Sage is the global market leader for technology that helps businesses of all sizes manage everything from money to people to payments. Our purpose is to support the people that make businesses thrive.
Maintaining payments and cash flow is the fuel of growth for our customers in the UK and Ireland, over 600,000 small and medium businesses.
Late payments are responsible for slow business growth, unpredictable cashflow and uncertainty. We surveyed 3000 SMB’s across 11 countries and found 1 in 10 invoices are paid later and up to 10% of late payments are either never paid or are written off.
Unfortunately, many factors contribute to why late payments exist and the issue is growing to be a hindrance to business growth.
Here are Sage’s top 6 suggestions on how to eliminate late payments and keep the cash flowing:
1. Establish terms up front
There could be a significant improvement in timely payments if you tightened up on your payment terms from the start.
2. Automate Payment Processes
If your business is experiencing the negative effects of being paid late, it could be worth considering using an automated invoice payments system or e-invoicing. This can help improve cash flow in your business and limit the obstacles that stop your payments from arriving on time
3. Avoid the awkward conversations
The biggest barrier to chasing late payments is avoiding that conversation to protect the relationship with the client. This is another benefit to e-invoicing: since invoices are automatically generated and sent, you know each customer has received their invoice and knows how much they owe.
This process can be streamlined by creating an invoice with a “Pay Now” button, which can be paid immediately wherever your customers are.
4. Eliminate human error
Using innovative fintech with invoicing functionality can get rid of the burden of the amount of time it takes to manually enter transactions while having to question the accuracy of the output.
Another reason for late payments is that the customer disputes the amount owed. Automated invoices are generated without manual data, so all amounts and totals are accurate. Both you and your customers can trust the accuracy and keep the transaction moving as agreed.
Payments can be automatically updated within the accounting software system, which eliminates admin and the chance of human error, meaning you don’t have to keep track of who has paid and who hasn’t as your accounting software will do it for you.
5. Offer digital payment methods
E-invoicing and digital direct debit payment methods such as Go Cardless have the funds transferred from your customers’ accounts to yours immediately once the payment is due. No more pending payments, returned cheques, or any other delays in payment transactions.
Processing invoice payments through Sage payment partners such as Stripe and PayPal only take minutes to set up and are simple and easy to use which can be great for your business freeing you from the need to deal with a complicated payment process. By integrating these providers into your accounting software, it’s easy to start taking payments on your invoices straight away.
6. Get paid faster and improve the visibility of your cashflow
Using automated payments and e-invoicing, payments are quick and easy. Payments can be as simple as one click, which eliminates some of the obstacles to getting paid on time. This means no more awkward conversations with your customers and no strained client relationships.
Due to the automated process of e-invoicing, human error and customer disputes are minimised – this makes your cash flow more transparent as you can ensure your numbers are accurate and updated in real time.