Accountants hold the key to late payment problems
Unpaid invoices are more than an inconvenience – they can threaten the very running of your, and your clients, business. James Frost, CMO of Worldpay, discusses the strategies you should put in place so that cashflow doesn’t remain a perennial and deadly headache.
For large businesses where cash flow isn’t a major problem, few things can kill a healthy business relationship between customers and suppliers as quickly as late payments. But for smaller firms it can be an existential issue, with unpaid invoices starving a company of the cash it needs to pay staff and keep the lights on.
Late payments cost UK SMEs more than £2 billion a year, and mean that managing directors are saddled with the stress of chasing invoices when they should be focused on much more important tasks. And research by Bacs, the bank-to-bank payment system, shows that 60% of SMEs have faced late payment challenges with the average UK SME owed £36,186 in unpaid invoices.
Fortunately, there are helpful and practical ways to improve late payment problems.
Be clear about payment terms
Make payment terms clear from the outset, and ensure they include both the due date and late payments penalties. At all costs avoid allowing wiggle room for the “didn’t know it was due” customer. Be tough on the terms – if you have late fees, implement them. It should avoid a repeat performance. Also check that the invoice you send is accurate - and send it promptly when work is complete.
With a dose of digital aid, it’s possible to reduce the time between invoice issue and payment, and free up a member of staff. Automation, invoice tracking, auto-chase emails – these can prove especially useful for the strenuous admin aspect of invoicing. Technology removes the need for ‘someone’ to remember to send invoices or chase payment, keeping cashflow in good shape.
Encourage smart and immediate payments
Smart services using the latest technology to bring benefits to business are making a significant impact on late payment problems. Services such as Pay by Link, which generates a ‘Pay Now’ button in an email or document, are making it substantially easier for clients and customers to make payments.
Accountants will certainly find such services useful for their own invoicing, but it also enables them to provide an extra service to their clients - unburdening them from the work of chasing payments, and solving a major headache for small businesses by helping them get paid on time.
The reason why these services have a much better success rate than traditional invoices or payment demands is that they make life simple: the recipient doesn’t have to log on to their Internet banking or pick up the phone - they simply click the link which takes them through to a secure payment page where they can make the payment within seconds.
Find out how you can get started with Pay by Link and become your clients’ payment chasing heroes.
Worldpay is a leading payments company with global reach. We provide an extensive range of technology-led payment products and services to around 400,000 customers, enabling their businesses to grow and prosper. We manage the increasing complexity of the payments landscape for our customers, allowing them to accept the widest range of payment types around the world. Using our network and technology, we are able to process payments from geographies covering 99% of global GDP, across 146 countries and 126 currencies. We help our customers to accept more than 300 different payment types.
Worldpay UK helps businesses of all sizes sell more to their customers by accepting card payments in-store, online, via mail or telephone, and on the move.
About the author
James Frost is the Chief Marketing and Commercial Officer at Worldpay UK; he is responsible for the development and management of all marketing in the UK, from sole traders to the largest corporations. James has over twenty years of experience in marketing and strategic development.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the commercial partner and not necessarily those of ICAS.