What is Satago and how does it help you manage your cashflow?
Satago is a three in one software a tool. It is a credit control tool that you can configure to automatically chase late payment of invoices, it is an invoice finance tool that you can upload invoices from your accounting software and receive funding and it is a risk insights tool that will provide analysis of clients creditworthiness.
Satago can be integrated with your accounting software such as Xero, Quickbooks and Freeagent. It will pull through all the customer details and invoices once the connection is made and put them in the Satago dashboard.
The credit control tool will automate a lot of the chasing of invoices and can be configured to send out templated emails to chase for payment. These can be customised and sent out at intervals during the collection process. They will stop once the invoice and payment are reconciled in the accounting software. The dashboard will also give you diary notifications on when a client promises to pay so that you can check for payment and a centralised point for all your communication with your clients. The latter is helpful if you have a team collecting payment so they aware of the status of collections.
The Invoice finance tool will also you to integrate directly into the accounting software and for you to select invoices that you wish to raise finance on. Satago will also you to see what invoices qualify for finance and once submitted you will be advanced up to 85% of the invoice value for a fee on the amount advanced. To qualify the business must be UK based, established for 3 years and not in financial difficulty.
The final piece of the software is the Risk Insights tool. This will allow a company to profile any company that they want to do business and to help establish credit terms for payment of invoices. This will check a company’s credit report and give you a risk profile back and review the current balance outstanding. The credit rating will continue to be monitored and any changes informed to you.
“Satago provides a comprehensive suite of tools to help any company manage its cashflow. It gives tools to help automate collection of debts, access to quick easy finance via its invoice finance tool and insights into a company’s credit report so you can avoid getting into trouble in the first place. On the face of it seems very powerful and it combines a lot of what small business and creative agencies would need.”
How does it work in Practice?
In using the software for me things tend to fall apart. Using the credit control tool out of the box with little configuration it seems to be overly aggressive and chases clients even before payment of invoices are due, it would send out payment reminders where a direct debit mandate was in place and before the due date.
Credit Control is one of the hardest tasks for any creative agency to balance. You need to collect the money owed, but these are your clients, push too hard and you may lose them. It is a process built on developing relationships and trust. It is not something to be automated, it must have the personal touch and unfortunately it is going to be labour intensive. Persistence and politeness are key in this process. You must speak to the client and talk through payment terms in a way that suits both parties.
This conversation will have nuances that an email will not. Credit control should always be a manual operation and somebody in your team needs to be given responsibility for it.
The invoice tool whilst it seems quite a nice function, I think that there are apps that would do this much better. I think that Capitalise is one that gives access to several different finance options such as invoice finance, loans, asset finance and peer to peer loans. It seems to be a much more flexible alternative depending on what you need the finance for. Whilst Satago does not try to be like Capitalise, I do not see why you would use it when there was an alternative like Capitalise available.
The Risk Analysis seems to again have the same weakness as the invoice tool and the credit control, that there are better options out there to use if you want to protect your business. I would use one of the major credit agencies to get insight into a client if they were looking for extended credit terms and whilst it is nice to have in in the same dashboard and software. I think that the intelligence that they give a business needs to be correct and the best it can be. If you make a wrong decision and the client cannot afford to pay for the design work you have done for them, it may have long term consequences for your business.
Is it something that we recommend?
I think that a lot of my concerns about the platform seems to be that it is attempting to automate tasks that really need to be done by people. I think the credit control function is important to any agency it needs tact and diplomacy to be done well. Deciding how to finance a business is something that should weigh up all options and whilst invoice finance can provide a small term boost to cashflow it is not a long term solution and that needs to be weighed up when deciding how to take on finance. Interpretation of credit reports should also be done in conjunction with us as your accountant and may consider non-financial reasons if you are going to trade with another company.
“I think that a lot of my concerns about the platform seems to be that it is attempting to automate tasks that really need to be done by people. ”
What should you do?
Your agency needs to have a plan in place how it is going to manage cashflow. It should be forecasting with us and building scenarios so it can ensure that it can meet all its financial liabilities. It needs to monitor the efficiency of its credit control giving a member of staff the responsibility for collecting any overdue amounts. If there is a shortfall, decisions need to be made on how it will meet the shortfall, will it take an overdraft, invoice finance or longer-term loans.
How can we help you?
These processes are something that we are experienced in doing and during the Coronavirus outbreak we have been supporting our clients to help mange their cashflow better.
In May 2020 a client came to us concerned about his cashflow, he had a number of invoices due to be paid in August 2020 but the Coronavirus had impacted the business and meant that there was a shortfall in funding for about three months. We had prepared his accounts in Xero and they were up to date. So, we prepared a cashflow forecast for the next twelve months highlighting the months that the cashflow was expected to be a problem and the expected recovery in sales income in August.
Using the cashflow that we prepared the client applied for a bounce back loan of £15,000 with payment terms over 60 months. We also asked our client to speak to the company that owed the invoices to try to arrange payment terms for the invoices slightly earlier in lieu of a small discount.
The cashflow predicted that the client will be able to pay back the loan by the end of May 2021 with no interest suffered. The invoices that were expected to be paid in August are now being paid by the end of June 2020 and the loan that was applied for was received at the end of May.
The loan was vital in providing short-term funding for the client to ensure that the business could survive the lockdown and be prepared to start trading after the restrictions are eased. Our client was very happy about the support that we gave him during this troubling time, and we have now formalised our agreement with him to provide ongoing accountancy support to his agency.
If you need any help in any of these areas, please arrange a discovery call so we can discuss how we may be able to help you manage your cashflow and your business better.