Entrepreneurs are often intimately acquainted with debt, Australians perhaps more so than others around the world: a report from financial services company MarketInvoice looked at data from over 30,000 invoices across 80 countries and found that Australians were often the latest to pay their invoices, paying on average 26.5 days late.
As every entrepreneur knows, the prompt payment of invoices is crucial to cash flow, but chasing them up can be time consuming and difficult.
After 16 years in the industry, Paul Metcalf launched collection agency CollectMore Debt Solutions two years ago, focusing on the corporate end of the market to help clients who run large scale accounts-receivable functions collect over $2.5 million. However, having seen the problems unpaid invoices can cause for smaller businesses, Metcalf last year decided to create an app to help empower the other end of the market to save and collect debt themselves.
“The final catalyst for creating the app was after having to tell a client that their $45,000 debt would have to be written off as their customer had gone into liquidation. The poor woman was crying her eyes out on the phone and I thought to myself, enough is enough, I need to put all my years experience into something that will prevent this sort of pain,” Metcalf said.
“The problem this lady had, and many small businesses have, is that by the time they refer the debt to a debt collector, it is too late. On the other hand, referring the debt too early can offend the customer and jeopardise the chance of more work. I thought there needs to be a solution for that middle ground.”
The development of the app, which was done by Melbourne agency Appscore, was funded through the CollectMore Debt Solutions business and took four months to complete.
The app works by having users input data about debt into the app, such as debt amount, due date, trading terms, any previous trading history with the customer, contact phone number, and of course, name of the customer.
The app then analyses this data and will send an SMS to the customer asking them to pay, using a pre-determined template. It can also help the user call the customer from within the app using a script generated by the app based on the data given.
“It complements our existing business by helping those who are not ready to use our actual services get paid,” Metcalf said.
He explained that the app also aims to be an educational tool, giving users a checklist of things they should do when owed money, and tips on how to approach collection. It also looks to teach business owners how to avoid a bad debt in the first place.
“The target market of the app are tradies and sole traders, people who are so heavily invested in maintaining the relationship with the customer, they do not have the skills necessary to ask for their money. Wearing so many hats and doing everything themselves is a major problem for many sole traders,” Metcalf said.
With 1.5 million sole traders in Australia, the opportunity for CollectMore in this space is big. Metcalf is currently working on a monetisation model as he looks to scale and turn the app into a must-have for small business owners around the world; until a few weeks ago it was a paid app, its price fluctuating between $0.99 and $4.49. It has been downloaded a total of 510 times, 350 times as a paid app.
He said, “We decided to make it free so more people could benefit. Giving free advice and teaching our clients how to avoid a bad debt is ingrained in our company ethos and we thought it was only right that this flowed through to the app.”
Image: Paul Metcalf. Source: Supplied.