Are Your Creditors Paying You on Time?
Steps you can take to speed up payments
Anyone involved in the day to day running of a business knows that maintaining a healthy and positive cash flow is critically important.
Yet even the most dynamic and successful businesses occasionally experience periods when capital costs such as new equipment or infrastructure, or simply the wage bill, stretches cashflow to the limit.
Maintaining cash reserves is one way to overcome short term cashflow hiccups, but this is far easier said than done for many businesses who may operate a tight cashflow system.
Factors affecting cashflow
A major burden on healthy cashflow is late payment of invoices.
It’s a widely known fact that smaller businesses are often kept waiting for payment by larger companies who they supply, and who impose their own invoice payment schedules. Even public sector organisations can be slow in paying invoices.
If the agreed deadlines are then allowed to slip, this makes matters worse.
The double whammy of unpaid (or late payment of) invoices and incoming bills is the worst nightmare for business owners and finance directors.
Late invoice payment as the main problem
A 2017 report published by Siemens revealed the following based on research gathered from almost 40 individual surveys and studies:
- Smaller businesses have to wait longer for payment. Those with a turnover of under £1m wait an average of 72 days, while for those with a turnover of £1m-£10m, the average is 53 to 54 days. The largest businesses wait only 48 days
- The average SME spends 130 hours per year chasing unpaid invoices, with an associated annual cost (across the UK) of £10.8 billion
- Unpaid invoices across the board account for 14% of the annual turnover of UK SMEs
Taken together, these costs add up to delayed cashflow of up to £250 billion for SMEs.
A solution for speeding up invoice payments
Automating key finance processes and eliminating paper in favour of digital delivery methods has the potential to transform cashflow by taking 24 or more hours out of the invoice generation and dispatch process.
For example, with Zetadocs for NAV, customer invoices can be prepared and delivered in a fraction of the time required to manually print, process and mail paper invoices.
Delivery is instant compared to waiting overnight or two days by mail – and as billing data is digitally stored, it is more easily accessed and managed.
Taking such a sizeable chunk out of the invoice processing and delivery process through the use of digital, automated, non-paper-based capture and delivery methods can be a major benefit to organisations whose existence is so tightly tied to regular, consistent and uninterrupted cashflow.
At the same time, to ease the burden on resource-strapped finance teams, automated payment processes can also offer efficient means of capturing, processing and payment of supplier invoices.
In this way, cashflow can be more easily balanced to ensure that business operations are continuous – and time can be freed up for chasing creditors for whom payment of your invoices is not the priority.
Finally, when customers do have queries about invoice amounts or statements which delay their payment until they are resolved, digital storage, retrieval and dispatch of invoice copies can again speed up the payment process.
If you would like to know more about how Zetadocs for NAV can speed up your invoicing processes, improve cashflow and save time for your finance team, contact Equisys on 0207 203 4001.
Book a demo of Zetadocs for NAV to find out how you can go paperless and improve competitive advantage for your organisation. Or speak to your NAV partner.