For small businesses, cash flow is crucial so late payments can be a real minefield to negotiate. Some may worry that chasing their customer will damage relations while others find that late payments cause more damage to them. According to research from this year whilst the national average owed to small businesses in late payments is £31,000, 35% of small businesses stated2 that any amount up to £20,000 could cause them to cease trading.
The survey also revealed that large companies were the worst offenders despite a Department of Business Innovation and Skills campaign to protect small businesses by urging as many companies as possible to join the Prompt Payment Code. This voluntary scheme aims to aid growth of businesses by promoting best practice in payments.
Unfortunately with the slow economic climate, companies dealing with the general public suffer the same problems but don’t have the help of a well-known code of conduct. With the average wait beyond terms standing at 25 days3 according to Experian data for the first quarter of 2013, not all businesses have the ability to waste on average 14 working days each year chasing late payments or the funds to take every unpaid invoice through debt collectors or courts.
To avoid taking drastic action like turning down repeat business from known bad payers, it is worth looking to the larger companies to see what tips can be taken from their processes. Automated payment systems such as Direct Debit are not just for big companies – UK organisations of all sizes choose it as the preferred method for collecting regular payments from both businesses and individuals, with more than 3 billion payments made this way each year.
Mike Hutchinson, Head of Marketing at Bacs, explains “We urge SMEs to look at where they can assert some control, automating payments wherever possible to save valuable time and administration costs, and remove some of the stress on the business and its owner.”1
Collecting invoices by Direct Debit is a safe and convenient way of avoiding late payments, saving companies the time and cost of credit control as well as streamlining existing collections to make more time for the business activities that matter. Customers feel in control with set payment dates and a trusted and popular payment method whilst businesses benefit from the security of bank validation, simple reconciliation and cost efficiency against cheques and cash.
London & Zurich have been offering automated payment solutions to SME’s since 1996, helping them to keep control of their finances and concentrate on the growth of their business. Their Direct Debit and Card Payment solutions have helped businesses grow. There are no more cheques in the post or excuses for late payment.
Businesses are able to offer instalments or deposits on large invoices, recurring collections for fixed values and collections for variable amounts. Thanks to the flexibility offered, other market experts have also championed the use of Direct Debits for small businesses.
Experienced small business accountant John Mayer of TaxAssist Weston-Super-Mare has helped countless small businesses reach their potential by providing quality advice and accountancy services. John encourages as many SME’s as possible to collect their fees monthly, often recommending London & Zurich’s services, saying “We would encourage any small business if at all possible to collect fees monthly.”
This advice is seconded by Jason Harris at Freedom Search. They are an Internet Marketing specialist, providing SME’s with bespoke web design services and targeted Google Adwords campaigns, who came to London & Zurich in 2011 after realising that invoice runs were inefficient and costing them valuable time.
He says “As our business grew, we found that waiting for customers to pay us by cheque or bank transfer was becoming a nightmare. We spent so much time chasing invoices that we decided we had to do something about it before it took over any more of our time. We chose to collect Direct Debits through London & Zurich and we haven’t looked back. We’re now waiting for London & Zurich to release their improved Card Payment module so that we can give customers the option of paying by card as well. All customers currently pay by Direct Debit, it’s easy and convenient because we’ve slashed credit control time and can concentrate on what we do best, providing expert advice on Internet Marketing.”
As part of London & Zurich’s commitment to helping small businesses to thrive, we offer friendly advice on how our services could help you. We are able to help all sizes of business, with or without bank sponsorship.
Also as part of the FSB network if you reply for a no obligation quote on our services before 31st October 2013. We are prepared to offer a saving of £100.00 on our set up costs for our online Direct Debit service. Please quote FSB01.
We are now also able to offer the FSB network a Free Evaluation of your current Credit & Debit card costs with your current provider and see if we can help by reducing your fees even further, our partner is able to supply you with a virtual terminal and a PSP gateway to take Credit & Debit cards on the internet, through your website or software solution.