Hidden Secrets to Avoid Late Payment Issues
By Vik Naidu
Are you facing late payment issues in your business? Getting the late invoices to be paid and chasing them is a big issue faced by small to medium-sized enterprises today. Not getting paid on time could lead to a lot of problems in your business internally.
Impact on SME’s
In Australia, surveys show that there is a big impact of late payments on SME’s. While they spend a number of man-days and resources chasing late payment invoices, most of them are written off as bad debt by SME’s.
It is important first to understand the reason why late payments occur in your business. While most of the customers do not provide a reason for late payments, when they do provide most of the time is because the transaction is pending or the customer only pay invoices only at certain times of the year.
With the above reasons, when the business actually gets into the process of chasing late payments, there are few reasons why they are not successful most of the time. One reason when the business owners do not chase for late payments is that they do not want to risk the relationship with the customer, they do not have enough manpower or resources to do so and the time constraint.
How to Lower the Associated Risks
However, with a strict agenda of items followed throughout the business, SME business owners can make sure they are at low risk with possible future late payments:
- Establish a strict agreement regarding payments before the actual transaction.
- Throughout the transaction send invoices with accurate amounts at the right times. Make sure there’s no delay nor error on your side. It is important that thorough communication is maintained at all times.
- Finally, to go a step forward, try and use digital means of doing work when possible as this may reduce human error and delay. Methods such as direct debit, e-invoicing can make sure that most of your headaches are solved and that customers will tend to pay their invoices on time.
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* Save 50 days in a year through process automation
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