Partner Article

SMEs spend 3 weeks annually chasing payments

Small business spend an average of 130 hours - the equivalent of three weeks - each year chasing payments according to research by RBS Invoice Finance.

SMEs also have to wait an average of 30 days longer than their agreed payment terms before receiving funds, which is contributing to the problem of cash flow problems affecting many businesses.

RBS Invoice Finance have now issued a number of golden rules to ease the burden of chasing payments and helping businesses to maintain cashflow.

This includes revising their current cashflow projections with a ‘worst case scenario’ in mind, encouraging their customers to pay more quickly by offering discounts, printing terms and conditions for payment on invoices and promptly following up any invoices which have not been paid.

Firms should also consider using invoice finance to allow themselves to access capital much faster, as this provides a percentage of the money that the company is owed within 24 hours of submitting an invoice.

Mark Qualter, director of strategy at RBS Invoice Finance, says: “SMEs could be much better off if they used their time more efficiently by following our Golden Rules to improve the cash collections process. By reducing the need to chase up payments, SMEs could free up to three extra weeks every year – time that can be spent concentrating on business development, marketing or improving customer relationships.

“Whether SMEs choose to use invoice finance or another approach to manage their cashflow, all businesses will need to take a structured approach to credit control and management.

“Given the current state of the economy, SMEs shouldn’t be afraid to seek out some assistance here, since a little help in this area can often go a very long way.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .