Dan Lundmark is Global Director of Sales, Cloud Division, ReadSoft Software Services AB, one of the leading global providers in business automation solutions. Dan is responsible for supporting ReadSoft’s cloud services throughout the company’s subsidiaries and managing training, education and analyst relations. BCW spoke with Dan to get his views on issues surrounding late payments, and how SMEs can tackle them by using cloud computing to their advantage.

What are the typical reasons for late or non payment of invoices?

There are many different reasons but the root cause often stems from inefficiencies in the business process behind the payment system. We see far less struggle in this area when organisations have adopted an automated invoice process. Typically when there is a short payment time, the person responsible for paying the invoice just doesn’t handle the post in time – or the invoice sits on someone’s desk for too long and is overlooked.

Specifically in the SME area of the market, there is a good potential to reduce such problems by introducing document automation both in reception of invoices (whether that’s receiving invoices electronically, or by converting them from paper as soon as possible when they are received) and in the processing of invoices. The higher the volume of invoices, the larger the advantage of automating the approval process, too. In short, the era of having to wait for people to come into their office and process and approve invoices is over.

How big an issue is this for the SME market in the UK/EU?

With our new cloud-based document automation offering for SMEs, we’re seeing a rapid take-up, so this suggests it’s a bigger issue than some people might believe. Nobody has exact figures, but we would estimate one in ten invoices issued by UK small businesses remain unpaid, and more than a third are paid late.

What are the barriers faced by companies attempting to address these issues?

In short, technology and investment. Even if a need is there, it hasn’t been big enough to make SMEs take the plunge. For most UK small businesses the capital expense of introducing on-premise automatic invoicing systems has precluded businesses which are annually averaging invoices in the mid hundreds to low thousands.

When you look at the costs versus the savings the math simply did not stack up because there has been too much IT involved, projects taking too much time and no resources in the organisation to handle the technology with upgrades and support. Also buying the technology has meant quite a big investment, both in terms of hardware as well as software.

How can Cloud computing make a difference? And what is achievable today?

Well here is the really good news. By adopting document automation through the cloud everything changes. There is no more hardware to buy and maintain, no software to install and upgrade and no big projects to pay for. By running document automation in the cloud you gain in many areas and the investment cost initially, which probably is the biggest hurdle for many SMEs, just disappears.

Most cloud services, including ReadSoft Online, are paid for based on usage rather than a large initial investment. So SME’s can rapidly embrace an opex instead of capex investment. This means that today it is possible to go all the way from receiving an invoice in any electronic format, or on paper, via approval workflow (if needed) to automatic acceptance of the invoice in your financial system – all within the Cloud.

Are SMEs recognising these advantages and adopting the SaaS route?

Yes, we see a strong trend in other parts of Europe in this segment and we believe the same thing will happen in the UK. The fastest types of company adopting cloud services are those within the SME sectors as well as those with a high ‘human capital’ quotient, such as service oriented companies including law firms, HR consultancies, and accountants.

A very high proportion (96%) of companies which have taken on cloud services have stated satisfaction with their experience, according to the Cloud Industry Forum. Four out of five have seen real improvements within six months, and with popular consumer applications like Spotify and Dropbox making Cloud both acceptable and familiar we expect to see more business processes move in that direction.

Where else can Cloud services support the SME office development?

Being proponents of cloud services, let’s turn that question around and ask “Are there any business process in a SME organisation that shouldn’t be considered to become a cloud solution?” We are certain that this is where SMEs will be going in the near future. Microsoft offers the full Office suite in the cloud and cloud ERP systems fight for customers with more functionality for less cost. And this is only the beginning. Let’s look at the outcome in a couple of years.

We’re sure about where we are going because why should we even think of migrating, backing up, thinking about security and threats, if we don’t have to? If we then also find a simple way to pay for those services which isn’t a huge investment before we can enjoy the advantages, surely we’re on to a winner? We are playing a totally new ball game and the people that don’t understand this will be the ones losing out in the end.

If there was one piece of advice you could give to an SME struggling with late payments what would it be?

You do not need to be struggling. If late payments are due to poor internal practices, this is a clear reason for automating the process. But, maybe take it a step at a time to make sure that it feels correct, and all works for you, and takes your business in the right direction. And there are other benefits to be gained from automation, so if you experience problems around quickly finding old invoices when someone calls up, finding invoices when sent for approval, waiting for people getting in to approve invoices or simply storing your invoices then those can all be good reason to automate and make the invoice process electronic instead of paper based.