When you think of the word “business,” you may think of large corporations or enterprises that do work all over the world. However, in reality, there’s another genre of businesses that is just as important when it comes to the economy, and that’s small business. Small businesses in Australia matter because they are the organizations that fuel the economy: they employ over 45% of the Australian workforce, they account for more than 20% of the national GDP, they are geographically dispersed, and they shape the national conversation and culture (thanks to their popularity with young entrepreneurs).
Small Business-Specific Challenge: Late Payments
Small businesses are important and power the economy. However, small business owners encounter their own specific set of challenges that are different than those experienced by large companies, and those challenges — particularly regarding payment administration — can also have a huge effect on the country at large. One of the most common payment administration problems is late payments by customers.
Without the administrative and manpower (and reputation of authority) that large corporations have, small businesses often deal with customers and clients who either can’t or won’t pay what they owe on time. Late payments affect more than 70% of all Australian small businesses, and more than 60% of businesses have reported that the trend is only increasing. The common nature of late payments doesn’t only create a cash flow problem, it can also have greater repercussions on the company and economy at large.
The Effects of Late Payments on Small Businesses
It is expensive to operate a small business. Not only do employees have to be paid, but products need to be manufactured, facilities must be maintained, marketing materials must be disseminated, and much, much more. When invoices are paid late to a small business, it creates a trickle down effect that stops that business from being able to operate and pay employees; it also stops them from hiring new employees. When employers can’t pay wages, it creates financial stress for the people not getting paid. Late payments also stop small businesses from being able to create new inventory, which stops them from being able to sell–which creates even more of a financial roadblock.
The Effects of Late Payments for Small Businesses
Late payments are a serious problem in Australia, with more than half of the country’s small businesses reporting that they are owed more than $20,000 in overdue bills. If you want to solve the late payment problem at your business, consider using IntegraPay + Xero. The Xero Add-On for IntegraPay is a platform that accepts all major payment methods, and it allows you to schedule payments and automatically reconcile your accounts. By using IntegraPay + Xero, you can automate your invoicing and reminder process, make it easier for customers to pay you, and increase the chances that you get paid on time — every time.