With new figures showing “an alarming number of Australian small businesses are not set up properly to receive invoice payments in a timely fashion”, thus creating “a huge bottleneck”, some of the power to get paid faster rests squarely in your hands.
That stat comes from “a survey of over 3500 small businesses” which “revealed that close to one third (31%) of payments were being delayed or put off indefinitely due to businesses not having staff working beyond the typical nine to five to collect credit card payments over the phone or not having the technology and process to receive online payments in real time".
A.J. Singh, managing director of ezyCollect, said: “Late payments can have a material impact on a company’s bottom line and in many instances, can be the final straw for a small business.
“Having cash on hand and the ability to pay staff and suppliers is the biggest issue facing small businesses in Australia.”
ezyCollect should know about all of this stuff, because it is “an advanced, cloud-based accounts receivable software that easily adds on to MYOB and Xero accounting software to automate debtor management and collection workflows".
Presumably having ensured it is always paid on time as much as possible, the Sydney-based start-up recently won an award for the Fastest Growing MYOB Add-on in 2017, and is used by more than 1350 users in over 30 countries.
So, what are some of the key survey findings?
- Most invoices are paid 18.23% during lunch hours (12pm-2pm).
- When analysing all the data – the most popular time for invoices to be paid was 11.01am.
- 16.43% are paid between 11am-12pm.
- 6% of payments are made in the two hours after closing hours (5pm-7pm).
- 7% of payments are made in the two hours before opening hours (7am-9am).
- 10% of payments are made between 9am and 10am (meaning if staff members are sick or late, you might miss out on a big chunk of money unless your business has a way to accept online payments without the need of a physical person)
And what are ezyCollect’s top five steps to get paid on time?
1. Accept credit card payments
Paying by credit card is a common consumer behaviour. Research from MYOB showed that 64% of Australians prefer to pay by card and 5.1 million Australians walk away from a sale if they can’t pay by card. Accepting online credit card payments makes it easy for customers to pay you: customers can pay 24/7 and they don’t need to rely on having cash in their bank account to pay you.
2. Add a PAY NOW button to your reminder emails and invoices
A simple ‘Pay Now’ button on emails and/or invoices, leading to your online payment gateway, means your customer is one click away from paying your invoice quickly and securely. They no longer need to spend time searching for a cheque book, envelope and stamp!
3. Communicate before a payment is due
A good way to stay on top of your customer’s mind is by maintaining your relationship. Genuinely reach out with the purpose of connecting and adding value. Take the opportunity to check their satisfaction with your goods or services. Your sales team is a great resource at this point in the collections journey.
4. A communication strategy is key
Your business should have a robust communication strategy ready to activate as soon as an invoice is overdue. Use a variety of channels to reach your customers with reminders: email, post, SMS, phone. You can do this manually, or an automation software can track invoices for you, so that as soon as an invoice becomes overdue your customer starts receiving polite system-generated reminders.
5. Escalate to debt collection and/or legal action
You didn’t go into business to start legal action with your customers, but remember, you didn’t go into business be a substitute bank to them, either! Starting debt collection or legal action is often the point at which businesses stall in the debt recovery process. Don’t panic – referring your customer to a debt collection or legal agency doesn’t mean your payment problem will escalate into a court case. Even a simple demand letter from a third party can be enough to prompt an outstanding payment.