you set up.
During growth spurts, you are able to receive payments efficiently. That guarantees good cash flow management during those critical moments. You know you’ll be able to pay your employees and providers on time, no matter what.
Implementing a debt collection platform also sends a message that payment collection is a priority: to your clients and internally.
By sending timely follow-ups, you show your customers that you’re on top of your accounts receivable management and that you mean business.
It’s also beneficial internally, especially to your sales team. It puts an emphasis on cash collection - as opposed to signing new clients, which doesn't immediately translate into money on your bank account.
Using debt collection software helps you streamline your processes simply, so they can support your growth when it happens.
Debt Collection Software as Alternatives to Collection Agencies.
Payment collection software is here to help you get paid faster. Being proactive in your accounts receivable management means:
Dealing with Your Debts (and Debtors) Efficiently.
A good collection management system assists you in collecting overdue invoices that might be piling up. At a glance, you can see which payments are outstanding and how long ago their payment was expected.
From there, you can decide to take action by contacting your debtor by email or phone call - which happens seamlessly because all their information is available on your software, ready for you to get dialing.
On Upflow, you can even send them a formal letter, directly from the debt collection platform.
You can choose from our different template email reminders, or leave an internal note for a team member to follow up on in a few days. You can also set up a workflow to know when to escalate the matter to the CFO when it becomes necessary. Need help writing the perfect email reminders? Check out our free collection email templates!
All of these actions make for a powerful process for when your debtors aren't paying - and prove you don’t need a debt collector to get paid!
Prevent Bad Debt From Happening.
When you have outstanding invoices, you are essentially extending a free credit to your customers, who therefore become your borrower.
After a while, these invoices can turn into bad debt, meaning they’ll never get paid. More than a loss to your business, they are an operational cost and should be minimized.
In order to not put your business at risk - and to have optimal cash flow, it’s essential to quickly take action. That’s what a debt collection system is for.
A debt collection system provides the right workflows and tools to help with your debt collection. It helps you be proactive with its automated workflows and payment processes.
For instance, you can set up an email sequence that goes towards your regularly late payers, or to the clients who have more than 60 days overdue invoice.
More than payment processing, debt collection software will help better manage your accounts receivable. It contributes to reducing the invoices that could turn into bad debt but also frees up your time to focus on the accounts that need it the most. In the end, it improves your cash flow management.
Reduce Churn and Late Payment Rates.
A huge benefit to using payment collection software is the payment reminders functionality. It helps with reducing bad debt (like we saw above) by making sure you are paid on time. It also reduces your churn rate.
Using Segmentation to Reduce Late Payment.
With the best debt collection software, you can go a step further by setting up different payment reminder workflows.
You can have different sequences for:
New clients: to remind them of your payment instruction.
Corporate accounts: to check if their accounting department received your invoice.
Small business: to offer payment plans if they have trouble paying your invoices.
Regular late payers: to send payment reminders before the due date
90-days overdue: to escalate the matter in a polite but assertive way.
For clients that require more attention (very important or very late ones), you can also send them a 100% personalized email. The great thing is you get to choose the degree of automation you need for each segment of your client base.
The idea behind payment reminder automation is to make sure all your clients get the correct information, at the right time. That includes their invoice reference and amount, but also the payment instructions they need, or how overdue they are.
Automate Payment Reminders to Reduce Churn Rate.
Your churn rate is the rate at which your customers are leaving you. It’s one of the 9 key financial metrics to track in your business.
You have two types of churn rates:
Voluntary: when your customer makes the conscious decision to stop working with you.
Involuntary: when your customer doesn’t make a clear decision, but it happens anyway.
Involuntary churn often happens because of repeated payment failures, like if their credit card expired.
Being able to notice when involuntary churn happens and be proactive about it can be a game changer for your cash flow.
Payment collection software can help you set up an email workflow for this precise situation, so your client knows it happened and can do something about it quickly. They’ll also appreciate your following through, which fosters a good customer relationship.
Better Payment Experience.
Payment collection software is optimized for payments. Concretely, it means that everything is designed and thought-out to make payments easier. That leads to you getting paid faster.
