The Simple Signs Your Business Is Ready For A Payment Solution
At a certain point every growing business needs to take a leap and invest in new technology. It can be daunting and expensive, but the rewards can be massive.
Collecting payments sooner to help manage your cashflow is one of the most important aspects of any business and one area where technology can make a huge difference. So what are the signs you need a business payment solution like IntegraPay?
Escalating debtor administration costs
If chasing debtors is taking up more than 5% of your time as a manager you need a payments partner. If administration staff are spending more than 30% of their time chasing payments you need a payments partner.
While some clients will always be recalcitrant when it comes to paying their bills, others simply don’t have a simple, easy way to settle their accounts. By making it easier for your customers to pay a payments partner can free up your time and your staff’s time to focus on more productive tasks.
Your Average Collection Period is worse than average
Outstanding payments, or Accounts Receivable, can be one of the most significant assets on an organisation’s balance sheet. As a percentage of total assets, accounts receivable has been estimated to constitute 20% for large organisations and 30% in small/medium sized organisations.
A recent study found that the average amount of time it takes for an invoice to be paid in Australia is 26.4 days overdue – the worst of any country in the world! In Mexico, the second-worst offender, that figure is 18.6 days overdue. Compare that with Japan, where on average invoices are paid 6.5 days early.
If you don’t already track it you should be fully aware of you Average Collection Period (ACP). If you can’t work it out yourself, get your account to do up a report.
While there is no definitive guide to what is a ‘good’ ACP and what is a ‘bad’ ACP, the Australian average should be a starting benchmark. If you are outside this average you need to look at what is causing payments to be so slow and investigate solutions, including partnering with a payments company.
Your interest bill is climbing
One of the most obvious signs that your cashflow is being impacted by late payments is the amount of interest you are a paying to borrow money to fund your day to day operations.
Most businesses will have some sort of overdraft facility that allows them to meet their obligations while they wait for their outstanding payments to come in.
While interest rates are falling, this interest bill should be getting smaller. If you are paying more interest now then you were a year ago, it is probably because your debtors have been extending payment terms.
Is it time?
While every business is different these are just three simple ways you can identify and measure the impact of late payments on your business. The solution to these problems is never simple, but partnering with IntegraPay to make it easier for your clients to pay should be the first step.
Want to automate your payments? Get started now at IntegraPay.