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How to reduce non-payment risk and minimise your credit exposure

17 February - 3 min read

Late payments expose your business to significant financial risk. According to data from the Australia Financial Security Authority (AFSA), people recently entering personal insolvency owe 32 per cent of their debts to a business, sole trader or individual, while 35 per cent is owed to banks. With trade credit almost as high as bank debt, it’s an important reminder of the risk to businesses when they provide goods and services on credit. 

Whether your business is experiencing several problem debtors or you’re exposed across a few large accounts, putting the right systems and processes in place to reduce non-payment risk will strengthen your business’s finances and reduce your credit exposure. In this article, we outline three key things your business can do to reduce non-payment risk, and strengthen your financial stability.

Automate your accounts receivable system

In many B2B transactions, the invoice-to-payment process is often manual, error-prone,  time-consuming and costly. In fact, businesses typically spend about 520 hours per year on accounting and administrative tasks, including manually processing invoices and payment reconciliation.

Automating your accounts receivable processes and inviting your business customers to connect to your digital portal to pay their outstanding invoices will allow your team to save hundreds of hours every year, and improve payment practices so that your business not only gets paid correctly, and on time.

Benefit from integrated payments

Current outdated systems make it difficult to access the flexibility many businesses need to correctly manage their cash flow. Integrated payments provide greater payment flexibility for the customer which significantly improves the chances of the supplier being paid on time, while allowing the customer to align their payments with their cash flow.

It costs, on average, more than $30 to process a paper invoice, and almost $28 for an emailed PDF version. In comparison, an e-invoice costs approximately $10 to process. So for businesses processing 500 invoices per month, that is an annual saving of $120,000. 

By modernising your payment infrastructure your business will be able to support and process higher payment volumes –  quickly and securely – and get paid in real-time, allowing you to reduce costs in the long run, and become more effective and competitive.

Add payment flexibility to the mix

Give your customers more ways to pay with multiple payment options such as via bank transfer and credit card, and via a B2B buy now pay later (BNPL) agreement. To sell more without increasing your risk of non-payment, a BNPL solution gives business suppliers and their customers access to the cash they need. 

At Spenda for example, we act as the third-party finance provider that deals directly with your customers. This means we assume the financial risk, so you can enjoy peace of mind and the cash flow advantage of getting paid in full and on time, every time. Further, by giving customers the flexibility they need to repay their invoices over time, they’ll be incentivised to order more from you while you’ll enjoy stronger assurance and visibility over your cash flow so you can plan and invest in smarter growth initiatives without needing extra credit.

Put an end to late payments with Spenda

Spenda helps businesses reduce non-payment risk and credit exposure through automation and by providing the tools to give customers more ways to pay their invoices. With our payment and lending services, you can offer your customers flexible and safe payment options while enjoying the peace of mind that comes with reduced financial risk and stronger financial stability. And by introducing these systems to your business, you’ll create a better customer experience at every stage of the transaction. 

Click here to download our free guide on how to improve cash flow management across your business and learn how you can save time chasing late payments, get paid faster and eliminate future debtors.

*This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.

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