How can small businesses help themselves to get paid faster? According to new research by accounting firm Xero, the first is establishing shorter payment terms.
Analysis of 10 million invoices issued by more than 150,000 SMBs suggests this strategy may reduce waiting times.
Small businesses that set one-week payment terms waited 15 days on average for payment, in other words, they were paid about a week late.
Businesses that set two-week terms waited 21 days on average – also a week late. Those with three-week terms waited 25 days.
The consistency of lateness, which is around one week as per the above findings, suggests customers may add a week to whatever terms are printed on the invoice as an automatic reflex.
Armed with this knowledge, SMBs should be factoring this in when setting their terms.
Automatic invoice reminders
The second step that Xero believes would help SMBs get paid faster is to start using automated invoice reminders.
SMBs should be sending a friendly e-mail reminder about their bill as soon as it becomes one day late, or even better, they should also be sending a reminder a few days before the due date.
Having well-structured, timed invoices is essential to getting your invoices paid on time.
CreditorWatch Collect offers a range of customisable reminders that you can tailor for each individual customer based on your relationship with them.
At any time, you can review, schedule or pause upcoming reminders, add your own notes, or review the entire history of a contact or an invoice. Click here to find out more.
Add a payment service to your invoice
Xero’s findings show that invoices created with an attached payment service were paid an average 55 per cent sooner than invoices without. That’s the difference between a 22-day wait and a 12-day wait.
With our latest software update, you can now link your CreditorWatch Collect Reminders directly to the Xero Online Invoice page, where you can add a direct payment option.
We can help!
Many businesses are burning time, money and energy chasing overdue invoices, taking valuable time and energy away from doing what they love. CreditorWatch Collect offers a better way that will save you hours each week, reduce stress and increase your cashflow.
Jump on the phone and book a chat with one of our Receivables Specialists or alternatively, start a 14-day trial – no credit card required.