Against a backdrop of business owners already struggling with rising energy bills and inflationary challenges, late payments are an additional frustration which can have a detrimental effect on a business’ cashflow and overall business performance. The impact
of late payments is sizeable, with some businesses facing up to £20,000 in outstanding payments every month, according to
research by Payit by NatWest.
Payit’s research also suggests that three fifths (60%) of small businesses have experienced an increase
of late payments in the last six months, with one in four (26%) admitting it impacts paying for materials as they struggle to pay staff when payments are late.
This piece aims to shed light on the impact that late payments and the cost-of-trading crisis is having on small businesses, and offers ways for business owners to combat their concerns and futureproof their businesses.
Recognising the impact of late payments on your business
Rising living costs present considerable challenges for households and businesses alike. Three quarters of small businesses (78%)
see the cost-of-living crisis as the biggest threat to their survival according to a survey conducted by Onepoll. While there is no silver bullet, small businesses can be flexible in how they adapt to the challenges by utilising technologies like virtual terminals
and mobile solutions to protect and develop their business.
Late payments alone are an age-old frustration. Mounting economic challenges such as rising inflation and the fluctuating value of the pound perpetuate the problem. For time-strapped business owners, energy could be better spent growing their business. Having
a better overview of spending and expenses can put businesses in a stronger position to cope with rising costs, late payments, and other unpredictable challenges that may arise.
The need for financial control
Investing in virtual terminals and using business analytics is a useful way for business owners to maintain oversight over sales, payments, and inventory, often keeping track of everything in one place and at the same time. Such portals and their features
help by crunching the numbers, making it easier for businesses to keep track of transactions, invoices, settlement. These insights are invaluable when it comes to developing a more robust business and gaining an understanding of issues such as a low cashflow,
therefore helping businesses stay afloat and remain profitable.
In addition, with the democratisation of data, SME owners are in a strong position to better analyse their business performance, devising strategies to drive growth and avoid unnecessary expenditure.
Using technology to win back time and save costs
With time as a valuable asset to many small businesses, particularly in today’s current climate, offering a method of immediate payment will give back a lot of time to many UK businesses, previously spent chasing payments through emails and phone calls.
The demand from businesses looking for new, innovative, and cost-effective ways to streamline services, save time, and reduce running costs is understandably high.
Businesses can look to adopt mobile payment solutions that generate
a link or QR code for payers who have any UK bank account to receive payments quickly from any of their customers, preventing the impact of late payments on cashflow. Payit’s research also found that the biggest driver among SMEs to change payment methods
is to spend less time chasing invoices, followed by speed of payment. The average SME spends four hours a month following up with customers for payment on outstanding invoices. The functionality of such mobile payment solutions ensures payments can be settled
instantly in real time, as requests can instantly be made directly from an app.
Embracing such technology can help small businesses streamline their day-to-day processes so they can focus their attention where it’s needed: their customers. Between supply issues, labour shortages, and low consumer confidence, the right technology can
help control stock, manage people efficiently, and maintain a positive cashflow.
Many regard small businesses as the lifeblood of the economy and the cornerstone of our communities, and they need the certainty of when they are to be paid to enable them to have the confidence to invest and build back better. By alleviating the anxieties
and pressures felt by many business owners struggling to pay staff or sustain a positive cashflow, we can help put businesses in a position to thrive.