Is there a good infrastructure for chasing invoices within your business? New research has shown that many small businesses may be damaging their cash flow prospects by failing to chase up invoice payment from customers, as well as waiting too long before they start to take action. According to FreeAgent, an accounts system provider who undertook the survey, many small businesses could be harming their cash flow by giving customers too much leeway when it comes to payment terms.
In this survey, many small businesses ended up giving customers weeks or even months before they started to chase up payment. The poll, carried out with YouGov assistance, showed that just 14% of small business owners would chase up an invoice the first week after it was due. More than 500 people were interviewed, all of whom own businesses with five or fewer members of staff.
Around 19% of respondents said that they would wait one to two weeks before chasing up an unpaid invoices, with nearly a quarter (23%) saying they would wait between two weeks to a month before doing so. 18% would wait between one to two months before chasing up a payment, whereas 2% said they would wait more than three months before requesting payment. What’s more, 4% admitted to never chasing up unpaid invoices at all.
Failing to chase up payment from customers could be damaging business cash flow for many of these companies. If the strain of invoice payment is harming your business, then it could be worth looking into factoring services – these can help small businesses by including a full credit collection system, as well as helping you to release the money tied up in unpaid customer bills. Staying on top of invoices is hugely important – don’t let late payment drag your business down.