It’s no secret that managing cashflow has long been a significant pressure for SMEs. Some 60 per cent of small businesses in Australia cease operation within the first three years, according to the Australian Bureau of Statistics and 40 per cent of those cite inadequate cashflow – from late payment – as a key contributor.
Acknowledging this pressure is one thing but what isn’t often taken into account is the vicious cycle of lost productivity and time spent managing this process, no doubt contributing to the crunch on business owners – producing invoices, getting them out on time, waiting weeks and sometimes even months for payment, chasing overdue payments, budget forecasting and managing expenditure.
Recent findings from our State of Pay report suggests that some business owners are spending up to eight hours per week collecting and chasing overdue payments.
The report’s findings were indicative of Australia’s culture of late payments but there are technologies business owners can implement to help ensure payment, shorten payment times and ease the overall strain that comes with managing a business.
From a broader viewpoint both the state and federal governments have been working to support SMEs, developing legislation that will help stamp out the late payments culture providing an immense benefit to SMEs in the long term.
However, from a grassroots perspective, it’s often difficult for businesses owners to know what to do and what products and technologies are available to help relieve the financial burden of running a business.
The State of Pay report found that when businesses introduced technology that automated their payment collection, not only was there a 30 per cent reduction in time spent chasing unpaid invoices but they saved an average of $15,000 annually by doing do.
The report, which has just been released found that when automated payment solutions are in place, business owners not only noted the positive impact of prompt and efficient payments on their business but their personal mental health and stress levels.
Automated systems help to break the cycle of getting bogged down in the time consuming, administrative components of their business and help business owners get back to doing what they do best, taking care of their clients.
Business owners have peace of mind knowing that the technology is doing all the heavy lifting and in turn, clients receive a more streamlined and seamless payment experience, making them more likely to pay and creating a win-win for everyone.
Along with the report, outlined below are three simple top tips to assist business owners to improve productivity and stop the cashflow crunch:
1. Introduce direct debit from savings accounts and credit cards
2. Introduce easy ways for late payers to catch up by automating your collection processes with an automated payment technology solution
3. Introduce incentives such as discounts for automated payment collection – it will save you in the long run
Here’s a summary of some key findings from the State of Pay report:
Chris Urry, CEO, IntegraPay