Friday, 22 June 2012 14:14
SMEs also wait 30 days longer than their agreed payment terms before they receive the money.
New research suggests that small and medium sized businesses (SMEs) spend an average of 130 hours, or up to three weeks, per year chasing payments.
In addition, the research shows that SMEs wait on average 30 days longer than their agreed payment terms before they actually receive the money. Those twin factors are contributing to the cash flow problems plaguing many SMEs.
Tips to maintain a healthy cash flow
RBS Invoice Finance has issued five Golden Rules following their research that can ease the burden of chasing payments and help businesses maintain a healthy cashflow:
• SMEs should think about re-visiting their current cashflow projections with a ‘worst case scenario’ in mind, so that they can see exactly what impact late payers are likely to have on the business – and then plan accordingly;
• Businesses might be able to encourage some of these customers to pay more quickly by offering discounts for early payment. SMEs could offer an early payment discount, or a discount for an upfront payment;
• SMEs should always print their terms and conditions for payment on invoices, contracts and/or order confirmations clearly;
• If a customer hasn’t paid on time, it is essential to follow up on the invoice promptly and professionally. Having a regular contact in the accounts department can help to make this process much easier – and more effective;
• Invoice finance allows firms to cash outstanding invoices so they can access capital much faster. This model provides a percentage of the money that the company is owed within 24 hours of submitting an invoice.
Newer news items:
Older news items: