In today’s competitive market, hi-tech firms looking to drive growth and pioneer the next wave of business solutions are keen to dedicate as many internal resources to innovation.
While large firms have dedicated staff to manage the company’s financial requirements without interrupting innovation efforts, medium-sized firms must simultaneously manage their accounting and revenue growth alongside product innovation.
This balance is commonly challenging for businesses in this space.
Sage-commissioned global research shows administrative accounting tasks such as chasing late payments costs medium-sized businesses around £16,000 annually and 7-10 working days each month.
Even subscription model firms are experiencing a slow recurring revenue growth in comparison to other industries of the same size.
Research by AGI, a research firm, shows only 18% of a company’s five-year revenue is recognised upon onboarding. Successful firms balance their revenue growth and innovation efforts by combining efforts from their finance and sales teams on one platform to monetise the value of their subscription deals.
This defines and optimises the workstream between sales and finance, which in turn improves cash flow throughout the business and leaves other resources free to focus on innovation and growth.
Here’s how combining sales and finance efforts and empowering both with the latest management tools can drive growth.
Breaking silos for transparency and visibility
By combining efforts between sales and finance, the sales team gets a unique view into the long-term value of the subscriptions they sell. Meanwhile, 18% of a five-year revenue at initial booking can lower the morale of a sales team.
With a more structured approach to a subscription model via one streamlined platform, you can involve your sales team more in the process by allowing them to generate sales contracts, invoices, see when revenue is recognised and get full visibility of contract schedules.
You can automate revenue recognition, see schedule of invoices that will be generated from a contract, and how the revenue will be recognised over the contract’s life.
Improving cash flow through payment integration
On average 39% of small and medium-sized businesses in the 11 countries that were surveyed reported either that they are already experiencing some impact from late payments of their invoices or likely will.
Upgrading the process with quicker payment methods such as e-invoicing brings about a trifecta of positive outputs:
- Free up staff. Employees no longer spend time chasing late invoices and having awkward conversations with valuable customers.
- Get invoices paid faster. E-invoicing can also include a ‘pay now’ feature allowing customers to pay directly from the invoice immediately upon receipt. This will speed up the time it takes to get paid and inject cash back into the firm. Today’s integration-friendly market makes it easy to find a solution that syncs with your bank or third-party payment services provider to have each payment automatically reconciled with your account in real time. This gives you always-on access to up-to-date data on the firm’s financial health.
- Make better finance decisions. This type of insight frees your team from time spent processing data and empowers them to utilise their high-level finance skills to enable critical business decisions. The entire contract management process is automated – from invoicing to following-up – so everyone can focus on their jobs.
The Art of Being Paid
Chasing invoice payments doesn’t have to be painful. Use this kit to answer a few questions about your customers so you understand their payment drivers, then read our advice on how to flex your style for each, calling techniques and much more.
Driving subscription renewals through intelligence
Firms that invest in connecting their sales and finance teams also benefit from data collected around customer behaviour. Since you can automate communications to customers and vendors, you can see how real time info cascades into your books.
Which customers pay immediately upon receiving their invoices? How can you incentivise those who don’t to get them to pay faster? This data can help you answer these types of questions.
You can also use this information to try different tactics to see which translate into more loyalty and revenue opportunities such as adding and enabling new applications, product or service add-ons, and/or pricing and bundle options.
Driving expansion through smart reporting
If your business uses Salesforce, for example, you can further connect your departments through cloud accounting where all applications can be integrated. Your firm can then leverage intelligent reports and dashboards to generate one single view of the entire business in real time.
This is an important feature if your firm has plans to expand internationally.
This type of intelligence bodes well for scalability, not just growth. Your firm can set up cost centres across regions and departments accounting for multiple currencies, nationalities, and compliance within multiple legislations.
You can accept payments in the currency you invoice in and in compliance with all applicable tax laws.
Hi-tech firms can enable improvements in critical financial areas including strategic cost reduction, data-quality improvements, data-driven insights and tax efficiencies through better-connected sales and finance teams.
Today’s solutions don’t just tick the box for proper accounting requirements. They improve your cash flow and save you time on managing your accounts. They future-proof your business for global expansion and are easy for anyone in any department to use.