While pandemic-imposed, flexible work arrangements have enabled many businesses to reduce their physical office footprint and assist staff to maintain a better sense of work/life balance, they have also created challenges for business owners and executives to manage whole-of-organisation business systems — especially in the area of accounting and financial management.
According to Daniel Riley, CEO of Earlypay, cloud-based software has proven to be one of the most beneficial tools for business management during the pandemic, in particular, accounting systems such as XERO and MYOB Account Right.
Earlypay Limited, an ASX listed company (EPY), is Australia’s leading customer-focused business financing organisation. It provides invoice financing, equipment financing and trade financing to Australian small to medium-sized businesses.
“There are several key advantages of cloud-based accounting and financial systems which many people are not aware of,” Riley said.
“Aside from the obvious benefits of being able to access and manage a business’ accounting and financial activities from anywhere, third party collaboration is a largely unknown benefit that more people need to understand. If they did, they would realise that it could assist their business to achieve significant efficiencies and also help to address cash flow issues, cash gaps and even support growth, acquisitions and restructuring.”
Riley has outlined the benefits of cloud-based accounting and financial systems.
Real time view of business health
“Cloud-based accounting and financial systems provide many benefits including the ability to maintain a live and omniscient view of the business and its financial health,” Riley said.
“Because a cloud-based system can be accessed from anywhere, this enables transactions to be made at anytime from anywhere and reports to be generated and viewed as required. This assists to ensure business managers are able to gauge the pulse of the business in real-time.”
Integration of apps and services
“Cloud based systems such as Xero also enable the integration of helpful third-party apps and services such as Hubdoc, which can assist to improve the ability for staff to engage with the system,” Riley added.
“For example, using these services, staff are able to scan and upload receipts on the go through their device.
“This means important documentation to support the financial management and activities of the business are captured and recorded in real-time. This delivers efficiencies and reduces the workload associated with doing these things manually.”
“Cloud-based systems also allow other key outside or third-party providers, such as business accountants, to access the platform,” Riley said.
“They are able to easily utilise the system to undertake audits and financial analysis and prepare and submit BAS and end of year returns.
“Businesses are also able to connect their cloud-based software directly to the ATO and lodge their BAS electronically.”
Invoice management and debt collection
“Invoice management and debt collection is a critical part of business and made easier if your external service provider is able to access your cloud-based system,” Riley explained.
“For example, in the case of debt collection, once invoices become overdue by a certain number of days, the provider can simply take over the collection of funds in a seamless manner. Access and integration enable high levels of automation.”
“Getting funds in the door quickly is important when ramping up business and undertaking investment in new staff, technology and equipment,” Riley added.
“Having a cloud-based system in place not only makes it easier to provide financial information to a potential lender such as Earlypay, it also enables the financial organisation to access your system to provide direct payments.
“There are several types of funding that are specific to the needs of businesses including Sale-back Finance, Invoice Finance and Trade Finance where cloud-based systems integration is particularly helpful.
“Sale-back Finance works by turning existing business assets into cash. If a business owns an asset that is unencumbered, a business finance provider such as Earlypay can give the business a loan against it, while allowing the business to continue using the asset. The loan is then paid off over a three-to-five-year period.
“Invoice Finance is a popular means of accessing income upfront fast to provide reliable cash flow without taking out a business loan or setting up a line of credit. It is also ideal for businesses that have ATO debt or a history of credit issues.
“In essence, businesses use their invoices as collateral to generate payment upfront. It is a way for businesses to access funds against the amounts due from their customers. Invoice financiers like Earlypay can also take care of managing debtors and collections so the business can focus on what they’re good at.
“Trade Finance is used in conjunction with Invoice Finance to bridge the gap between paying the suppliers and receiving payments from customers. Businesses use Trade Finance to pay for their goods upfront. Then they markup the goods and get them ready for sale. Once sold, they issue an invoice which then increases the value of their Invoice Finance facility, which pays down the Trade Finance.
“Finance providers such as Earlypay can integrate their systems with cloud-based platforms such as Xero to automatically access invoices and deposit funds.”
Earlypay has been backing Australian businesses since 2001. Starting out as a small business, it is now an ASX-listed company (ASX: EPY) and a market leader in providing tailored financial solutions to businesses of all shapes and sizes, delivered through an innovative online platform. Earlypay now has over 100 business finance professionals around Australia servicing business across a wide range of industries.