In December 2011, PaySimple conducted a survey among small business owners and employees. Their hope was to gauge small businesses’ outlook on cash flow for the upcoming new year. However, the figures they came across where quite outstanding. Although small businesses remained optimistic about cash flow in 2012, they have a serious problem. 4 out of 5 small businesses are plagued with late paying customers. For many this in a chronic, monthly problem. What could be the cause of this epidemic?
Small Business Payment Trends
Looking at the figures from above, it is seen just how many small business owners struggle with collecting payments. What seems to be the problem and what are possible solutions?
1 – Organization – Nearly half say it’s hard to keep up with everything. Small business owners need to make sure they are using an awesome invoicing program and even look into using software for their collections, as it helps streamline the entire process. By automating the system, they will have better ability to “keep track of everything”.
2 – Not utilizing payment strategies - Small business owners seem to be sticking to old school collection tactics. They are emailing and calling but very few look into penalizing late payers or rewarding early payers. This sort of system motivates people to pay and should be something that every small business owner operating on trade credit utilizes.
3 – Payment Processing - Most owners are accepting their payments through cash, check and the mail, where very few are using mobile and online payments. By providing such options, the small business owner would make it easier for the customer to pay. If it’s easier for them to pay, it is more likely they will.
Without a doubt, collecting late payments is one of the toughest tasks as a small business owner. However, there are solutions and strategies out there that can turn collections into one of the easiest parts of managing your business. Don’t be afraid to try them!