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Key techniques for improving payment times

Late payments to Australian small businesses are on the rise, placing additional pressure on cash flow and making it more challenging to meet operational costs. Recent data from OptiPay indicates that the average number of days outstanding for invoices has reached 38 days, creating significant financial strain for many smaller enterprises.

When customers delay payments, the consequences extend beyond cash flow issues. Business relationships can deteriorate, and valuable time is spent chasing overdue payments rather than focusing on growth and operations.

To help address the issue, here are five effective strategies for reducing payment delays:

  • Provide multiple payment options: Offering a range of payment methods, such as credit/debit cards, Direct Debit, and online payment gateways like PayPal, makes it easier for customers to pay promptly. The more flexible the options, the quicker customers are likely to settle their invoices.
  • Send invoices promptly and accurately: Timely invoicing is key to receiving timely payments. Ensure that invoices are sent out promptly with clear and accurate details. For larger projects, consider breaking invoices into smaller payments aligned with project milestones to encourage faster payment.
  • Offer early payment discounts: Incentivise your customers to pay early by offering discounts for prompt payment. For example, a 2% discount for payment within 10 days on invoices with 30-day terms can encourage quicker settlement.
  • Actively manage credit control: Regularly review your aged debtor reports and follow up on overdue invoices. A polite reminder to the customer of their outstanding balance, along with automated payment reminders from your accounting system, can be effective in speeding up collections.
  • Explore invoice financing options: If overdue payments are causing serious cash flow issues, invoice financing may offer a solution. By selling your unpaid invoices to a finance provider, you receive immediate cash flow while the provider takes on the responsibility of collecting the debt from your customer.

If late payments are impacting your business, it is essential to take immediate action.
Contact our team to discuss ways to streamline payment processes, improve credit control, and reduce the financial impact of overdue invoices on your business.

Graham Burfield
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