SMEs struggle with late payments and fraud
Nearly six in ten small business have to chase and re-chase for payments they are owed, according to new research.
A survey from WePay and Survata found that 59% of firms have to follow up with customers on late payments twice on average before receiving any money.
The delayed revenue can be a scourge for small firms as it impacts on business cash flow and productivity, not to forget the time that is wasted chasing unpaid invoices.
With valuable resources tied up that could be better used on other aspects of the business, while the final quarter was found to be especially problematic.
Some 21% of respondents to the survey said they see an increase in the number of later payments they have to deal with towards the end of the year.
The research suggests that small firms need to accept as many different payment methods as possible to reduce the problem.
Fraud was also identified as a key issue that is impacting on businesses, with the data suggesting it can be even more harmful to SMEs than regular late payments.
While forensic accounting processes can help to identify cases where fraud is occurring, it call also assist with the recovery of assets from fraudulent or criminal activity.
Businesses need to watch for a number of potential pitfalls, including chargebacks, buyer-identity fraud and merchant-identity fraud.
Not all cases will be immediately obvious, and it is often the case that fraudulent activity only comes to light in the wake of insolvency proceedings.
A firm in difficulty may also consider turnaround management as a means of addressing some of the issues they are facing.
From sourcing management personnel to restructuring debt, contingency planning and business reviews, these techniques can help to provide businesses with a wider range of possible options.
The key in any case is to act quickly, as this usually increases the number of possibilities that could be employed.
By Phil Smith