Late payments can cripple your cashflow and undermine the viability of your business. We’ve outlined some ways to tackle late payments and get your cashflow back on track.
Late payments to Kiwi small businesses are on the rise, putting additional pressure on your cashflow and ability to cover your expenses.
According to recent research by Pin Payments, the average number of days outstanding for invoices stands at a sluggish 38 days, causing major cashflow issues for many SMEs.
When your customers don’t pay on time, not only does your cashflow take a dip, but working relationships can be damaged and hours of business time can be wasted chasing up these overdue payments.
We’ve outlined five techniques for cutting down payment times:
1. Send your invoices out on time
The customer can only pay once you raise an invoice. Make sure you send invoices out in a timely way, and that the details are accurate and clear. Break large invoices up into smaller payments that get sent out when specific milestones are reached in the project.
2. Include clear payment terms
Include payment terms and make sure there are clear on the invoice. Request notification if payment will be delayed, and if it’s late, you’re justified in following up immediately.
3. Offer flexible payment options
The easier you make it for customers to pay, the better. Provide your customers with a variety of payment methods, including credit cards, debit cards, regular Direct Debit payments and payment gateways like PayPal etc.
4. Get proactive with your credit control
Check your aged debtor reports regularly and chase up invoices that are overdue. Politely reach out to the customer and remind them of the outstanding balance. Sending automated notifications from your accounting software can also help to provide some impetus for customers to settle their bills.
5. Consider invoice finance
In a worst-case scenario, where payments are well overdue and cashflow is suffering, it’s worth considering invoice finance. Selling your outstanding invoice to a financing provider gets you the cash you need now, while passing the debt to the provider and allowing the customer time to breathe.
Talk to us about reducing overdue payments.
If late payments are becoming an issue, it’s important to take action fast!
Talk to our team about finding new ways to speed up payment times, get proactive with your credit control and provide faster, more reliable payment options for your customers.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
