The importance of being proactive when it comes to payment
Chasing outstanding payment is a difficult part of working life that virtually every small business needs to accept. Whether they are big or small, keeping track of invoices that could boost the company coffers is one of the first rules of good business practice.
However, new research from online accounting system FreeAgent suggests that a failure to keep up to date in this regard could have serious consequences for smaller businesses that may already be edging towards company administration.
According to the research, only 14% of small business owners said they would chase an unpaid invoice within one week of it being due.
These statistics underline the importance of taking a proactive and responsible attitude towards the idea of chasing outstanding payments.
So, what do smaller businesses need to remember when they are dealing with elusive payments?
The buck stops with you
As a director or senior figure in the business, if you don’t chase the payment then the business will ultimately suffer. You may be able to put up with one or two late payers but if 3 or 4 significant invoices remain unpaid over the course of a month, can you really afford to take that hit?
Stand up for yourself
Asserting your place in the market and receiving the funds which you are owed is the only way to ensure that larger companies respect your position. As well as being the most effective route to growth, such a strategy ensures that you will never be seen as a soft touch.
Balance is key
Alongside the potential profit you may be looking at (once all payments are received), a smaller business has to factor in elements such as staffing costs and the cost of purchasing new stock. It is often a balancing act for such companies and if the balance tips too much in the wrong direction then it could be fatal.
Business recovery specialists
If your SME is struggling with unpaid invoices and you are struggling with the basics of running the business, it may be a good idea to contact business recovery specialists who can offer expert advice and guidance.