From fast food to lawn care to preschool — some of the most successful and recognizable American businesses were built from a franchise model. And while this approach offers a number of advantages and conveniences to consumers, franchisors, and franchisees, it also frequently adds to the complexity of the back office, particularly when it comes to finances and accounting.
Typically, franchisors require direct, comprehensive visibility into the fiscal health of the various branch locations that bear their brand name. Meanwhile, franchisees often need to manage more convoluted billing processes that must align with established guidelines and might feature royalties or other fees that need to be accounted for and collected per each sale.
Ultimately, creating a single source of financial truth and common billing framework between these two separate but interdependent organizations is critical. And franchise accounting software can help make this desired connection a reality. In this article, we’ll explore franchise billing software in greater detail, focusing on the value it offers as well as how you can make sure that you select the right platform.
Why invest in franchise invoicing software?
1. Manual billing is time-consuming and error-prone; automation and AI can help
First off, transitioning to software for your back-office processes is always a smart idea. The amount of time and labor required to generate invoices, pursue payments, and appropriately apply cash to relevant accounts by hand can quickly add up. Conversely, an automated accounts receivable (A/R) platform can often perform each of these functions in a matter of seconds.
At the same time, if you’re still filling in your general ledger and other financial records by manually transcribing information between systems, you’re inviting all manner of human error to disrupt your financials and overall cash flow. Of course, there are all manner of advantages that A/R automation can enable:
Standardized payment terms simplify billing, reduce confusion
If some franchisees operate under a cash-on-delivery model, while others utilize more traditional Net 30 payment terms and still others adopt subscription billing, you’ll likely need to establish a unique fee structure for each approach. Additionally, you’ll need to maintain separate billing workflows for each option, which will significantly increase the amount of human oversight required if you’re still managing things manually. However, when you implement a limited, standard set of terms to be used by all franchisees, you can avoid a lot of headaches.
Automatic calculations on royalties and fees cut through complexity and reduce disputes
Profit percentages, leasing costs, supply chain markups, royalties — when it comes to choosing how to collect funds from a franchisee, the franchisor has a lot of options to pick from. And unfortunately, anything beyond a flat fee will require some manner of transaction-level monitoring and calculation. Automated workflows — or, better yet, AI-powered monitoring capabilities — can help ensure that this oversight occurs for every sale and that the appropriate funds are being set aside with no added effort from accounting staff.
Automated reminders reduce late payments and disrupted cash flow
Dunning is a critical part of accelerating the invoice-to-cash process. These reminders help to keep outstanding debts at the forefront of end customers’ minds, making it much more likely that invoices will be closed promptly. However, when these crucial missives are left to manual oversight, an unplanned illness or simple, human forgetfulness can mean that notices are sent out late — or possibly not at all. Conversely, when you automate your dunning, you can rest assured that end customers for every franchisee are being consistently reached.
Multiple payment methods increase convenience and reduce delays
Unlike payment terms, it’s often wise to support as many payment types as possible. End customers often have their own preferred method, and they are more likely to close out an invoice quickly if that option is available. Otherwise they may need to set up an account or coordinate with their bank before initiating the transaction, which prolongs the payment cycle.
Of course, each of these payment types requires different sets of information from the customer. A credit card transaction might only need a card number, expiration date, and security code, while an automated clearing house (ACH) transaction will need bank routing numbers and account details. Fortunately, franchise invoicing software can simplify the collection and use of these details while also keeping errors — and corresponding disputes — to a minimum.
2. Lack of payment transparency causes delays; a customer portal provides clarity
Traditionally, keeping the franchisor, the franchisee, and the end customer on the same page throughout the payment cycle required constant oversight. But now, with the right franchise accounting software in place — namely one boasting a centralized payment portal for buyers — everyone can stay fully informed with very little actual work.
From this site, buyers can typically review their outstanding invoices and transfer funds independently. Meanwhile, the information tied to the portal — particularly details relating to if and how a given customer has paid — can be fed up to the franchisee and the franchisor, offering granular visibility into where each invoice stands as well as how overall collection efforts are proceeding. And from this insight both of these organizations can more effectively anticipate future cash flow and act accordingly.
3. Inadequate financial visibility creates uncertainty for both franchise owners and franchisees; real-time reporting provides immediate insights
Stale, outdated data can often undermine critical business decisions as much as not having any data to work with at all. Therefore, the closer you can get to real-time reporting on company financials — both for franchisors and franchisees — the more likely you’ll make the right call in the moment and when planning for the future.
