Nicola Smith 6 October - 6 min read
Making sure you get paid on time is critical to your business’s cash flow. Not only is adequate cash flow important in paying your operating expenses, but understanding your average payment times and where and how this can be improved will allow you to better plan investments in your business. There are several reasons your payment times may not be where you want them to be, but that doesn’t mean you can’t turn things around.
In this article, we provide a few tips to help you get paid faster, including thinking about the customer’s payment experience, which is often a common impediment to a business’s cash flow.
When it comes to identifying why customers don’t pay their invoices on time, it’s important to consider the payment process from their point of view. You may be frustrated that, again, a customer hasn’t paid their invoice on time, but have you asked what the process looks like for that customer to settle their account? Think about the last time you had to pay an invoice, and the process felt difficult. The payment details may have been unclear, or you may have had to process several invoices for one creditor or suppliers over individual transactions — not exactly the makings of efficient business processes.
According to Prushka’s 2020 Canary in the Coal Mine report, 64 per cent of businesses spend, on average, less than five hour per week following up debtors. While this is an improvement, up by around 20 per cent over the last 18 months, just under half of the businesses surveyed (47 per cent), said that it’s becoming harder to collect outstanding debt. Similarly, 53 per cent of debtors surveyed for the report said it’s harder to pay debt than a year ago. The economic impacts of COVID-19 may have exacerbated this difficulty; however, there are still things businesses can do to get paid faster.
Innovation in B2C payments has developed significantly in recent years, while B2B payments are still often fraught with friction. Some of the common reasons customers fail to pay their invoices on time include:
Looking at what your business can change to get paid faster is a critical step in taking back control of payment times and processes in your business.
There are a few things you can do to help your business get paid faster. From incentivising customers for early payments to being clear with your payment details on your invoices, you need to think about the customer’s payment experience while strengthening your payment systems and processes.
Some changes you can implement to strengthen payment systems and processes, include:
The key factor that will bring together all the improvements you’re making across your business is a system that integrates all of the digital transformations in your business, particularly when it comes to payments.
While making changes such as ensuring your invoices clearly state payment details and terms for your customers can help remove ambiguity, your business needs strong digital frameworks behind all these processes.
Spenda’s platform includes a range of products that help businesses to ensure all of their accounting and finance platforms have a single point of truth. Not only does this reduce errors due to poor data, but it helps businesses get paid faster by providing customers with a range of payment options.
Contact us to learn more about how you can integrate the right tools and processes in your business so you can get paid faster.
Over the last decade, payment service providers (PSPs) have made a range of payment methods available to customers, particularly when it comes to online payments.
The payment processing industry has progressed rapidly in recent years, particularly for business to consumer (B2C) transactions. Platforms that offer integrated payment technologies for businesses to business (B2B) transactions are also becoming more widely adopted, allowing businesses to accept online payments and transform the way in which they trade.
Providing a great customer experience is critical for long-term business growth. Studies show increasing your customer retention by just 5 per cent can lead to revenue increases of at least 25 per cent.
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