Deadbeats 2.0: How SMBs Use Cloud To Get Paid

How two SMBs automate everything from friendly reminders to the not-so-friendly collections process.
10 Important Cloud Apps For SMBs
10 Important Cloud Apps For SMBs
(click image for larger view and for slideshow)
If time and money are a small and midsize business's most precious resources, spending too much time getting paid seems downright cruel.

That was the case for Jennifer Rust, owner of Rust Designs. Her small business produces personalized dinnerware, and its core market is the massive wedding industry--more than two million couples got hitched last year alone, according to government data. Rust sells retail to the bride-and-groom-to-be and wholesale to other businesses. The latter segment, though potentially lucrative, doesn't much like paying its bills promptly.

"It's hard getting paid on time," Rust said in an interview. "Most of the businesses I deal with are small, and they don't like to send out checks if they don't have to. I was spending more time than I wanted to dealing with people who didn't want to pay."

[ Get closer to your customers with 4 Ways SMBs Can Score With Gamification. ]

Like many businesses, Rust bills on a 30-day cycle, and when customers exceed that window, the cash flow starts crunching. "If someone goes into 60 days, it's just killing me," Rust said. Her own vendors expect payment within 30 days, so as a self-described "tiny" company, Rust Designs can't afford to be in the credit business.

Large customers pose an even larger problem--they have the leverage over small vendors, and Rust said they'll use it to stretch payment as long as possible: "Something like $20,000 is a big order. They know they can wait as long as they want to pay, because there's not much I could do about it." A recent experience with a large client "killed my January," Rust said.

Rust shoulders some of the blame--as a busy business owner, she can't keep tabs on every invoice. Nor can she hire an accounting department. Rust was already using the cloud application Blinksale for invoicing, so when she received an email--online marketers, rejoice--about ZenCash, she signed up immediately. The startup's raison d'etre: Automating the process of dealing with slow or non-paying customers. Yes, even the intimidating henchman has moved to cloud.

ZenCash applies the typical pay-as-you-go cloud pitch in the literal sense--there's no subscription cost. Rather, customers like Rust pay for what they want--all of it runs on auto-pilot based on the user's settings. Want to send a thank-you note for prompt payment with a $15 iTunes gift card included? That will run you $18.45. Need a "receivables specialist" to make an emotion-less call to nudge a client to pay up? That's just $2.95. When bills go into collections, the pricing turns into a percentage of the amount collected. (Sorry, "kneecapping" is not on the service menu, though legal recourse is.) The service integrates with the likes of Blinksale, Harvest, QuickBooks, and other related cloud platforms.

That was part of the appeal for Mark Van Holstyn, a partner at software developer Mutually Human. "Most of our business is run on cloud-based applications," Van Holstyn said via email. "Using another [one] to help solve our collections headaches was a natural fit."

Van Holstyn said getting paid has been one of his firm's biggest pain points. While most of Mutually Human's clients pay their tab as agreed, there are some inevitable deadbeats in the bunch. Rare is the small business, after all, that can afford to turn down a sale because they're concerned about the customer's creditworthiness. Yet the problem of outstanding invoices usually gets worse with each passing day.

"The longer invoices remain unpaid, the less likely it is we will ever collect," Van Holstyn said. "Eventually we can't justify continuing to try and collect, and often the time and cost to bring about any type of legal action just isn't worth it."

Outsourcing that challenge to the cloud was essentially a no-brainer, especially given Mutually Human's existing comfort with online applications. Van Holstyn said it's too soon to quantify the results, but he's already noticing a time savings. Moreover, he sees the longer-term value in saying "thank you" to paying customers.

"It helps us add another touch of humanity to our interactions with our clients," Van Holstyn said. "Being able to easily and automatically send out a high-quality thank-you card to customers for paying their invoices on time can really go a long way to building a quality, long-term relationship with our clients."

For Rust, the return on investment is a piece of cake. She doesn't want to spend time hounding anyone--especially fellow small business owners--to pay their bills. Automating that necessary evil saves her plenty of time and agita.

"Not having to think about it is a huge thing--not having to worry about it and just knowing it's getting done," Rust said.

The pay-as-you go nature of the cloud makes ROI calculation seem easy. It’s not. Also in the new, all-digital Cloud Calculations InformationWeek supplement: Why infrastructure-as-a-service is a bad deal. (Free registration required.)