Australian and New Zealand employees waste three hours each week on unnecessary admin, according to research. That's dead time for your business – and payment collection is one of the biggest offenders.
The average amount of time for an invoice to be paid in Australia is 11.7 days past the payment date, according to Illion, meaning staff are spending a chunk of the working week chasing up late-paying customers. And when you factor in sending out invoices, collecting the payments and reconciling the cash, it’s easy to see how payment collection takes so much time and effort.
So, how can you claim back that valuable time?
1. Switch to online invoicing in the cloud
Impact: Speed up payment with electronic invoices
Almost one third of Australian businesses now use cloud-based software. The move to the cloud is particularly important since online invoicing speeds up payment and is included as standard with the major cloud accounting platforms like Xero and MYOB. Xero has found for example that their online invoices get paid an average 33% faster than invoices that aren’t sent electronically.
As well as managing your finances online, you can also quickly create branded electronic invoices and email them straight to your customers – removing the need to print and post hard-copy invoices.
2. Ditch manual payment methods
Impact: Eliminate the need to chase payments
If you regularly invoice customers, relying on them to make manual payments can be problematic – as control over the process sits squarely with the customer, rather than with you.
Choose payment methods that promote fast payment and get you back in control. If you're using manual 'push' payment methods, like bank transfer or one-time card payments, then move to an automated collection method like Direct Debit, standing order or recurring card payments – all of which will ensure you get paid as soon as payment's due.
GoCardless' own research found that 84% of small businesses using Direct Debit through GoCardless for Xero, spent less time chasing payments.
3. Automate your bank reconciliation
Impact: Save hours of time – no need to manually check bank statements
Reconciliation is necessary but time-consuming. But with the right software you can automate the whole process of matching your transactions to the bank statement.
Integrate your payment gateway with your billing software for maximum impact here. With GoCardless for Xero for example, payment is collected by Direct Debit and then automatically matched in your accounting software. GoCardless research found that three quarters of users spent less time on bank reconciliation since moving to GoCardless for Xero.
4. Remove the problem of expired cards
Impact: Reduce the hassle of failed payments
Rejected card payments cause real issues if you're collecting regular payments. By choosing a bank-to-bank payment method that doesn't involve a credit or debit card, or credit account, such as Direct Debit through the BECS system, you avoid having to deal with expired card details.
That reduces the wasted time spent chasing customers for new card details, and provides you with a more predictable and secure payment pipeline – giving more stability around the company’s cash flow.
5. Set up notifications for failed payments
Impact: Sort out failed payments faster
When your customers' payments fail, that creates admin and cash flow headaches for the business. So the sooner you’re notified about failed payments, the sooner you can act.
With the right payment software in place, you’re quickly notified of any payments that fail. For example, GoCardless sends an email to your inbox if the cash can’t be collected via the usual Direct Debit. The relevant invoice will then appear in the ‘Pending’ section of your invoices tab, and will also be marked as unpaid in Xero – so you’re always in control of any missing payments.
6. Automatically chase any late-paying customers
Impact: Credit control is much less time-consuming
Prevention is better than cure when it comes to late payments, and Direct Debit can remove the need to chase payment altogether. However, for those customers who still pay by manual payment methods, try automating the payment chasing process.
The smart features of your cloud platform, combined with an increasing choice of debtor tracking apps such as Chaser, Fluidly and Debtor Daddy give you control over your aged debtor numbers, and automatically send out chaser emails to customers.