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Late payments to Aussie small businesses are on the rise, putting additional pressure on your small business cashflow and ability to cover your expenses.
According to recent research the average number of days outstanding for invoices stands at a sluggish 38 days, causing major cashflow issues for many smaller businesses.
Here are five straightforward ways to improve your payment times:
How to get paid faster and boost your cashflow.
When your customers don’t pay on time, this late payment can cause a multitude of business and economic problems. Not only does your cashflow take a dip, but working relationships can be damaged and hours of business time can be wasted chasing up these overdue payments.
We’ve outlined five key techniques for cutting down payment times:
Offer flexible payment options.
The easier you make it for customers to pay, the better. Provide your customers with a varieties of payment options including credit cards, debit cards, regular Direct Debit payments and payment gateways like PayPal etc.
Send your invoices out on time.
The customer can only pay once you raise an invoice. Make sure you send invoices out in a timely way and that the details are accurate and clear. Break large invoices up into smaller payments that get sent out when specific milestones are reached in the project.
Offer discounts for early payment.
Customers won’t pay before the invoice due date unless it’s in their interest to do so. But you can incentivise customers to pay their invoices early by offering discounts for fast payment. For example, if payment terms are usually 30 days, offer a 2% discount if the invoice is paid within 10 days.
Get proactive with your credit control.
Check your aged debtor reports regularly and chase up invoices that are overdue. Politely reach out to the customer and remind them of the outstanding balance. Sending automated notifications from your accounting software can also help to provide some impetus for customers to settle their bills.
Consider invoice finance.
In a worst-case scenario, where payments are well overdue and cashflow is suffering, it’s worth considering invoice finance. Selling your outstanding invoice to a financing provider gets you the cash you need now, while passing the debt to the provider and allowing the customer time to breathe.
Talk to us about reducing overdue payments.
If late payments are becoming an issue, it’s important to take action fast!
Talk to our team about finding new ways to speed up payment times, get proactive with your credit control and provide faster, more reliable payment options for your customers.
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