After conducting its widespread Prompt Payment survey, the British Chamber of Commerce has come up with a list of recommendations to help small businesses combat late payment and ease cash flow problems. The survey showed that nearly all businesses had been paid late at least once during their lifetime, with over a quarter experiencing this on 40% of their payments. So, if your business is the same, read on to see what you can do to alleviate the pressures caused by slow payments:
1) Encourage payment in preferred methods. You can encourage businesses to pay in any method you choose, and offer discounts to those who choose to take notice. However, be sure to choose the method that most benefits your business cash flow as different options have different time frames attached to them.
2) Use e-invoicing. This will maximise your cost efficiency savings and will help you benefit from discounting platforms. Cheques have been found to have a negative effect on business cash flow – there is even a case for phasing them out by 2018 – so switching to e-invoicing is being hailed as a good idea for many businesses.
3) Take advantage of government schemes. The government is currently improving access to finance through its business bank, so be sure to stay up to date with developments. Small business finance is an area that is currently fairly high profile so changes could start to happen – be sure you know what’s best for your company.
As well as these bits of advice from the BCC, you could also look into invoice finance. This will help to take off the strain when it comes to waiting for payments as you’ll have access to up to 90% of the invoice value within 24 hours. While taking care of your invoicing procedure should be a high priority, there are external options to help with your cash flow.