When it comes to cash flow issues, the common culprits for SMEs are:

• Your clients are taking a long time to pay and it’s causing gaps in cash flow.
• You don’t know how fast a client pays until you start working with them, making it difficult to forecast future cash flow.
• You’re often manually chasing payments which takes time, effort and costs money.
• It can be difficult to get credit like loans and overdrafts that are affordable and easy to use.

Over the past 10 years of building Satago, we’ve seen our fair share of the issues that SMEs struggle with. When Satago was first founded in 2012, the initial aim was to help SMEs set up automatic invoice reminder workflows, helping them get paid quicker. Now, we do a lot more than that.

Today, we help SMEs with invoice financing, credit control and credit search tools within a single platform. We also help accountants leverage these tools for their customers. 

In this article, we want to break down the issues we’ve seen SMEs in the United Kingdom struggle with the most and explain how Satago’s tools can help solve them.

Note: looking for an invoice financing and credit control tool all in one? Sign up to Satago’s 14 day free trial and see how it could work for you.

Common SME Cash Flow Issues

SMEs are taking longer than ever to get paid

It’s taking longer than ever for SMEs to get paid. According to Simply Business, more than £23.4 billion is owed to UK businesses, and over a quarter of businesses (26%) have reported an increase in the number of late payments since the cost of living began to rise. 

The reality is large corporations often take advantage of their size and position to pay SMEs later than they should. SMEs are often uncomfortable having the money conversation with customers in hopes that it will protect their relationship with clients – but this isn’t really the case. It perpetuates the problem.

Businesses end up turning to less-than-ideal solutions to solve their money problems, such as expensive loans and overdrafts – just because their business customers can’t pay invoices on time.

Most invoice financing lenders charge hidden fees

A better alternative to loans and overdrafts is invoice financing, a financing option that allows businesses to get an advance on outstanding invoices.

Many businesses turn to invoice financing at the eleventh hour, as an emergency choice, as a quick cash injection. Despite that, applying for invoice financing often means completing and submitting countless PDFs for verification and contractual purposes – only to be then told they cannot be approved, by which point the cash flow issues have worsened.

On top of that, invoice financing tools often have a confusing pricing structure due to hidden fees. For example, all invoice finance includes an arrangement fee, a monthly service fee, and an interest fee. But many will also charge additional disbursement fees such as bank charges, report charges and refactoring fees.

It means that SMEs are often waiting far too long to get the cash injection they desperately need, and when they do, the lack of transparency over fees affects their longer-term outlook.

Accounting software have limited credit control functionalities

Instead of relying on cash injections, what if SMEs could focus on getting the customer to get paid more quickly?

Based on the data from the Satago platform, we’ve observed approximately 70% of invoices are paid after the first automated invoice reminder and 86% are paid after the second automatic reminder.

Accounting tools like Xero, Sage, FreeAgent and Quickbooks are great for SMEs to keep track of customers and send invoices in bulk. However, they have limited functionality when it comes to sending invoice reminders. Most accounting tools will allow you to send a few, basic invoice reminders under one template, at best.

So, what if you want to send a payment reminder before the due date, so the client is ready to pay? What if you want to send them a thank you email when they pay early? What if you want to add custom text for certain industries and customers?

For more customisation, you often must hire a credit controller, which adds additional costs to an already painful cash flow issue.

It’s difficult to know which customers might be a credit risk

Finally, SMEs can be as prepared as they want, but ultimately taking on a new client is a managed risk at best: you won’t know how fast they pay until you start working with them.

Not knowing how well a client pays can be a source of stress, an operational concern, and only makes it harder to predict cash flow month over month.

How we’re solving these issues at Satago

Our objective at Satago is to offer an all-in-one platform that makes it as easy as possible for you, as an SME or accountant, to get back on top of your or your clients’ cash flow.

That means that we’re not only offering tools to help assess a customer’s creditworthiness, chase late payments and acquire fast, convenient cash injections, but we also want to change the way people think about cash flow.

