Payments play a crucial role in the operations of accounting and bookkeeping firms. However, challenges arise when clients fail to meet payment deadlines, leading to significant financial, emotional, and operational consequences for businesses. A survey conducted among 800 small-to-medium business (SMB) decision-makers in Australia and New Zealand highlights the pressing issues associated with late payments.
The findings indicate that many businesses are burdened by the time-consuming process of collecting overdue payments. Over a quarter of small businesses dedicate an hour each week to chase late payments, time that could otherwise be spent on client acquisition or business innovation. A concerning trend emerges, with nearly half of the surveyed SMBs reporting longer wait times for payments compared to the previous year. With 59% expressing fears that this situation may worsen due to rising costs, the issue appears to be escalating.
The financial implications are equally severe; 41% of Australian SMBs and 35% of their New Zealand counterparts report payments that are, on average, over 14 days overdue, resulting in potential losses of up to $1,000 each month for 15% of businesses. Beyond the monetary aspects, the emotional toll is significant, as chasing payments can strain customer relationships and cause considerable stress for business owners.
The negative impacts of delayed payments extend to business growth, leading some SMBs to alter their operations. Actions taken include severing relationships with late payers, increasing prices, delaying payments to suppliers, postponing product launches, or even considering business closure.
Despite these challenges, there is a willingness among SMBs to adopt technological solutions to mitigate late payments. Two-thirds of respondents expressed interest in implementing new technologies, such as bank payment systems like GoCardless, which can streamline the payment collection process and enhance cash flow management.
Why this story matters:
- Addresses the critical challenges SMBs face with late payments, affecting their growth and stability.
Key takeaway:
- Technology adoption can provide effective solutions to combat the issue of late payments.
Opposing viewpoint:
- Some may argue that late payments are a normal aspect of business operations and that traditional practices should suffice.
