New Business? – you could be spending 10% of time chasing payments
Recent research shows that a new / small business could be spending up to 10% of their time chasing payments or unpaid invoices.
Cloud Accounting Software Xero, are claiming that up to a 10% of time is dedicated to chasing payment. With 52% owners worrying about unpaid invoices.
HR was the sector where most time is wasted chasing payments (three days), far more than IT & telecoms (1.8 days) and manufacturing & utilities (1.7 days), according to the Xero’s research.
Two main reasons why they were being paid late was their customers themselves having to wait for payments (32%), as well as “lack of consistency on payment terms” (27%).
More than a third (37%) of respondents identified reduced productivity as a consequence of them having to wait for payment, as well as cash flow problems, losing money and other work building up because time was being spent chasing unpaid invoices.
“Nearly 60% of all UK small-business invoices were paid late in 2015, which can cripple and often close a business within its first few years,” said Emma Jones, founder of business community Enterprise Nation.
“The late payment epidemic the UK is facing has to change, so that small businesses don’t spend so many hours chasing doubt and worrying about cash flow [as a result of] late payment. With small businesses making up 99.8% of the British economic engine, this is a critical issue to sort out for the betterment of the UK economy as a whole.”
Gary Turner, co-founder and UK managing director of Xero, says: “The UK has a dismal productivity rating compared to the rest of the G7 nations. Our recent research has proved that small businesses are continuing to waste time chasing payments, only adding to the problem with productivity we face in this country.”
To help small businesses avoid cash flow problems caused by late payment, Turner recommends invoicing promptly. “The sooner you invoice, the sooner you’ll receive payment. It’s vital to get your invoicing process right from the start so that it is efficient,” he comments.
Turner also recommends that business owners and managers introduce themselves to those responsible for payment at the companies they are invoicing. He also advises small firms to maintain accurate financial records, to have shorter credit terms where possible and to make it as easy and convenient as possible for customers to make payments.