“It’s more about the mindset of the way people work: we don’t have to borrow, we just have to manage and put in [place] better processes, have established relationships with customers and set boundaries for payments.” – Sinéad McHale, CEO of Satago

Here’s how we’re helping SMEs do that:

Get paid more quickly with customised credit control

Most people aren’t deviously trying to avoid paying invoices: they’re usually very busy, and invoices and reminders slip under the radar.

That’s why one of the best ways to reduce your debtor days and get paid more quickly is to send invoices and invoice reminders at the right time. The key to getting paid more quickly is having a robust credit control system in place.

With Satago, users can set up invoice reminder workflows, monthly statements and thank you emails, which are available on all packages. They’re also fully customisable, both in terms of the email content and the sending schedule. 

With Satago, you can send:

• Invoice reminders before the due date.
• “Thank you” emails for early payments.
• Late payment invoice reminders that automatically include late payment fees.
• Grouped reminder emails.

Using automated emails is much easier than sending them manually, especially if you have no dedicated credit control department. It’s also cheaper and allows for more individualisation than if you handed over to a third-party credit controller.

For example, Satago lets you send grouped reminder emails, combining all the invoices into one email. This is ideal if a client has multiple invoices due as it means they’re not bombarded by multiple reminder emails.

Another great way to incentivise paying early is to charge late payment fees. Usually, you have to manually calculate what interest to add to your invoice. With Satago, it’s as easy as adding a snippet that automatically calculates how much your customer owes you.

Read more about how to set up an automatic late payment fee workflow: Late Payment Fee Calculator: How to Charge for Overdue Invoices

Ultimately, credit control tools are about maintaining a good relationship with your clients. By fully customising your invoice reminders, you can change tone of voice depending on how late the payment is and can send different types of reminders to different customers.

Get invoices financed in days, not weeks (and know exactly how much it’ll cost)

As we mentioned above, most invoice financing tools use older systems that process PDFs and require filling in forms. They also charge hidden fees, which makes it a lot harder to understand their pricing structure.

At Satago, we do invoice financing a little differently:

• You won’t be charged any hidden fees. We only charge an arrangement fee, a monthly service fee, and an interest fee. Our pricing is clear and transparent, so you can calculate costs a lot more easily.
• Once you’ve signed up, you can get a response within 24 hours. Since you connect Satago with your accounting tool, we have instant visibility of your finances and can give you a response and cash injection within days, if approved.
• Have the option to get started with single invoice financing. Most invoice financing tools will want you to get started with full, or whole-book, invoice financing, which means you’ll need to invoice finance every single invoice. What if you want to do invoice financing for only one or two invoices? With Satago, you can choose to start with selective invoice financing and only apply for financing whenever you need it. No other provider can offer both totally interchangeably.
• Get invoice financing and credit control in one tool. Most SME financing tools will either help you with invoice financing or with chasing invoices – but not both. With Satago, you can see how creditworthy a client is, set up a custom invoice reminder workflow and get invoice financing all in one solution!

To be eligible for Satago invoice financing you must:

• Charge on credit terms.
• Be a UK limited company.
• Trade with other limited companies.
• Use accounting software that connects to the Satago platform.

Once approved, it’s very easy to apply for flexible invoice financing. In fact, it’s as easy as heading to the “Finance” section on your dashboard and selecting the invoices that you want to get financing for. You’ll see:

1. Eligible invoices: This shows invoices available for financing. Add the one(s) you’d like to your basket, then once you’ve clicked Continue, they’ll go to our team for checks and approval.

2. Pending invoices: This shows both invoices that are pending disbursal and those that are ready to withdraw.

3. Financed invoices: This is where you can see historic data and any invoices you’ve had finance against.

The best part is that with Satago, you don’t just get invoice financing – you get an all-in-one cashflow management platform, including our automated credit control system and risk insight reports that will help you take control of your cash flow.

Satago was game-changing for an IT consultancy that didn’t want to pay monthly fees for full invoice financing. Instead, they decided to go with selective invoice financing, which has allowed them to take on extra work, continue to pay staff on time and not worry about cash flow.

Read more about their experience here: Satago supports IT consultancy to improve cashflow and grow with invoice finance.

Get an insight into the risk profile of your customers with our risk insight reports

As we mentioned above, one of the main issues SMEs face is not being able to assess how creditworthy a client is before working with them.

