According to research, 48% of invoices issued by small businesses in the UK are paid past their due date, being paid on average 14 days late. While most businesses have the best of intentions to pay faster, economically uncertain times can get in the way, and this can have a significant impact on the receiving company’s cash flow, making it more difficult to make much-needed investments.
In light of this, our CEO, Marieke Saeij, explains how businesses can improve their chances of being paid, and ultimately their cash flow, saying, “The use of smart technology is increasingly making a real difference to improving operating cash flow. With uncertainty hanging over the economy now and in the coming months, there are measures that managers can take to get paid faster.”
So, what are these measures?
Implementing the right technology
Many companies still rely on Excel spreadsheets for financial administration, an extremely outdated method. A more effective approach is using one of the smart, user-friendly solutions on offer that can help with the faster collection of outstanding accounts. For example, systems such as Onguard CreditManager allow your business to make use of tools such as e-invoicing which saves time, getting invoices to the customer much quicker than manually sending out letters. This approach also enables the customer to respond immediately and also determine how they want to receive the invoice. This can be via text message, email or even an app and payments can be made with just one click.
Checking customer creditworthiness
It also doesn’t hurt to check the creditworthiness of new customers. Depending on the size of the agreement and the duration of the relationship, this doesn’t have to be a one-off action. All kinds of smart tools are now available that continue to monitor the creditworthiness of customers throughout the year. This helps to prevent unpleasant surprises.
Gaining good insight
Not every professional involved in credit management has sufficient insight into a customer’s profile. Good insight doesn’t stop with determining creditworthiness. By ensuring you know each customer well, it may mean you approach one customer differently from another. This applies, for example, to payment terms but also to the reminder method. Fintech such as ours helps with personalised reminders, which are fully automated. This can prevent organisations taking the route of debt collection agencies and bailiffs.
Taking out credit insurance
In the unlikely event that there is an excessive payment risk, credit insurance is not an unnecessary luxury. However, it’s worth noting that credit insurers grant each debtor a different, usually limited, limit. So, be aware of the fact that credit insurance is not a salvation.
The end result
Of course, every credit manager wants customers to pay as soon as possible. By implementing the right order-to-cash strategy and ensuring you have access to insights from the relevant customer data, you’ll increase your chances of making this happen.
Want to know more?
Read more about our dunning solution, CreditManager and how you can optimise your credit management processes and ensure payment.