Last editedMar 20222 min read
Picture this: You wake up. You start work. You deliver a great product or service to your customer. You invoice them. And when the due date comes around, you get paid.
No sending email reminders about paying the invoice, no awkward phone conversations to ask why payment still hasn’t been made, days or weeks after it’s due.
Imagine if that’s how your business operated all the time. Nice, right?
But instead, small businesses around the globe are subjected to a late payments epidemic.
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Find out how GoCardless helps Xero users get paid 2X faster.
The late payment problem
According to a report by The Federation of Small Businesses (FSB), each year the late payment problem costs the UK economy £2.5bn, and kills 50,000 small firms.
Putting aside business failure, late payments still cause everyday problems for small businesses, such as:
Stifled cash flow
Inability to make payments on time
So why is late payment so prevalent? It’s a deeply ingrained cultural issue, where paying late has become normal and excusable.
But what most businesses don’t realise is that this doesn’t mean the problem can’t be solved. True, you can’t change people’s attitudes overnight. But that’s not the way you solve this problem.
The way you solve it is by examining how payments work.
4 fixes that won't help
❌ Make your payment policy clearer to your customers. This can change the behaviour of forgetful customers, but is unlikely to affect others.
❌ Send reminder emails before the due date. This again can help change the behaviour of forgetful customers, but it requires time and resource investment.
❌ Charge late payment penalties or interest. Threatening this may scare some customers into paying sooner, but it’s uncommon enough that it’s likely to push customers away to your competitors.
❌ Shorten your payment terms. You’re likely to get cash you’re owed sooner from some customers, but it just moves the goal posts. You’ll still experience late payments on your new terms.
The real solution to late payments? Take back control
The best solution to your late payments problem is taking control of making the payment. The most common way of paying invoices - where your customer transfers you money from their bank account - leaves control of making the payment entirely in their hands.
However, using an automated payment method gives you that control back. And ensures payments are always made on the due date. As it should be.
The best way to automate your payments is to use a Direct Debit provider, like GoCardless. With GoCardless, you and your customers both benefit:
|Benefits for you||Benefits for your customer|
No more chasing late payments. Just send out invoices, knowing payment will be automatically collected on time.
Plus, reconciliation is automatic too. Which means time saved, money saved, and stress avoided.
GoCardless helps businesses reduce the time spent on managing payment platforms by 59% on average*
Once they've set up a Direct Debit with you, your customers can relax, knowing all future payments are made automatically. Without them having to lift a finger.
Better cash flow
Be confident you'll be paid on time. Meaning more accurate cash flow projections, and having the cash on hand to cover unexpected problems or opportunities.
Businesses get paid 47% faster with GoCardless*
Email reminders about upcoming payments are sent automatically. Meaning no nasty surprises. (But if a payment is ever taken in error, they're protected.)
Easy to get started
Sign up for free and connect GoCardless to your Xero, QuickBooks Online or Sage 50cloud account. Easily manage all your invoices and payments together from within your accounting software.
GoCardless lowers costs of taking payments by 56%*
Easy to get started
They just need to fill in a short, one-time authorisation form. Then all future invoices have payment collected automatically on the due date.
The market leader
60,000+ businesses around the world trust GoCardless to power their payments. And 10+ years of focusing on making payments pain-free puts GoCardless ahead of the pack.
It gives them what they want
* Source: IDC, The Business Value of The GoCardless Platform for Recurring Payments, 2020
Take back control with GoCardless + Xero
How collecting payments works with GoCardless + Xero
Connect GoCardless to Xero It only takes a few minutes to create a GoCardless account and connect it to Xero. See the step-by-step process below.
One-time customer setup Pick GoCardless as a payment method for your invoices in Xero. Now when you invoice a customer, they can set up a Direct Debit with you by clicking the Pay Now button.
No need for old-fashioned paperwork, it’s done online. Each customer only needs to do this once, and then you’re authorised to automatically collect payment from their bank account whenever an invoice is due.
Payment for this initial invoice will be scheduled and collected automatically via GoCardless.
Send invoices; get paid automatically With a Direct Debit set up, just invoice your customer like normal from Xero. On the due date, GoCardless will automatically collect payment for the exact amount on your invoice, and transfer it to your bank account.
Cut out the bookkeeping Any Direct Debit payments that GoCardless collects for you will be automatically reconciled in Xero. Saving you the job of balancing your books.
How you can get started in minutes
1) Complete the sign up form + choose Invoice payments Click the Get started button at the bottom of this article, and fill in a few quick details. On the following screen, choose Invoice payments.
2) Select Xero as your software partner to connect to Click the Xero logo on the following screen, to use GoCardless in connection with your existing Xero account.
3) Finish connecting Xero to your GoCardless account You'll be prompted to sign into your Xero account. Simply follow the steps to connect GoCardless up to Xero, starting with your bank settings. It'll only take a few minutes and you're done.