Small businesses get creative to ensure payments
With late payments prevalent among the UK’s small firms, maintaining a healthy cash flow is not always the easiest of tasks for business owners.
This has led to many looking for creative ways to ensure they receive payments on time in order to protect the longevity of their business.
One third of respondents told a PYMTS.com study, sponsored by Sage Payment Solutions, that getting paid on time was their biggest concern.
A further 14% said they experienced regular frustration with their invoicing systems while the majority said that they often struggled with liquidity issues – half of SMEs also recently stated that slow payer ethic is a threat to their business.
While a range of alternative finance options exist to support those facing difficulties, businesses have also implemented a few innovative tactics of their own.
Of the 1,000 businesses questioned, 52% suggested that accelerating payments was made easier with technological upgrades.
To speed up cash flow, firms looked to management dashboards in order to effectively manage payment processes – from paying suppliers and customers to payroll.
Integrating payments into new software also allows for the collection of data that can cover buying and sales trends, as well as other forms of business analytics.
A third of the firms suggested that traditional banks have not made enough business loans available for smaller companies, while has driven them to consider alternative finance options.
Nearly two thirds of firms said that crowdfunding was an easier way of accessing finance, and 68% said they would use the option again if needed.
The key for businesses looking to overcome cashflow difficulties is to understand how each form of finance could support them before making decisions.
The majority of businesses said that making the payment process as simple as possible also brought benefits, as customers were more likely to pay on time.
An emphasis on customer experience was also found to increase the likelihood of customers and suppliers returning for repeat business.
All of these factors should help firms to alleviate cashflow issues and be paid on time, reducing the risk of insolvency or other financial problems in the process.
By Phil Smith
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