Collections Tool ZenCash Helps Businesses Get Paid

There’s no shortage of online invoicing tools to help small businesses and freelancers get paid, from startup Freshbooks to larger solutions like QuickBooks. New startup ZenCash doesn’t want to replace existing invoice solutions, but rather complement them by thanking clients who do pay, and following up with the ones who don’t. The Dallas-based startup launches today to automate the entire receivables management process. It aims to help small businesses “take the customer shakedown out of their business” by keeping track of who has paid, and tracking down clients who haven’t.

Users start by syncing ZenCash with their existing invoicing solution (currently supported: Freshbooks, Clio, Quickbooks, Harvest and Blinksale), then define the schedule of due dates and desired actions for each client. After an invoice is issued, ZenCash sends out friendly reminders based on defined parameters – thank you notes when payment is received, phone calls about upcoming due dates – at certain points throughout the payment cycle. If payment hasn’t been received after the due date, the company’s collection partner, United Recovery Systems, calls the client until the invoice is closed.

Zencash’s pricing structure is based on a “per action” basis. It’s free to sign up, and users only pay for the actions the company performs on their behalf (prices starts at $1.95 for a printed thank you note). If an invoice moves to the collections process, a contingency fee is charged based on the amount collected. Collections pricing is available for invoices above $250, and fees range from 20-30% for successful claims. Customers also have the option to enable legal action for additional fees if a claim is unsuccessful. If an invoice is current or past due, clients pay the customer directly, and once an invoice is in collections payment goes to ZenCash’s trust account and is then distributed to the customer.

The company, which is self-funded with $500,000, has eight founders in Spain, Romania and the U.S. and is led by serial entrepreneur Brandon Cotter. “Getting paid, and paid on time, is a big issue with freelancers and small businesses,” Cotter said in an interview. “It is something I have dealt with over the years and know the pain of having to make the phone calls asking for the check.” He’s not the only one feeling the pain – a 2011 study by the National Federation of Independent Business found that 40% of firms said that receivables are coming in at a slower pace. Since small businesses are often too small to have a full-time accounting department, they can fail to follow up on outstanding receivables and often won’t make difficult phone calls when a customer doesn’t pay. There are existing collections agencies targeted at small business, but ZenCash is unique because it’s a cloud-based, automated solution.

Some existing invoicing solutions send built-in reminders to clients to remind them about payment due dates, but they don’t take action beyond emails. “We aren’t trying to reproduce what the folks at Quickbooks, Freshbooks or others are doing with invoicing,” Cotter said. “Instead, our focus is enhancing the ‘post invoice’ process.” ZenCash fills a gap between built-in reminders in invoicing tools and a large collections agency, which would typically only work with a larger corporation. Cotter says small businesses can work with a collections agency, but most don’t. “The process is a bit painful and there isn’t an automated way to interact with a collections agency,” he said. “And the bigger ones that have the best reach and strongest resources only work for the big banks. We give small businesses a way to follow up automatically and we give them access to national collections team that would not usually take small claims.”

Small businesses can easily send thank you notes and payment reminders themselves, but it’s often a matter of remembering to do it, and following up if deadlines aren’t met. There are also regulations in place for debt collections calls that stipulate the frequency and time of day calls can be made, and requirements for making calls (in Canada for example a reminder of payment owing must be mailed to the client before reminder calls can be made). And the longer a business owner leaves a debt in collections, the less likely it is they can follow up with legal action. For small businesses who often rely on getting paid to make payroll and keep their business afloat, ZenCash could be a great way to make sure invoices get paid, no nasty phone calls required.

Erin Bury

Erin Bury

Erin Bury is a Co-founder and CEO at Willful, an online estate planning platform. Also a former Managing Director at Eighty-Eight, a creative communications agency based in Toronto. She was formerly the Managing Editor at BetaKit. Follow her on Twitter at @erinbury.

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