Satago CEO Sinead McHale speaks to IIBN about why effective cashflow management is more essential than ever and how her award-winning fintech can help.

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As businesses look to navigate their way out of lockdown, many will question how they can continue to prosper amidst a backdrop of economic uncertainty.

This topic is especially pertinent for me because as well as being a small business, Satago works for small businesses. Thankfully, Satago has continued to grow despite the current climate and our cloud platform is helping more SMEs and their Accountants in the UK access finance and manage cashflow than ever before.

I am also personally passionate about the success of small business. Having worked in finance in Ireland following the collapse of the Celtic Tiger, I witnessed first-hand how SMEs were ignored by traditional lenders, often to their detriment. In addition, having grown up in a small family business in Mayo, I appreciate how important their survival is for the families that rely on them, the communities where they operate, and of course the economy.

Key to that survival is good cashflow management. That’s why I am keen for IIBN members to learn about Satago as I believe they will very quickly recognise the value and support that the platform can give them in managing their cashflow. While this is beneficial to businesses at any time, it will become essential as we start to exit lockdown and navigate the months ahead.

The role of technology during Covid-19

Cloud software has changed the way we do business forever. Whether it’s Slack, Microsoft Teams or Xero, the cloud is enabling us to collaborate in new and exciting ways, whilst improving efficiencies within the workplace.

If we had gone into lockdown ten years ago, my guess is that many office-based teams would have struggled. But cloud software has made it possible for the large majority of us to continue doing business as usual, and even begin considering what an office-free future might look like.

Over the past few years, one of the fastest areas of technological growth has been within my own sector. Finance platforms like Satago, which integrate with cloud accounting software, can automate tasks that used to require hours of manual work – from chasing invoices to applying for finance.

But the best pieces of software don’t just save you time – they offer data-driven insight to empower your business decisions. For me, this is where technology gets exciting. By offering all companies, no matter their size, a level of financial clarity that was previously unattainable for many, technology can bolster small businesses. Technology provides solutions to the everyday cashflow issues that cause so many enterprises to fail within their first few years of trading.

So, how can these advances in technology help your business cope over the coming months?

The cost of late payments

In my opinion, the cost of late payments is one of the major threats the UK economy faces in 2020. As the government’s coronavirus support schemes wind down, the rate of insolvency and bad debt threatens to increase dramatically, thereby disrupting supply chains, restricting growth and ultimately threatening the survival of smaller enterprises.

Last year alone, small UK businesses lost a collective total of £51.5bn due to late payments. That number was unacceptable before coronavirus struck. Now, it could be devastating.

As we ease out of lockdown, it’s essential that we tackle this issue head on. Businesses already spend a lot of time and money chasing late payments. This is stressful enough in itself without the backdrop of having a large debtor book outstanding, plus the fact that many small businesses have had to stop trading during lockdown.

Right now, business owners need to be well informed about the clients they are doing business with, while utilizing the technology that is available to chase outstanding debts. In doing so they are freeing up resources to concentrate on pursuing new business and planning for the months ahead.

Essentially, reducing the burden of late payments is a two-step process. First, business owners need to stop offering payment terms to clients who may not be able to pay them. Second, companies must empower a robust credit control process that encourages clients to pay on time.

Know your customer

We’ve all heard the phrase, but what does it mean for your business?

Put simply, it means knowing when to walk away from scenarios which could put your company at risk. For many entrepreneurs, saying no to a prospective client goes against every instinct they have. But having the wherewithal to reject unreliable customers is crucial.

Fortunately, technology now allows us all to view our customers’ credit score at the touch of a button, giving us the opportunity to make informed decisions based on accurate data.

Modern risk analysis tools go one step further, informing you of your customers’ risk band, suggesting workable payment terms and notifying you of credit breaches within your sales ledger. This level of insight is invaluable to business owners and their accountants, making it easier for them to make choices that will ultimately future-proof their business.

Credit control

The other side of the late payment coin (pun very much intended) is credit control.

Persuading customers to pay their bills on time can be extremely frustrating. For businesses with a wide customer base, manually chasing payments is time consuming. The average business spends around two days a month sending invoice reminders – hardly a good use of anyone’s time.

For companies with a smaller number of clients, chasing payment can feel awkward. Some business owners shy away from sending payment reminders or make regular concessions for fear of damaging their customer relationships.

If either of these scenarios sound familiar, my advice is to automate your invoice chasing process. Automated credit control facilities are proven to significantly reduce debtor days and can save you a great deal of time and worry. There are plenty of solutions out there, but the best ones will allow you to keep things personal by integrating with your existing mail server.

A time of change

It’s difficult to say what the next few months hold in store for businesses but there will be positives and negatives.

I’m optimistic that businesses will continue to think progressively and use technology to overcome the everyday obstacles that threaten their growth, particularly in regards to cashflow.  If we can make even a small dent in the enormous £51.5bn burden caused by late payments, more businesses will have a chance to survive and thrive in the coming years.

If your business does experience cashflow gaps, my advice is to avoid expensive options (such as dipping into your overdraft) by opting for responsible financial solutions which can ease cashflow concerns in the long term. If you’re interested, you can take a look at Satago’s single invoice finance facility, which enables you to access cash advances on unpaid invoices.