See it in practice: A spotlight on the healthcare industry and medical billing franchises
A/R for healthcare, at least in the United States, can be quite complex. Before sending any type of bill to the actual patient, the healthcare organization will typically first send out an invoice to the patient’s insurance company or a government aid program (e.g., Medicare, Medicaid). And these documents, along with the provider’s billing efforts, need to not only abide by strict government regulations but they also need to align with complex coding guidelines agreed upon with the insurer. Subsequently, the insurance company or government agency will send back some form of remittance advice — or explanation of benefits — to the medical facility, which will, in turn, send out a separate invoice to the patient to cover the remaining cost of the visit.
While large hospitals may possess sufficient staff to oversee this rather complex process, smaller offices, like a lone physical therapist or sleep study clinic, regularly find these operations overly burdensome. As such, they may outsource their invoice management to a medical billing franchise. What does that look like?
Consider the fictitious example of CureClaim Financial Services, a medical billing franchise business. The organization operates as a typical franchisor might, working with smaller, local entrepreneurs and offering them the resources, training, marketing, and support to set up individual billing offices that operate under a common masthead.
As is common, CureClaim provides the underlying invoice management software to its franchisees. And for each claim that is processed by these individual offices, CureClaim can monitor the corresponding financials and pull comprehensive reports that offer not only royalty tracking but also the financial performance of each franchisee. At the same time, CureClaim can leverage this central billing solution to ensure that each of its franchisees is complying with established invoicing and payment guidelines.
Meanwhile, the individually owned and operated billing offices will ideally have — from the same software — the tools needed to generate invoices for healthcare recipients, oversee dunning, and process incoming payments, applying them to the appropriate patient accounts.
What to look for in franchise billing software
Automated invoicing, payment reminders, and notifications
As we’ve already covered, automation can be incredibly valuable in driving efficient, timely A/R operations. So, when choosing a platform to oversee the invoicing and collection efforts of your franchisees, consider a solution like our Accounts Receivable Automation software. It delivers out-of-the-box workflows alongside an Automation Builder feature that allows users to set up their own event-based triggers for critical billing processes.
Similarly, we’ve also augmented the dunning process with our Smart Chasing tool, which can execute scheduled, multi-channel touches without direct human intervention.
Customizable billing plans and multiple payment options
Flexibility and convenience are two important factors for any billing system. Opt for a platform that can not only support the payment options you currently use, but that can also be easily modified to align with the needs of tomorrow. You never know — in a matter of months, it might make more business sense to begin offering early payment discounts or switch to a subscription model, so you can always future-proof your technology investments when you can.
In much the same way, you should align with a system that can support a variety of payment methods as well. For example, our solution currently works with:
- ACH
- Checks
- Debit and credit cards
- Direct debit
- Flywire
- PayPal
- Virtual cards
- Wire transfers
Payment history, reporting, and analytics
Knowing what’s going on with your finances — right now — makes it much easier to run day-to-day operations, respond to emerging opportunities, or put in place growth plans. So, when choosing a solution, opt for one like ours that offers comprehensive reporting and analytics support. With our platform, we deliver a host of pre-built reports alongside our Advanced Reporting add-on, which lets you assemble your own based on hundreds of objects and field types.
And with so much raw data at your fingertips, our Cash Collection Forecasting tool can deliver surprisingly accurate projections on what your overall finances and cash-in-hand will look like in the near future.
A customer portal that provides self-service access, secure payment processing, and streamlined communication
Invoiced also offers a self-service payment portal as part of our software. Through this one-stop site, buyers can review invoices, register disputes, manage subscriptions, update account details, set up AutoPay options, and initiate payments — all from an easy-to-use, branded interface.
The benefits of using Invoiced as your franchise billing software
Supporting your billing efforts with Invoiced’s Accounts Receivable Automation software is the smartest choice for simplifying and standardizing invoicing across your franchise. Our platform makes payments seamless for your customers through an intuitive portal while reducing the workload for your team.
With Invoiced (a Flywire company), you get:
- Stabilized cash flow to keep operations running smoothly
- Less admin work thanks to automation handling the heavy lifting
- Stronger franchisee and customer relationships built on transparency and trust
- Scalability with a flexible platform that grows with your business
- Global reach with support for transactions in 140 currencies
See the difference for yourself — schedule a demo today.
