One of the biggest challenges many small business face is getting paid on time. Getting paid on time is crucial to a business’s cashflow and there are multiple impacts late payments can cause. From staff wages to paying suppliers, getting money into the business, on time, is crucial to the day to day running.
According to Xero’s small business insights, the average debtor day is 39 days. 9 days over the average 30 day term, with only 50% of businesses currently cashflow positive. On top of this, a large amount of administration time is needed to chase up late payments. Time that could be better spent elsewhere.
One of the best ways to tackle late payers is by getting your businesses finances into an online accounts package, such as Xero or Quickbooks. These softwares are designed for small businesses and have many features that contribute to improving the day to day operations. The journey to getting paid faster starts here.
In this article we’ll run through the 3 ways in which your business can get paid faster as well as reducing the amount of administration time that comes with this.
Many small businesses have manual credit controls that are slow and do not update regularly. An offline approach to credit control is slow and requires a lot of manual review. This ultimately costs small businesses a lot of time in administration that can be mitigated.
This manual approach makes it hard for business owners to gain visibility of what invoices are owed, when they were last sent and so on. This whole process costs time and is a big reason why so many small businesses are paid late.
Automating credit control starts with an online accounts package and building out integrated solutions.
Simply connecting products such as Xero and Chaser will significantly improve the time it takes to get paid by removing the need for manual review of invoices and chasing.
Xero and Chaser will automatically chase clients up for payment, with automatic payment reminder emails and insights into whether a client has even opened the invoice or not. This is powerful data that can really help small businesses get better insights into their clients.
The best way to automate credit control is by starting simple. By using Xero, you can send invoices digitally and set up automatic payment reminders. Email reminders in Xero can be personalised, sent out automatically and is a great way to make sure debtors aren’t ‘missing invoices’.
How many times have you been online shopping recently and only been able to pay with one method?
From PayPal to Klarna, the digital payment world is evolving and making it easier for customers to buy products from businesses. However, it seems that only a very small portion of small businesses are adopting this new approach.
There is still a large majority of small businesses only offering one maybe two ways to pay an outstanding invoice, such as the all too common bank transfer.
Xero has started to take a lead on payments now offering the ability to pay outstanding invoices within the software itself. But what if your customer isn’t operating Xero?
There is a lot of data that shows offering multiple payment methods reduces debtor days, but it can be hard to know where to start. With multiple players in the market and many different offerings, we’ve picked the top 3 for small businesses;
Setting up these 3 payment options in your business is super simple and takes no longer than 20 minutes. Once done, coupled with automated credit control, your clients should have no reason not to pay on time.
The accounting profession has seen a massive switch from just offering year end accounts to providing advice on current business proceedings. There are now many accountants out there operating helping businesses operate digitally.
Accountants are now able to work with your business and implement change. Updating old accounts softwares and teaching you how to use cloud based ones, such as Quickbooks & Xero.
Many firms have the goal of helping their clients become digital businesses, which means not only can they bring your accounts up to date, teach you how to use these new online systems, but they’ll also be able to set up those multiple payment options.
Once your accountant has set up a businesses online accounts, they’ll be able to show who are your late payers and put procedures in place to improve the average debtor within your business.
If you feel that your debtor days are getting out of hand, the best thing to do is reach out to your account, they’ll be best equipped to start improving this area of your business.
When it comes to reducing the average debtor days, it’s clear online solutions are key to improving this area.
Just ask yourself, what would be paid faster… a paper invoice sent in the post or a digital version sent straight away, with its multiple payment options & follow up reminders?
There are more businesses going digital and receiving the benefits online software affords them. If your business is struggling with getting paid on time or understanding online accounts packages, then it’s time to speak with your accountant. Simply implementing something like Quickbooks or Xero could be the difference to your business.
Or maybe you’ve already got an online accounts package but are not getting the best results from using it? Fill in the form below and let’s see if we can help you out.