Britain’s 5.4 million small businesses have turned to pop star Adele to help improve their cashflow by releasing a parody song calling on late payers to settle unpaid invoices.
Chasing Payments, a small business take on Adele’s number one hit Chasing Pavements, has been recorded following new research that reveals that small business owners are spending 10 per cent of their working day chasing late invoices – an average of one and a half days per month.
Xero, the UK’s leading cloud accounting software, polled over 1,000 small business owners about the problems they face and found that late payments are the number one concern with 52 per cent saying they are constantly ‘worried’ about cashflow issues caused by unpaid invoices. Over a third (37 per cent) of small business owners said that late payments lead to a reduction in productivity.
In an effort to help small business owners deal with late payment issues, Xero has launched chasingpayments.com, a dedicated website of tools and advice. The site includes the Chasing Payments parody video, which stars a number of small business owners and has been designed for sending to late payers and shame them into paying, and a league table for good payers, which the company hopes will nudge businesses into keeping to their agreed payment terms.
London-based small businesses were revealed to spend the most time chasing payments averaging 11 hours per month. Welsh small businesses followed closely behind spending 9.4 hours chasing payments followed by Scottish small business owners who average 9.2 hours a month.
The industry sector wasting the most time chasing payments a month was revealed to be HR (21.1 hours), followed by IT & Telecoms (12.7 hours), Sales, Media and Marketing (10.7 hours), Architecture, Engineering and Building and Finance (9.8 hours).
Gary Turner, co-founder and UK managing director of Xero, comments:
“The late payment epidemic has to change so small business founders do not spend so many hours chasing debt and worrying about cashflow on the back. With small businesses making up a staggering 99.8% of the British economic engine, this is a critical issue to sort for the UK economy as a whole.”
Top Five Tips for Managing Cashflow
1. Invoice promptly
The sooner you invoice, the sooner you will receive payment. It is vital to get your invoicing process right from the start so that it is efficient and pain-free.
2. Establish a relationship
Introducing yourself to the people in the accounts departments of the companies you are invoicing can often make a difference. At the same time, ask them to include your invoice number as a reference with every payment they make, to help you determine which invoice is being paid.
3. Keep accurate records
Keep track of the time and materials expended on a client’s project and make sure you invoice for everything. If you record the work done as you go, it saves you trying to remember the details at a later date.
4. Define your payment terms
Consider shortening your invoice payment period to encourage your customers to pay sooner, even to one or two weeks. If you make your best efforts to supply your products and services to your clients’ deadlines, there is no reason why they should not try their best to pay you just as quickly.
5. Offer easy payment methods
As a general rule, when you make it easier for your customers to pay, they will pay sooner. Some accounting software offers a ‘pay now’ button on online invoices, which means you can send customers invoices online with an option of getting paid instantly.
Visit chasingpayments.com to add businesses to the good payers league or to shame a late payer into paying via the Chasing Payment video.