B2B Payments

Why The Smallest Firms Face The Biggest Threats Without Automation

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Time is money for every business, but perhaps no more so than for microbusinesses. With only a handful of employees, the time wasted on manual business processes, like invoicing, means lost business (and, of course, lost money).

But there’s a section of the microenterprise community that may be even more susceptible to the pains of manual practices: service providers.

Breezeworks focuses its mobile and automated business solutions on this space, and it’s one that is broad, according to CEO Matthew Cowan. His firm counts companies from plumbing and electricians to horse dentists as clients, each servicing both consumers and other corporations. But what they all have in common is that they go into the field and further away from the desks at which they can perform processes like invoicing and payment.

Cowan told PYMNTS that, not only does this take up time for microenterprises and lead to losses of potential business, it also challenges these firms to actually collect payment — ever.

“There are complaints about corporate customers, like how long it takes to get paid,” he said of what he’s heard from Breezeworks’ customers. “Sometimes, they don’t get paid, and they’re chasing after people.”

Automation is one major element to tackling this issue, and Breezeworks is by no means the only B2B company on the market working on it.

But for the services industry, the issue of the added gap of time and distance between when a service provider completes the job and when he or she can actually get an invoice in the customer’s hand adds a whole new level of complication. And that’s what Cowan said he wanted to tackle.

“The key thing was allowing service providers to be able to create an invoice that’s completely ready to be paid at the job site when the work is completed,” he explained, “as opposed to billing later.”

Going mobile was the natural answer to the task at hand, he added.

“That kind of automation is something that can only be made possible by the creation of the smartphone,” stated Cowan. Historically, he continued, if a service provider — like, say, an electrician — finished the job onsite, they would then have to return to the office to generate an invoice or create a physical invoice by actually handwriting the bill.

That means writing or manually typing in clients’ names and additional info several times for a single job.

Even for companies that are using automated solutions, like Square, or their scheduling assistant in their smartphones aren’t providing end-to-end experiences, with service providers having to manually enter data in across these solutions.

Cowan told PYMNTS that automated solutions have been around for some time for larger enterprises but not for microfirms that are onsite to conduct their jobs. But this kind of business, he said, so critically depends on every minute to generate cash flow.

“The bottom line is that automated solutions increase profits,” he said. “Every worker in the company is spending less time on administrative work. Therefore, they have more time to do more jobs.”

A solo practitioner taking an hour a day to call scheduled clients to confirm their appointments, he explained, means taking time that could have otherwise provided a few more jobs every week.

Customer satisfaction, too, can mean deeper pockets for micro-service providers. Automated technology enables a more efficient process for the client and a way to more easily provide customer service; not to mention, that increase in customer satisfaction will help lead to repeat business — a major opportunity for small service providers that Cowan said is often overlooked.

But the ability for these microbusinesses to immediately collect payment from their customers is a major component of Breezeworks’ efforts, Cowan added.

“There’s no delay in generating an invoice and having that customer pay; it’s extraordinarily powerful from a cash flow perspective,” he said.

Only days ago, a report by the Asset Based Finance Association (ABFA) in the U.K. said microbusinesses are disproportionately impacted by late payments from their corporate clients.

“Even when a [small] business is thriving, just a few unpaid invoices can end up a real threat to survival,” stated Jeff Longhurst, the ABFA’s chief executive, in a statement.

A lack of automation that’s accessible while still in the field can mean a much longer process to bill and get paid, Cowan said. He estimates that between 5 and 10 percent of jobs completed by micro-sized service providers are never billed and never collected, whether it’s an issue of late payments from the customer end or an issue of manual processes creating billing errors and absences.

“That’s an extraordinarily large number,” he said of the nonpayments issued to these companies. “If we can cut that in half and substantially reduce that, it also has phenomenal benefits to cash flow.”

Cowan said that Breezeworks will be looking to tap into this industry that he says has largely ignored the in-the-field types of microfirms that need automated, mobile tools. To help its initiative, the firm revealed a takeover of mobile enterprise app company Prompt.ly. It’s Cowan’s hope that growing his business will promote automation in this community of businesses, which aren’t always fully on board.

“There are about 2.5 million businesses in the U.S. that are 20 service providers or less — very small companies,” he said. “And nearly all of them that we come into contact with have some kind of combination of manual and technology processes.”

“I would estimate that no more than 5 percent of small service providers in the U.S. today are using end-to-end automation,” he continued. “So, the market is largely untapped.”

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