How Taulia helped Pneusource Inc. get paid in 2 days
PneuSource Inc., based in Springdale, Ark., is a compressed air specialist, providing service and sales to meet customers’ compressed air requirements. Their products include air compressors, pumps, heat exchanges, filters, blowers, vacuum pumps, and air compressor parts. Their staff of factory-trained service technicians provide customer design and installations, training, and preventative programs for customers.
In recent years, many of PneuSource’s customers have been extending their payment terms further and further out. Customers that used to pay their invoices in 30 days are now paying in 60 to 90 days or even longer in some instances. “This has put a serious strain our cash flow,” says owner Gary Piker. “So we started looking for opportunities to accelerate invoice payments by our customers in order to get cash into our bank account faster and improve our cash flow.”
Two years ago, PneuSource discovered that one of their biggest customers, a Fortune 500 food processor, offers Early Payments from Taulia. This is a feature that enables PneuSource to receive payment on outstanding invoices with the customer in as little as two days, instead of the standard 30 days. Here’s how it works:
When they sell a product or service, PneuSource receives a purchase order through the Taulia system. PneuSource then creates an invoice in Taulia via PO Flip after the product is delivered or the job is complete.
“Entering invoices this way using PO Flip is very fast and easy,” says Piker. “It’s faster than writing a paper invoice, putting it in an envelope and mailing it – and mail time is eliminated, which further accelerates collections.”
Next, PneuSource clicks on the Cash Planner tab in Taulia and selects the invoices for which they want to receive payment early. The normal payment terms with this customer are net 30, but with Early Payments PneuSource receives payment in two days. “I get a notification the next morning that they payment has been processed and the money is direct deposited into my bank account the following day,” says Piker.
PneuSource chooses to get paid early on all of its invoices with this customer. “The cost is two percent of the invoice amount and I’ll take that in a heartbeat,” Piker says.
“Some of my net-30 customers call me on day 30 and want to pay with a credit card, which costs me three percent or more,” he adds. “Early Payment is cheaper than that and I get paid in two days instead of 30.”
Piker says he loves the ease of use of Early Payments and the fact that he knows the payment status of all his invoices with customers at all times. “I can close them out right away so I don’t have to go looking for them later,” he says. “I have to admit, I was skeptical about Early Payments at first, but now I love it. The benefits of the service make it well worth the cost.”
Piker adds: “When business is slow, I tell my employees to go find some more work with this customer! And when this customer needs something from us, we try to give them preferential treatment because of how quickly we receive their payments.”
“As a small business, cash flow is everything. Early Payments helps offset some of the cash flow challenges we’re facing due to other customers extending their payment terms with us.”