Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Business

LATE PAYMENTS ARE AN EPIDEMIC FOR SMALL BUSINESSES

LATE PAYMENTS ARE AN EPIDEMIC FOR SMALL BUSINESSES

By Gary Turner, UK MD and co-founder of Xero

In light of recent news that Britain’s third largest supermarket chain Asda is set to enact 90 day payment terms on its clothing suppliers, the ongoing issue of payment chasing has come to the forefront once more.

It’s an eternally pressing concern for businesses everywhere – our research last year found that a fifth of small businesses across the UK and the US pointed to overdue invoices as their biggest time waster, and UK business owners have admitted to spending 10% of their working day chasing late invoices, the equivalent of one and a half days per month.

 For retail giants like Asda these longer payment terms simply mean, as The Guardian aptly phrased it, “financial breathing space”. But, for the small businesses who act as suppliers, longer payment terms bring with them far more serious implications. At an increase of 50% longer to receive payment, Asda’s suppliers may now be forced to walk a fine line between bankruptcy and survival. Indeed, the knock on effect from a supplier being dealt difficult payment terms is far reaching – in turn, their employees may have to wait for their pay and their suppliers must also must wait longer for payment. As the businesses gets smaller further along the supply chain, the increased delay in payment time inversely means harsher and larger consequences.

But what do the suppliers think? Recently, Xero’s 2017 Make or Break Report found small business confidence to be high, with 75% remaining confident about the future despite the economic uncertainty brought on by Brexit. However, there can be no doubt this confidence will take a hammering if big businesses like Asda continue to make decisions like this based on Brexit consequences – in this case, the decision to lengthen payment terms was attributed to the falling pound. The report found that despite this confidence, chasing payments is still the biggest time waster for small businesses in both the UK and US.

When over half of business owners in the UK admitted to being constantly worried about cash flow due to unpaid invoices, and another third blaming these outstanding payments for a reduction in productivity, it’s clear changes must be made. While there is not a simple answer to this ongoing tug-of-war, it is worth big businesses taking into consideration how their decisions will impact their suppliers and remembering that thousands of businesses in the UK fail each year due to late payments. Xero’s tongue-in-cheek parody helps to Chasing Payments.

TOP FIVE TIPS FOR MANAGING CASH FLOW

  1. Invoice promptly

The sooner you invoice, the sooner you will receive payment. It is vital to get your invoicing process right from the start so that it is efficient and pain-free.

  1. Establish a relationship

Introducing yourself to the people in the accounts departments of the companies you are invoicing can often make a difference. At the same time, ask them to include your invoice number as a reference with every payment they make, to help you determine which invoice is being paid.

  1. Keep accurate records

Keep track of the time and materials expended on a client’s project and make sure you invoice for everything. If you record the work done as you go, it saves you trying to remember the details at a later date.

  1. Define your payment terms

Consider shortening your invoice payment period to encourage your customers to pay sooner, even to one or two weeks. If you make your best efforts to supply your products and services to your clients’ deadlines, there is no reason why they should not try their best to pay you just as quickly.

  1. Offer easy payment methods

As a general rule, when you make it easier for your customers to pay, they will pay sooner. Some accounting software offers a ‘pay now’ button on online invoices, which means you can send customers invoices online with an option of getting paid instantly.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post