One of the ways it achieves this is by offering various payment options to your clients. With Upflow for instance, your customer can pay via credit card, debit card, or wire transfer among many options.
You can set up an email workflow for each type of payment, with the relevant payment instructions (direct link to pay with a credit card, instructions for ACH, etc.). If you have a subscription-based business, offering them to pay via credit card means recurring income, (almost) effortlessly.
More payment options mean being able to work with different clients from different countries, too. Make sure your software solution supports different currencies to make the most of this!
A great payment experience also involves using a payment processing interface that’s user-friendly and easy to navigate.
All in all: the easier it is for them to pay you, the faster they will. It’s the golden rule of good debt collection management, which leads to more cash flow.
Access Real-Time Analytics.
Another advantage of using payment collection software is the visibility it gives you. At a glance, you can see your outstanding invoices and some of the important accounts receivables metrics of your business, such as:
Your Days Sales Outstanding (DSO)
Your Collection Effectiveness Index (CEI)
Your Aging Report,
Your Billing Cohort.
KPIs are calculated automatically for you, in real-time.
Your receivable management solution should work in sync with the other software solutions in your tech stack. It means your debt-collecting software is connected natively or via API with your accounting software, billing tool, and any other ERP you want (like your CRM).
Because they all work together, you get better visibility over your business, while trusting your data is accurate.
Debt collector software like Upflow also uses machine learning to help with your forecast. You can for example know in advance how much cash will come into your business.
Better data allows you to make better and faster decisions for your business. If your DSO is too high, you can decide to review your credit management terms for instance.
Payment collection software empowers you to make informed decisions for your company by:
Knowing what’s really happening in your business,
Taking action directly from the software solution.
You can focus your collection efforts where it matters the most, measure your progress and course-correct as needed - all from your receivable management software! Need help calculating your main KPIs? Check our free AR metric spreadsheet and our DSO cheatsheet.
The Best Collection Software? The One that Fits Your Needs!
You’ll find benefits to using collection software regardless of the nature and stage of your business.
However, there are a lot of options on the market for B2B payment collection software. It's important to pay attention to your specific needs now, and in the future, to choose one that will seamlessly integrate within your company system.
Take a moment to map out your actual debt collection process to see where automation will help you. Consider both your current and future needs (a 2 years vision is optimal) when making a decision.
Using a debt collection solution like Upflow from the start of your business will improve your efficiency and reduce your late payments. In turn, it helps foster your growth while you scale.
Upflow helps you do all the tasks highlighted in this article, such as:
Payment reminders: Schedule automated payment reminders for your clients to reduce churn rate and get paid faster.
Payment options: Send direct payment links to pay online via credit and debit card (ideal for subscription-based businesses) or instructions to make a wire transfer.
Real-Time Analytics: Access your important A/R metric and measure your progress over time
Collaboration: Involve an unlimited number of collaborators - like people from your accounting and sales department to help follow through
Customer experience: Deliver the information your clients need, when they need it.
More than a list of features, Upflow is here to make your debt collection more efficient. Since your processes are streamlined and your repetitive tasks automated, it reduces the costs of your debt collection efforts.
That all leads to a high ROI both on your software and your financial team. You also get more time to focus on what really matters: your growth.
Payment collection software is here to optimize your collection management. You can decide to automate part or all of your processes. Automation is more efficient and less error-prone than manual collection processes.
With debt collection software, you can send automated payment reminders, which helps your late payments and churn rates.
Because your receivables processes are scalable, your team can easily handle any influx of new payments. It also ensures you have the cash flow necessary to support your growth.
Payment collection software also helps deal with debt more efficiently. Automating your most repetitive tasks frees up your time, so you can focus on the accounts that need it the most. It also assists you in being proactive about your overdue invoices in the first place.
Collections platforms like Upflow offer in-depth segmentation: you can create different workflows depending on different client subgroups or scenarios.
Making payment easier for your clients is key to getting paid faster. Debt collection software provides a user-friendly experience, as well as several options to pay you.
Your payment collection software integrates with your other tools like your accounting software or billing platform, creating a connected collection system.
Real-time analytics that comes from your tech stack allows you to measure your collection effort over time and prioritize your energy.