Could automation help SMEs tackle late payment problem?
Small businesses that automate parts of their operations could save themselves time when tackling late payments, new research has claimed.
According to Clear Books, automating aspects such as credit control, payment processes and receipts would enable businesses to save time spent chasing late payments.
Not only does this mean staff can focus on more beneficial parts of the business – such as product development and innovation – but those with pre-existing automated processes are being paid faster by their suppliers when compared to the national average.
Unpaid invoices and the costs associated with pursuing payments reportedly costs SMEs more than £250 billion of liquid cash flow every year.
Longer payment terms have also been placing pressure on small businesses, as they need to carefully manage their finances in order to stave off the threat of insolvency or other financial difficulties.
Siemens Financial Services also reports that smaller firms suffer disproportionately from late payments when compared to their larger counterparts.
This is highlighted by the fact businesses with an annual turnover of under £1 million can expect to wait 72 days for invoices to be paid on average, compared to 53 to 54 days for those with a turnover of between £1 million and £10 million.
Automated software makes the process of managing cash flow easier and more efficient as it is possible to identify issues of late payment far more quickly.
This reduces the threat to trading and allows a business to adequately plan for growth, either via the range of alternative finance options or following a restructuring.
Should a business be unsure on its finances, options reviews can help to assess the current situation and to navigate the best course of action.
When small businesses have greater control over their outgoings, they are in a better position to plan ahead and ensure that all legalities, such as VAT and tax, are also met.
By Phil Smith