When you’re a small business owner, it can be tough to avoid late payments, especially in Australia. Payment experts are MarketInvoice recently found that Australia is one of the worst countries at paying invoices on time. After crunching 5 years of payment data, they found that 72% of businesses fail to pay their invoices on time, with the average late payment coming in 26 days overdue. Given the current rate of overdue payments, we put together this article to help you stay on top of late paying clients.
Offer more payment options
We believe one of the easiest ways to avoid late payments is to simply give your customers more payment options. Credit cards like Visa, MasterCard and American express have become the go-to payment method for thousands of people. And with more than 16 million cards in circulation, chances are this is the preferred payment for your customers too. Direct deposit is also a popular payment method for many businesses. But the biggest of all is BPAY, accounting for a whopping 60% of all bill payments in Australia.
So, if you’re struggling with cash flow and don’t have a payment solution already, it’s best to start looking. IntegraPay can help set you up with all of the above payment options and more. So, if you’re interested, be sure to send us an enquiry so we can help!
Set up recurring payments
Another simple yet efficient way to improve your cash flow is to offer your customers the option of recurring payments. According to the Reserve Bank of Australia, Australians pay about 16 per cent of their bills on a recurring basis.
Whether it’s a subscription-based service like memberships or installments for other products or services, recurring options give you consistency. Be it direct debit or BPAY, you’ll be able to receive money from your customers securely and on time. This means you get reliable cash flow – allowing you to avoid late payments all together.
Set reasonable payment terms
Not sure what payment terms to set? We’ve found sticking with the status quo is often the best way to get paid on time. 7 or 15 day invoice terms are great ideas if you’re wanting to get paid faster. But many businesses are struggling with cash flow just like you and this may not be feasible. On the other hand, extended 60 or 90 day terms not only put a significant hold on your cash in-flow, but you also risk customers forgetting the invoice even exists without adequate reminders.
To avoid late payments, we recommend using an invoice management system so you can set normal 30-day terms, with automated payment reminders at set intervals leading up to the due date.
Late payment has the potential to add significant financial and administrative costs, damage your business relationships and overall hurt your bottom line. With an estimated $19 billion locked away each year in overdue payments, it’s no wonder that small businesses in Australia are struggling with their cash flow. So, if you need help with your business payments, get in touch with one of our payment specialists.