At Satago, we’ve partnered with major credit reference agencies which allows our customers to assess how risky a client is in a few ways.

When you head to the “Risk Insights” section of Satago, you’ll be able to learn more about current and potential customers, do a credit search on a potential customer and track which customers are breaching their credit limits.

The risk insights area is divided into three parts:

1. Credit search: Here you can view reports on existing or prospective clients, including how many days beyond their term they pay on average, and a traffic light system showing how high or low risk they are as a credit customer. You can also download a full credit report powered by Creditsafe, which includes detailed information on the company’s directors and shareholders, financials, mortgages and any CCJs.
   
   You can view an unlimited number of snapshot summaries about prospective clients, but a limited number of complete credit reports each year (the exact number depends on the plan you’re on: Standard = 3, Plus = 25, Premium = unlimited).

2. Analysis: This dashboard shows:
   • Aged debtors: How overdue your invoices are in increments of 30 days. You can download a CSV or PDF report showing a breakdown of customers and how overdue they are, hyperlinked so you can easily navigate the system and send reminder emails or set yourself a reminder to call or follow up with them at a particular time.
   • Risk segments: How many customers fit into which risk band.
   • Risk concentration: This combines aged debtors and risk segments, so you could look at how many very high risk customers have invoices 90+ days overdue for example.
   • Largest and oldest open invoices
   • Customer credit summary: How many customers fit into each risk band.
   • Top industry segment concentrations: This shows which clients are in which sector.
   • Highest risk active customers

3. Credit limit breaches: Each client has a recommended credit limit based on the data held, and you see here if they’ve gone over their credit limit in overdue invoices. You can also amend this to a custom limit if you choose. 

All of this information helps you make informed decisions about how you work with clients, what credit terms you might offer and how you manage reminder emails, and even if there are any companies who you might prefer not to work with at all. 

Access invoice financing, credit control and credit search tools from one location

If you use multiple tools to manage your business accounts, cash flow and credit control, you’ll need to keep switching from one to another. Not just that, but each of these tools will encourage you to keep using them. But invoice financing and credit control tools don’t solve the underlying problem: the goal is not to continuously chase invoices and rely on financing to plug cash flow gaps.

At Satago, our purpose is to actually help decrease your reliance on short-term fixes, and instead build a more robust and sustainable cash flow management function. Since Satago integrates with your accounting software, with just a few clicks you can see which customers are paying you late, how much you can charge in late fees and track you cash flow performance.

And if you do face issues with clients, then you can set up a customised invoice reminder workflow or get a fast cash injection with invoice financing.

You may like: Debtor Days Calculator: How to Reduce the Time it Takes to Get Paid

How we’re developing tools to make accountants’ jobs easier

These days, accountants have replaced the role of the bank manager for SMEs. Accountants play the trusted advisory role for SMEs, which means they are the ones businesses turn to when faced with cash flow issues.

Here’s how Satago helps accountants take care of their clients:

• View the status of your clients’ finances in one view free of charge. Most tools require uploading your clients’ information one by one. But with Satago, you can bulk upload any information from any accounting tool. Then with our portfolio overview tool, you can see at a glance how many invoices your clients have overdue and what their average debtor days are.

• Help your clients take control of their cash flow. With Satago, you’re helping your clients take control of their cash flow by setting up automatic invoice reminders, getting free credit reports and getting invoice financing whenever needed.
• Offer your clients Satago as added value to your service (and turn it into an additional revenue stream). Quite a few accountants like to offer Satago to their customers as a value-add to their existing service. You can choose to charge extra to allow your clients access to the Satago platform, turning it into an additional revenue stream for your practice.

Don’t wait too long to get paid, take control of your cash flow with Satago

We hope this article makes it clearer what issues we’re trying to solve at Satago. Ultimately, our goal is to change the way business owners think about cash flow and use the tools available to them to get paid on time, spend less time on admin and more time on their business.

With Satago, you can take control of your cashflow in a proactive way, putting in place good systems and processes and building up strong relationships with your clients, safe in the knowledge that you have access to invoice financing should your business need a quick cash injection.

Sign up with Satago today and start your 14-day free trial.