Late payments are a persistent challenge for businesses across the UK, draining valuable time and resources. According to research by Payit, NatWest’s open banking payments solution, 31% of businesses admit to spending between 21-30 hours per month chasing customers for payments. This is a significant amount of time that could instead have been spent on growth and innovation.
Let’s talk about time
Chasing late payments consumes valuable resources, particularly if this process is manual. Employees spend countless hours drafting emails, making phone calls, and tracking outstanding invoices. This diversion of resources from core business activities can hinder growth and efficiency. Moreover, the administrative burden of managing late payments can increase operational costs, diverting funds from other critical areas.
Battling burnout
The constant need to follow up on overdue payments causes stress and frustration for business owners and their teams. This emotional toll can lead to decreased morale and productivity, impacting the overall health of the business. Stress from financial instability can also affect decision-making processes, leading to short-term fixes rather than long-term strategic planning.
Strained relationships with customers
Persistent follow-ups on late payments can strain relationships with customers. Businesses may risk damaging their reputation and losing loyal clients due to the ongoing hassle of payment collection. Maintaining a positive customer relationship is essential for repeat business and referrals, and aggressive payment collection tactics can tarnish the business's image.
Cash flow chaos
Late payments disrupt cash flow, creating a domino effect of financial instability. This can lead to difficulty paying staff, purchasing inventory, or even maintaining daily operations. A steady cash flow is crucial for business sustainability, and late payments can create a precarious situation where businesses struggle to pay their day-to-day expenses.
Diffusing the time bomb
To mitigate the time cost and stress associated with late payments, businesses should consider automating their accounts receivable process. Automation tools can streamline invoicing, send reminders, and provide real-time tracking of payments. This not only saves time but also reduces errors and improves cash flow management.
By leveraging technology to handle accounts receivable, businesses can reallocate their resources to more strategic initiatives, foster better customer relationships, and ultimately drive growth. Automation tools can also provide insights into payment trends, helping businesses proactively identify and address payment issues.
Contact us today for more information on how Paycada can support your business with our smart accounts receivable solutions and diffuse the late payment time bomb.
