According to Xero, on average payments were made 7.9 days late to businesses in June 2023 and 7.6 days in the three months to June. This is 1.2 days longer than the compared 6.4 day average of 2022.
SMEs need a consistent cash flow to operate successfully. However, delayed payment can disturb businesses cash flow and harm a small business’s income and ability to trade efficiently. This further leads to business failure as delayed payments prevent reinvestment in the company. With 50,000 businesses going bust each year due to cash flow issues it is so important for businesses to have a strong handle on their ledger and minimise late payments.
This is where Collect-it works its magic!
Many people may not be aware that I have worked in the credit management industry for 30 years having run Darcey Quigley & Co, a successful pre litigation commercial debt recovery company collecting unpaid invoices globally for 17 years.
My mission has always been to make sure businesses get paid on time, every time.
As part of the Know-it, the all-in-one credit management solution, Collect-it gives SMEs the ability to collect their unpaid invoices seamlessly in the click of a button, straight to our team of trained experts across all industries. Working with sole traders to large PLCs this makes us a fantastic barometer for the global credit cycle. Something which is truly unique in any SaaS platform.
Using Collect-it has been the difference between some companies’ survival having recovered over £385 million worth of unpaid invoices this year alone. We immediately action all cases within 1 hour of instruction with an average case turnaround time of 48 hours in the UK. The power of outsourcing is where our success lies.
Maintaining a healthy cash flow is crucial for businesses, and it’s important to understand the impact of late payers and bad debtors on a company. Know-it can minimise the risk of late payments and increase business efficiency. Avoid the pitfalls of liquidations and administration which are rapidly increasing globally.
Here are my top 4 tips for getting paid on time:
Clear and Transparent Communication
Clear and transparent communication is the foundation of a healthy business-client relationship.
Establishing open lines of communication from the start ensures that both parties are on the same page regarding payment terms and expectations.
Clearly define your payment policies and ensure that your clients are aware of them.
These policies should include details such as due dates, late payment penalties, and accepted payment methods. Regularly remind your clients of these terms to maintain a proactive approach to payments.
Streamline Invoicing and Payment Processes
Simplify your invoicing and payment processes to minimise delays and confusion.
Invest in a reliable accounting software like Xero or system that enables you to generate professional invoices quickly and accurately.
Ensure that your invoices contain all relevant details, including a breakdown of services or products provided, payment due dates, and clear instructions for payment.
Implement an efficient system for tracking and monitoring outstanding invoices, allowing you to identify and follow up on late payments promptly. Automated payment chasing via email, letter and SMS can be found in the Know-it platform – Chase-it!
Encourage prompt payment with late payment interest and compensation
The late payment of commercial debts act means you can legally claim late payment interest and compensation on your unpaid invoices.
When writing your credit policies be sure to include that late payment interest and compensation will be added to the outstanding balance if payment becomes overdue.
Implement a Strong Collections Strategy
Despite your best efforts, there may be instances when clients consistently fail to meet payment deadlines.
In such cases, it is crucial to have a well-defined collections strategy in place.
Clearly outline your steps for escalating late payments, including reminder emails, phone calls, and formal collection letters.
Be firm, but professional, in your approach, and consider using Darcey Quigley & Co via Collect-it.