How Technology Can Help SMEs Get Paid Faster
UK small businesses are grappling with a real problem of overdue customer payments, costing them a total of £2bn every year.
It is one of the greatest challenges facing UK SMEs, with a third of companies facing delays of at least a month beyond their terms and nearly 20% having to wait more than 60 days before being paid.
This is having an adverse effect on small businesses in the UK and needs to be addressed. Business owners spend four hours a week chasing overdue invoices, with 12% saying they have had to employ individuals whose specific role is to chase overdue invoices.
A further 16% of small businesses say that unpaid invoices mean they struggle to pay their staff, showing that the culture of late payments is having an impact beyond the businesses themselves.
What are the reasons for this?
Most SME owners often talk about how stretched they are. So, when one small business deals with another, the owners find themselves with little time to pay the invoice or chase up the late ones.
There are other reason of course, and these include:
• delays sending invoices
• invoices that don’t stand out
• disorganised customers
How does technology help?
There are numerous online and cloud accounting software suites designed to help SMEs manage their accounts more effectively, but how do they actually help SMEs collect their payments faster?
Send invoices straight away
Accounting software will allow you to send out each invoice immediately after the work is complete – wherever you happen to be. There is no need to wait until the end of the month or manually create a PDF and email it out.
The software will allow you to pre create a price list for your standard products and use this list to easily put together invoices for your work. If you have recurring invoices for the same customers there will be an option for these to be sent out automatically when necessary.
Get your invoices noticed
You need to make sure your customers actually see the invoice in order to get paid on time. By using accounting software, your customers can click a link within an email to access the invoice rather than having to download a PDF. Likewise, if add your own customisations to the invoice, such as personalised branding and clear payment terms, this will stand out amongst all the others your customers will likely have.
Make it easy to pay
The addition of a ‘pay now’ button makes it a lot easier for your customers to pay. Your customer can use credit cards or PayPal to pay online, removing any potential barriers and speeding up the process. Also, providing the invoice is correct, back and forth about chasing payments will be eliminated.
For customers who don’t pay straight away, your software should come with automatic invoice reminders that gently prod customers to pay on time and save you having to follow up on late payments.
Online invoicing removes the most common obstacles to payment by streamlining the process for business owner and customer alike. It frees up time for more important work, improves cash flow, and also takes away a source of ongoing stress for many SMEs.