Startups and small businesses know all too well the havoc caused by unpredictable cash flow. Many, though, rely on a manual invoicing process, which slows payment and causes a domino effect. In this Q&A, Flint Lane, CEO of Billtrust, talks about how SMBs can close the cash flow gap.
Having positive cash flow is critical to the success of any business. As the founder of CEO of the cloud-based Payment Cycle Management and accounts receivable solution Billtrust, Flint Lane knows just how critical it is to have more money coming into your business each month than going out.
Lane founded Billtrust in 2001 in an effort help organizations get paid. Billtrust's solutions accelerate cash flow by automating invoice delivery, invoice payment and cash application.
We recently had a chance to speak with Lane about the importance of cash flow and starting new businesses.
Q. Why is having positive cash flow so critical to small businesses?
A. Cash flow is the No. 1 determining factor in whether or not a business survives. Getting customers to pay for something of value is hard. And a lot of companies fail at this point. But turning revenue into cash flow is equally important. Without steady cash flow, investing for growth is very difficult.
Q. How can a company's strategic vision impact cash flow?
A. A business can't expect to survive, let alone grow, without a basic understanding of its present-day challenges and long-term goals. A company's strategic vision influences everything in a company, from its values and mission to hiring standards and marketing goals, and especially its cash flow. In order to implement more efficient solutions that accelerate cash flow, organizations must have tactical support, budget and buy-in from leadership – which is next to impossible if a long-term strategy isn't clearly defined across the organization.
Q. What is the best way to improve your cash flow?
A. For most companies, cash flow can slow down for multiple reasons throughout the invoice-to-cash process – or what we call payment cycle management – including unapplied payments, delayed invoices and even human error. The best way to improve cash flow is through automation technology like Billtrust's Quantum Payment Cycle Management. By automating their accounts receivable software, businesses can manage invoicing, payments and cash application strategically, which, in turn, accelerates cash flow and allows businesses to grow more aggressively.
Q. You have founded multiple companies. What did you learn the first time around that made you better prepared when starting Billtrust?
A. I made every first-time entrepreneur mistake at my first company, including raising too much money, hiring the wrong people and picking a bad business model. Basically, I didn't know what I didn't know. I'm much more self-aware this time around and understand far greater the difficulties of building a high-growth, sustaining business.
Q. When starting your own business, what type of people should you surround yourself with?
A. In the early days, I didn't think much about a type of culture, because it was just a bunch of smart people in a room trying to solve client problems. Once we hit 25 people, it became clear that we need to codify a set of values delineating what was important to us.
We've developed a set standard through our mission and values to make sure each employee understands this is an important part of the company. Now, the cultural fit is as important as the skill set of each employee.
Q. How did you come up with the idea for Billtrust, and what made you think it would fit in today's competitive marketplace?
A. Prior to founding Billtrust, I co-founded a company called Paystrust that made it easier for consumers to pay their bills. Instead of getting your bills at home, in your mailbox, they were delivered to a secure website so you could receive and pay all of your bills online.
I saw then, and continue to see now, businesses struggling to digitize their own billing and invoicing systems. Witnessing these struggles firsthand, I knew there was a major need in the market for a solution that helps businesses with large invoice volumes transition from paper to electronic seamlessly. Billtrust was built to be that solution and transform the accounts receivable industry.
Q. How has technology changed the bill payment landscape?
A. Although there have been significant technological advancements in the accounts payable arena, accounts receivable is still lagging behind. The biggest change in technology for the bill payment landscape has been automation. Previously, you would mail an invoice, wait for your customer to mail back their payment and then manually apply that payment to their account. Digitization has enabled companies to automate previously manual processes that were otherwise wasting valuable time and resources, and significantly speed up the invoice-to-cash process.