SMEs waste two weeks chasing invoices a year

Small business owners are a passionate lot. Passionate about their work, their customers and how they how run their business. Many don’t do it for the money, they do it because they feel a calling to create, to break the status quo and make it on their own.

But cashflow is a growing problem. According to research by Intuit, PayPal and DragonBill, Australian small businesses are owed $26B and chasing this costs them $13B a year.

The average Australian small business wastes 83 hours a year chasing late invoices, with 27% of small business borrowing to cover late payments. On top of the financial costs, with one in five small businesses risking closure if faced with a late payment, it place stress and strain on the mental health, relationships and families of small business operators. 

With this in mind, here are six tips to help you get paid on time.

1 Upfront Payment

Payment upfront is the ideal situation for any small business. If you can get it, take it. This is the obvious choice if a customer has been consistently paying late - you should insist on payment upfront to protect yourself.

2 Written Agreements

We all know that this doesn’t always work in the real world. Some jobs are too small or quick to warrant the time to create a written agreement. At least make sure you have an email or a signed agreement to the quote, terms of payment and permission to proceed.

3 Chase Late Payments

Make sure you stick to your terms! If your terms are 30 days and you haven’t be paid at the end of day 30, call them the next day. If they are out, leave a polite message and follow up the next day. If they can’t pay immediately, get a date that they will pay. Remember the squeaky wheel gets the oil!

4 Payment Choices

Make it easier for your customers to pay you by giving them choices. You probably already accept cash and direct deposit. Accepting credit card and debit card can add more convenience and your customers can collect reward points.

5 Early Bird Discount

No-one likes a late fee but everyone loves a discount. Consider offering a ‘discount’ for on time invoice payment, say 5%, if payment is made before the due date.

6 Fintech options

A new generation of solutions is catering to many small business needs: capital loans, invoice financing, peer to peer lending. At DragonBill our goal is to make sure you get paid on time by offering an easy, no hassle escrow service. To see some of the options available visit http://www.fintechmelbourne.org/startup-listing/

Applying these tips in your business will help you get your invoices paid. In the unfortunate event that you still can’t get you money, contact the relevant statutory body in your state. You worked hard, you deserve to get paid so get to it.

Luke Hally is the CEO of DragonBill, a fintech startup solving the problem of late payments for small business.