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Technology to help entrepreneurs boost their cash flow Add to ...

You just finished a service call at a client’s business. Now you need to get paid.

You used to have to trundle back to your office, create an invoice and send it off. Then you would wait 30 days (and often more) for your money.

Today you can whip out your smartphone, log into a mobile billing service and enter the transaction details and your customer’s credit card information. The payment is processed on the spot, and your customer gets sent an electronic receipt right away. An e-invoice is also produced that gets entered in your accounting system.

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Managing cash flow is one of the biggest challenges entrepreneurs face, especially in today’s tough economy. Information and communications technologies (ICTs) can help by allowing for faster bill collections, better inventory control and tighter expense management.

“Cash flow comes up consistently as the no. 1 issue for entrepreneurs,” says Jamie Sutherland, vice president and general manager of Richmond, B.C.-based Sage Simply Accounting. “It’s the life blood of a business.”

Thirty-six per cent of Canadian small businesses listed cash flow as the most important financial management issue for their business’ success and another 53 per cent named invoice/billing, according to a 2010 survey by Sage.

But a surprisingly large number of business owners don’t know what their key business costs are and how to use technology to control them, says Mr. Sutherland.

“Automating how you track expenses, inventory and income is an important step,” he says. “At least, you will have the pulse of what’s going on.”

Then, entrepreneurs should explore how new ICTs can help lubricate cash flow. For example, new accounting software allows companies to send an electronic invoice with a link taking the client to a portal where bills can be paid online.

“It’s a lot faster than waiting for them to mail a cheque that has to be processed,” says Darren Root, executive editor of The CPA Technology Advisor and owner of RootWorks, a Bloomington, Indiana, consulting firm that advises accountants on technology.

Mobile bill processing can speed up cash flow even more. The technology not only makes billing and getting paid nearly instantaneous, it also cuts mailing and paper costs; reduces the risk of NSF cheques; and frees staff from having to email or mail invoices and follow up on accounts receivable.

The technology seems to be catching on. Already widespread in Europe and Asia, payments via mobile devices are expected to top $600-billion annually by 2013 worldwide.

But in North America, many small and medium-sized enterprises (SMEs) are still reluctant to adopt new ICTs for financial management, Mr. Root says. “There’s still a tendency to do things the same way they’ve always been done.”

And when SMEs do buy new technology, Mr. Root adds, they often make the mistake of not following up with staff training on how to use it. “Don’t buy technology for the sake of technology,” he says.

But with the right products and training, ICTs can help ease cash flow headaches, Mr. Root says.

“You can bill faster, get paid faster and control your expenses better.”

Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.

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