While industry revenue is projected to grow at around 2.0 per cent annually between 2020 and 2025, accounting firms face a number of challenges, including enhancing efficiency and managing cash flow.
Moula’s new white paper – Decreasing Debtor Days: Strategies for Accounting Practices – examines the cash flow challenges that accounting practices face as a result of high work-in-progress and debtor days.
Research has shown that lock-up (work in progress plus debtor days) is exceptionally high for accounting practices, at an average of 77 days. More recently, due to the impact of COVID-19, 55 per cent of accounting firms have offered their clients more flexible payment terms, so it’s likely that debtor days have increased for accounting firms, adding to the 77-day lock-up.
The white paper covers the causes of this problem and the steps that can be taken to overcome it. It also examines the true carrying cost of accounts receivable, revealing that many accounting firms are losing up to 30 per cent of the value of their receivables, depending on the age of the accounts.
The white paper also looks at outsourcing and finance options that can help accounting practices to reduce debtor days and improve cash flow.
The Decreasing Debtor Days white paper includes exclusive data and insights from Moula, as well as tips from Melanie Power, an industry thought leader and bookkeeping business growth expert
Moula CEO Aris Allegos noted how Moula helps accounting practices improve their cash flow.
“Our research revealed that 63 per cent of SMEs experience cash flow shortages resulting from the late payment of invoices,” Allegos said. “Accounting practices are no exception to this challenge. In fact, they have higher average debtor days than other sectors. In response to the late payment challenges facing SMEs, we developed Moula Pay, a better way to offer B2B payment terms, and get paid upfront when invoicing.”
Melanie Power has used Moula Pay in her own business and discussed her experience: “Moula Pay has empowered me to get paid upfront, and saved me chasing invoices. Since seeing how much my own business and debtor days have improved, I’ve referred several of my clients to become Merchants, too. It’s been a real game-changer for cash flow.”
Download the white paper Decreasing Debtor Days: Strategies for Accounting Practices or learn more about how Moula Pay can help businesses get paid upfront.
Founded in 2013, Moula is an Australian fintech focusing on backing good business, and simplifying access to finance. With products spanning both the lending and payments ecosystems, Moula’s proprietary platform empowers a business to use their cloud accounting or transaction data to access finance.
Althea Mirvis, Head of Brand and Communications