As the nights draw in and the weather gets colder, many of us are fondly looking back on a happy summer holiday. Sadly, that's not the case for a lot of SME owners. A recent study found that 57% of them cancelled holiday plans to chase unpaid invoices.
While this statistic is further evidence of Britain’s late payment culture, it also made me wonder whether these SME owners are making the most of new invoicing tools available to them. In particular, I believe there’s an untapped opportunity for SMEs to use e-invoicing to automate their process and make it more effective.
Recognising the problem
Research by YouGov and Hitachi Capital Business Finance, conducted in August this year, revealed that just 30% of small businesses are being paid on time. What’s more, the research also revealed that it’s the smallest businesses that are most likely to be paid over a month late and have bad debt risks from non-payment.
This can often lead to stress and a feeling of powerlessness. A problem that can only be solved if small businesses take control of the invoicing process. That’s where e-invoicing tools come into play.
Strengthening creditor rights
Using electronic invoicing isn’t just about saving time, it’s about effectively structuring your invoicing process. Building the system is an opportunity to ensure your invoices include essential details such as your right to charge statutory interest on late payments, or pursue unpaid debts through enforcement agents. It also allows you to schedule reminders for clients, so payments aren’t simply forgotten.
Once these systems are in place, owners no longer need to worry about chasing late payments. This frees them up to focus on business strategy. And if late payment turns into non-payment, they will at least feel confident that the groundwork for collection has already been laid in their invoices and automated reminders. This means enforcement agents can be called upon as soon as they’re needed.
Trying new solutions
Industry data suggests that e-invoicing use in Europe has grown in popularity, rising by 29% this year. In 2017, 90% of invoices were still being processed manually, so even with a jump of 29% there is still only a small proportion of businesses using e-invoicing.
Part of the reason for the slow uptake may be cost. 37% of SME owners say they’re focussed on a cost-cutting strategy, so they may be reluctant to spend on new software. But even a small dent in the 130 hours per year SMEs spend chasing unpaid invoices would save a small fortune, and the long-term benefits of a focussed, clear-minded owner are priceless.
Many thanks for viewing my post, I hope you found it useful.
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