Accountants Blame ‘Margin of Error’ For Thousands of Dollars in Delayed Monthly Revenue
CODA, the finance systems specialist, today released results of a survey demonstrating that invoicing errors are sapping businesses of revenue at a time when they need it most–a phenomenon CODA has dubbed the ‘Margin of Error.’ The problem stems from the common business practice of submitting multiple invoices at once. If a customer finds an error on even one, it will often hold the entire batch for verification. This can take weeks, even months, and delay payment for an indefinite period-a serious concern for any company trying to weather hard economic times.
CODA set out to determine the prevalence and importance of the Margin of Error by surveying more than 100 U.S. accountants at small-to-medium-size businesses (SMBs). It found that the issue is both costly and widespread. A large percentage of respondents confirmed that invoicing is a common source of cash flow problems, and a significant number estimated that at their companies, improper invoicing delays thousands of dollars of revenue per month.
Among the key findings:
- 89% of respondents said that cash flow has become a more important problem for their company in the downturn
- 47% said that invoicing delays are a ‘definitely’ or ‘somewhat’ common source of cash flow problems for their company
- 25% estimated their company has at least $5,000 a month delayed due to invoicing errors
- Nearly 17% have seen payments greater than $50,000 delayed due to invoicing errors
- In a possible sign of disconnect between finance departments and upper management, 58% of respondents reported that finance was feeling more pressure to invoice properly in the downturn; however, almost 60% said their company was ‘not at all’ looking for ways to improve its invoicing process.
‘Cash flow is the lifeblood of business, especially in times like these when credit is hard to come by,’ said Jeremy Roche, CEO, CODA. ‘The results of this study show that the Margin of Error is worse than a nuisance. It’s a drag on the bottom line. For small to medium-size businesses, payment delays can mean the difference between survival and bankruptcy. Luckily, there are several ways to minimize the risk of these errors, so long as management listens to finance and takes the problem as seriously as it deserves. We hope this survey prompts businesses to have those internal discussions and find a solution that works for them.’
One of the more common causes of invoicing error is the use of finance software that lacks the ability to track sales through a company’s CRM system, from the salesperson’s first contact to the recognition of revenue. To remedy this problem, CODA has developed powerful ‘Opportunity to Cash’ functionality in its CODA 2go on-demand accounting package. Built on the Force.com platform, CODA 2go is completely embedded with Salesforce.com and so enables accountants to go from their ‘opportunities’ in Salesforce CRM to create an invoice at the click of a button and post the transaction to their sales ledger. This gives users the most complete possible view of the sales process and eliminates re-keying of data, minimizing the chance for confusion — and error.
Introduced in 2008, CODA 2go is the first 100%-native enterprise accounting application developed on the Force.com platform and is a leading example of the industry trend toward ‘cloud accounting’.
About CODA & CODA 2go
CODA creates, markets and implements a comprehensive range of software systems designed specifically to meet the needs of financial directors and finance departments. These include on-premise financial management systems, analysis applications and business process management and control software to implement compliance solutions.
CODA 2go is CODA’s new SaaS accounting application designed to deliver high functionality accounting on a subscription basis. It is the first international SaaS accounting system developed on salesforce.com’s application development and delivery platform, Force.com.
Founded in 1979, CODA has nearly 500 employees working at 18 offices in 14 countries. CODA is part of Unit 4 Agresso NV, an international software developer headquartered in the Netherlands and listed on the Dutch stock exchange. It has around 3,500 staff in 19 countries and 5,200 client organizations.