We all know that cash is King, and without it, nothing can happen in your business. Wages stop getting paid, suppliers stop delivering goods and services, and your reputation can take a serious hit, even if you’re profitable.
For many businesses, getting paid is the just last step in the process of delivering a job, and it’s never really thought about until the accounts receivables list grows in size, lateness, and its impact on the business. With a function that is so utterly crucial to business success, it’s often amazing how little effort is devoted to it, and the impact that has on SMBs cannot be overstated.
In the UK, the FSB estimates that over 50 000 businesses are pushed into insolvency each year, as a direct result of late payments.
In Australia, Xero’s Small Business insights report 48% of business invoices are paid late, with more than 10% of those over a month overdue. Illion’s August report said that of overdue invoices in Australia, 57% were more than 60 days overdue! That’s huge and represents an enormous risk to any business!
What’s even more crazy is that, business owners and managers spend an awful lot of time improving and optimising their sales process, and operational delivery to ensure that work gets done, but comparatively little effort goes into getting paid on time. It’s amazing that the function that provides the cash and liquidity that business is utterly dependent on, is often left up to an accounts clerk to chase overdue invoices.
There is a cost to getting paid late that is often missed when you’re reading a standard P&L - simply because there isn’t a line in most that accounts for it adequately.
Outside of debt collection fees, and bad debts, late payments hurt SMBs in three ways:
- Overdue invoices remove liquidity from the business and hinders its ability to grow! The opportunity cost of not having that extra 50K, 100K or 200K cash at bank can be enormous.
- People have to spend time and money chasing cash that they’re owed, rather than chasing more sales or improving the business. You’re spending money on a valuable resource, to chase money - which increases your Cost of Sales and impacts your margins! Worse, this is a staff member that can’t be dedicated to growing the business.
- They damage relationships with customers. When you do work for someone and don’t get paid in a timely manner, it can have flow on impacts with follow up work, and even cost you a customer altogether. Whether it’s bad systems, or bad cashflow on your customer’s end, poor payment behaviour creates resentment, and puts entire business relationships at risk
At WorkGuru, we’ve been working towards solving this problem for our customers for a while now, and embedding the payments conversation into the sales process. Our goal was to allow SMBs to optimise their cashflow, sell only to customers who have a full intention of paying the bill on time, AND save the money that they’d otherwise spend on accounts receivable.
When we spoke to our customers, one of the key requests our customers have made was to not only accept payments after a job is done, but to take a deposit at the point of Quote acceptance, or even require a pre-approved payment method for future invoices.
This means that when a Quote is accepted, the business owners can be confident that they’re going to get paid, on time, and in full for the work they do, and the client knows upfront the terms of the engagement, including how and when the bill will be paid.
To bring this vision to fruition, WorkGuru has partnered with the team at Pinch Payments for our latest product release, GuruPay. GuruPay brings the payment terms and automation into the sales process and ensures that service providers and their customers are all on the same page about how and when payments will be made.
Looking for a payments partner that had the flexibility of platform and technology was important, and they had to be a company that shared our values and drive to improve the lives of small business owners. That’s why working with Pinch Payments was a simple decision. Their customer-centric ethos and the strength of their underlying technology made it an easy choice, and one we’re truly excited about.
Paul Allen, CEO of Pinch Payments, shares our enthusiasm, stating, "We are delighted to support WorkGuru in their mission to enhance payment solutions for small businesses. Through this collaboration, we are furthering our own mission to eradicate the issue of late payments, a problem that exacts a significant toll on the global economy each year."
We’re delighted to work with Paul and the whole Pinch team to try and address the late payments problem that is damaging SMBs across the world and it’s our aim that by 2024, all WorkGuru customers have the ability to pre-authorise payment methods at the quote stage, to ensure that they’re paid on time.
Additionally, we’re keen to do this at the lowest possible friction for our customers. A key element of the GuruPay offering is that it doesn’t need to cost customers a cent. Where your jurisdiction allows it, GuruPay allows you to pass on the fees and charges associated with your transactions to customers, and have them automatically applied to your invoice, and the payment reconciled in Xero.
While it’s a small step on the journey of improving global payment times for SMBs it’s one that WorkGuru is proud to be undertaking and we hope will make a huge difference to all of our customers globally.
*While GuruPay is currently only available in Australia and New Zealand, we aim to roll the offering out to our UK customers in early 2024.