Control Cash Flow

Five Simple steps to Automate Collections

Five Simple steps to Automate Collections

A fast, efficient collections process is paramount to building a solid foundation for your business. The latest generation of business banking and payments technologies offers forward-thinking businesses the unprecedented ability to collect payments in less time, with less effort and without a great deal of your attention.
Automating collections makes sense for a variety of reasons, including:

  • A high percentage of cash could be tied up in receivables and customer finance
  • It can save time and resources when billing, collecting, depositing, and tracking receivables
  • Automating the collection process has the potential to shrink your cash flow cycle by days or weeks

Cash-conscious businesses are capitalizing on technology advances related to collections. They are changing customer payment preferences to shrink their collection cycle by days and eliminate hours of labor from the process. With the help of these technologies and your business bank, you can take the following practical steps to easily automate the collections process.

1. Bill and collect electronically.

The first step in streamlining your cash-conversion cycle is to start billing and collecting electronically. You can generate and e-mail PDF invoices from accounting or word-processing software. You also should take advantage of online banking to accept preauthorized ACH payments. This capability allows you to set up automatic payments from regular customers and speed collections. Payments are less expensive than wire transfers and typically clear faster than checks. Customers simply fill out a form and provide a few account details.

2. Accept card payments.

An easy, immediate step is to offer customers the option to pay by credit card. Businesses can accept card payments over the phone, online or in person with a merchant services account. Cards help you collect faster, grow sales and save time billing, collecting and depositing. Further benefits of accepting cards include:

  • Cards create more selling opportunities. Cards make it easier to collect from customers over the phone during sales conversations. Accepting cards can transform your website from a messaging and information source to an active sales channel. Stored-value cards help provide loyalty cards and gift cards as a customer convenience and reward.
  • Cards speed collections. Opening a merchant services account allows faster access to cash from sales made on credit, debit and gift cards. Cash received from card payments posts to your bank account within days, not weeks.
    Cards also help manage slow payers or late receivables, because they allow you to accept cards for payment in collection calls.
  • Lastly, cards save time. You can track card-sales transactions and deposits online anytime or get automated alerts when a payment or transaction has occurred. Automation eliminates paperwork and effort associated with depositing and tracking revenues.

3. Automate how you process paper checks.

Checks remain a popular form of payment for small businesses. Consumers still use checks in a quarter of consumer payments1. Unfortunately, paper checks take time to clear, they can get lost and stolen, and it takes time and energy to deposit and reconcile check payments. Automating the payment process for paper checks brings the following benefits:

  • Electronic-checks technology allows you to scan paper checks and submit them for deposit as electronic transactions, which automates how you process paper checks by depositing and tracking them online. Today, leading banks offer affordable, simple-to-use remote check-capture solutions, and many allow you to make deposits after banking hours and still get credit that day.
  • An effective merchant services solution will allow you to scan, collect, reconcile and report paper checks received at the retail point of purchase. Most providers offer check verification to identify checks likely to be rejected due to insufficient funds.
  • If your business has many locations and you receive checks as payment, consider a lock-box service. This service improves the collection of receivables by minimizing mail float, processing time and clearing float.

4. Consolidate electronic deposit transactions.

Consolidate business transactions into an online banking solution, so you can see all of your accounts at once, and check balances 24/7 with online banking. A solid online banking solution allows you to track your entire financial picture on the Web, including many different business entities, as well as personal and business accounts. Your checking account also can help you track many different payment types, including checks, online bill payments and card payments.

If you accept credit and debit cards, make sure your merchant services account is linked to your checking account.

This makes it easier to track more receivables and collections. Paying with bank debit and credit cards makes it easier to track your payables because, in many cases, you can view your credit-card transactions in your online bank account.

5. Stop paying bills manually.

Finally, paying employees and suppliers electronically or by card is more convenient and gives you better expense information, which can help you generate invoices. Many online banking and payroll services allow exporting expense information into QuickBooks® or a spreadsheet software program.

This software makes it easier to allocate costs to specific products and allows employees to add pass-through expenses, such as out-of-pocket travel, more easily. Some payroll solutions also allow you to export time sheets and payroll expense information directly into QuickBooks or a spreadsheet. Importing more of your expenses into a spreadsheet or accounting software makes it easier for your bookkeeper or accountant to understand your costs and allocate these expenses to specific projects, products or customer accounts, resulting in more accurate bills."

1 2010 Federal Reserve Payments Study, December 2010.

About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.

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