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Get prompt payment on the invoices you send

Article provided by Xero

Small businesses are carrying billions of Rands worth of unpaid invoices. Those late payments put pressure on your cash flow and can cause a lot of worry. And yet, just a few simple steps could help fix the problem.

Late payment happens – a lot

If you’re a small business owner, you’ve probably been paid late before. You’re not alone.

  • Small and medium enterprises are owed billions.
  • A quarter of businesses need an overdraft to deal with the cash-flow shortfall.

Late payment slows growth, reduces productivity and increases stress. It can lead to problems making payroll, difficulty paying bills, and increased borrowing.

Small business gets hit harder

Small businesses are regularly paid later than big companies and they have fewer cash reserves to cover the late income. You probably also have a harder time chasing debtors, because:

  • You’re not scary
    When your customers get a lot of bills at once, they will deal with the big guys first. Corporations have a reputation for enforcing penalties and referring unpaid invoices to debt collectors – so they tend to get paid before you.
  • You may not have an accounts department
    Small business often do not have a dedicated resource for chasing debtors. As a result, you will not always know who owes you, or how late they are. And you are probably not contacting those clients to follow up on payment.
  • You do not have time
    Chasing debtors takes time, and a lot of it. You have to check your books, find out what is unpaid, and decide what to do about each outstanding invoice. Then you have to compose a well-thought-out email (or make a call) that treads the fine line between being polite and being firm. It is a complete distraction from your core business.
  • You are nice and there is nothing you can do about that
    You might find it hard to press late-paying clients for personal reasons. Perhaps you worry about bringing financial tension into a working relationship. It can feel awkward and uncomfortable, even if you know you have every right to be paid.

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