A CFO’s Guide to Reducing Expenses in Subscription Payment Collection

A CFO’s Guide to Reducing Expenses in Subscription Payment Collection

Written by Work365Apps, In Technology, Published On
February 10, 2024

Your Greatest Issue

Being a CFO is challenging. The state of your company’s finances is under your control. That implies you’re balancing, adhering to rules and laws, increasing sales and profitability, and staying within your budget.

Notwithstanding these important duties, every CFO in the IT services industry is struck by one thing.

Receiving payments

It drains you of time and energy to the point that your profit margins are severely damaged.

The purpose of this post is to walk you through the reasons for high overhead and payment chasing. We’ll also go over ways to reduce expenses and stop chasing after payments so you can finally focus on what you should be free to do, which is to secure the company’s financial future.

Following Payments

IT services are particularly vulnerable to chase payments since their subscription models depend heavily on timely payments.

However, it isn’t easy because it’s a well-known fact that you’ll probably be chasing more money the more clients you have.

Anything can result in payments being delayed: 

  • Cash flow issues
  • Neglecting to make payments
  • Not offering clients their preferred payment option
  • Misunderstanding the conditions of the payment contract
  • Conflicts regarding subscription fees or charges
  • Errors made by your revenue and sales teams

You and your revenue staff are stuck chasing payments for hours on end, days on end, regardless of what triggered it.

What harm results from pursuing past-due payments?

It would be an understatement to say that collecting unpaid invoices is inconvenient.

It seriously disrupts you and poses a risk to your business, ultimately resulting in significant losses to your overhead. Do any of these effects seem recognizable?

  • Operations: If your team is preoccupied with finding missing money, they won’t have time for the other tasks at hand. That leaves less time for planning, budgeting, and developing growth strategies.
  • Financial: Staff hours, legal fees, administrative expenses, and—worst of all—borrowing to make up for cash shortages are all incurred for every second you spend trying to collect the money you already own.
  • Cash Flow: About interruption, late payments from clients prevent cash from flowing. It implies having trouble making ends meet and paying salaries. It also makes investing difficult.
  • Clients – It’s difficult to have a positive connection with someone whose payments are late, regardless of who is at fault. When you see them, all you can think of is “The AUDACITY,” irrespective of whether they are telling the truth or have a valid excuse for being late. You are merely human!
  • Credit Rating: Your credit rating is in jeopardy the moment you have difficulty paying your debts. And “invest ability” is what this sector is all about. You forfeit your ability to bargain with suppliers. You lose a reputable name. The next thing you know, investors won’t even consider speaking with you.
  • Legal Risks: Disputes over bills and payments occasionally need to be resolved by attorneys. They’re costly, a last choice, and even though you’ll probably come out on top, you know, nobody wins?
  • Both physical and emotional effects are equally significant, even though they are the last to be considered. To ensure that it stayed in your memory, we saved it for last! You should never put your physical or emotional health at risk, and the stress of collecting unpaid bills is the last thing you need. It is selfless and never-ending. Turnover and burnout may result from it.
  • It’s much simpler to defend acting once you can demonstrate the effects that chasing money has on you, your group, and your company (particularly when talking to stakeholders and the C-Suite who value change and new approaches).
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Since nothing should result in overhead that deprives you of the company’s present and future, this is the bottom line, literally. You just need to know what your options are since you already know that change is a long time.

Methods for Reducing the Expenses of Pursuing Payments

You have many choices if you’re prepared to eliminate all the overhead that collecting unpaid invoices brings:

  1. Make on-time payment appealing — You can reward clients who pay on time with extra add-ons, more usage, or discounts (such as a modest percentage off the bill). You receive timely payment in addition to the possibility of positive word-of-mouth.
  2. Clear Communication – There is no doubt that your clients understand the terms of their contracts completely. Very explicit terms—including penalty clauses—as well as payment reminders help prevent consumers from forgetting or misinterpreting what is expected of them.
  3. Simplify arguments – Arguments take time. Having a procedure in place that is incorporated into your contract conditions is the best way to avoid this. This gives channels for clients to ask any questions and anticipate prompt assistance.
  4. Be rigorous – Dealbreakers are undesirable when discussing potential new clients, but they are occasionally required. Credit limit setting and credit check procedures can be beneficial. Yes, it may seem like a lot, and you may lose some clients, but you will also save a lot of money and suffer.
  5. Consolidate the payment platform — Using a billing platform that reduces the time spent switching between systems can result in a significant increase in efficiency. This implies fewer errors and simpler payment tracking.
  6. Outsourcing – In certain cases, it’s simpler to assign the issue to a third party. It can be worthwhile to take into consideration if the lost time and resources for your team outweigh the percentage that a collections company would charge.
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All of them are excellent choices. However, what if we told you there was a solution to every issue that leads to almost all late payments? Something that doesn’t require you to spend any more time it gives you more time to do the tasks you want to complete for the business.

It’s as simple as one word: automation

You may greatly reduce your issues by using the available technology to automate the entire billing and payment process.

We know this because, over the past 20 years, we have worked with CFOs in the IT services industry who have tried to find unnecessary solutions to their problems on their own.

The largest issue is that a lot of CFOs are unaware of the extent to which automation might alter the way they and their teams operate. We are discussing a comprehensive, end-to-end solution that at last gives you the time to focus on long-term financial planning. a method that provides you with reliable and accurate numbers.

A solution that provides more than this in reality.

The ideal automation system provides you with: 

  1. Creating invoices

Your system is capable of producing and sending accurate invoices for you, even the intricate multi-month bills that account for use and other variables.

  1. Recurring invoices

Payments can be made automatically at predetermined periods.

  1. Reminding

Clients won’t be taken aback. Nor will they forget. You can receive reminders from the system.

  1. Round-the-clock reports

Most likely, the ultimate fantasy of a CFO is to always know where all of their revenue is coming from. You can get real-time information from automation, which includes the necessary cash flow and revenue numbers. Additionally, having all of your financial data in one location allows you to make the necessary well-informed decisions.

  1. Simplified conflict

When everything is automatic and clear, disagreements are far more difficult to occur, but they will do so sooner and can be settled more quickly. And that is adored by all!

  1. Compensation

At last, silos separating finance and sales are broken down. This implies that all ambiguities regarding client offers, and contract terms have been resolved. Moreover, payments and invoices are automatically matched, eliminating the need for manual reconciliation.

  1. Simple payments

Secure payments that are quickly deposited into your account are available. Though!

  1. Flexibility

The key phrase! Scaling is something you should do, but without automation, it may seem nearly impossible. No matter how much you expand, automation can handle the transactions and avoid the overheads that come with larger volumes.

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Additionally, it automatically provides your sales teams with chances for upselling and cross-selling, which not only helps your business increase income and optimize your product offers but also fosters long-term relationships and client confidence as they now receive personalized offerings when needed.

You may have it

You are aware that your state-of-the-art offers, services, and products are made especially to meet the needs of your clients.

Why can’t you take pleasure in the same? Particularly when an innovative product SAVES you both money and time? and permanently removes such overheads?

You deserve a stress-free life, as does your staff. The amount of time you need to plan.

As the CFO, you should be able to enter any meeting with the C-Suite or other stakeholders fully assured of the work that your team has done and the improved numbers that result from delegating part of your responsibilities to a machine.

Work 365 is an automated billing system and subscription billing solution for Microsoft partners and software vendors to streamline recurring billing and customer experience.

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