Not getting paid on time will always be one of the biggest hindrances for our clients. Not only is it frustrating, but it can also have serious consequences on the financial health of a business. According to research conducted by Xero, a quarter of small business owners in the UK believe their business will fold in the next five years, with late payments being the biggest concern.
However, cloud accounting systems, like Xero, have utilised technology and automation to make things much easier for small businesses to keep on top of invoicing and allow them to receive payments quicker.
But for this vision to materialise, businesses must adopt this technology and integrate it into the heart of their processes and procedures. We’ve outlined how Xero can help you get paid faster.
Online invoicing improves the administrative process
You know the saying, ‘every little helps’. Why wait 1-2 days for an invoice to reach a client by post, assuming it doesn’t go AWOL in the mail, when it can go instantly via Xero, straight to your client? Online invoicing also minimises room for human error, offers a customisable template and allows you to track the status of the invoice in question – allowing you to see exactly when a customer has opened your invoice and which ones have been paid, in real time.
Setting up automatic invoice reminders allows Xero to do the chasing for you
Research conducted by Xero showed that small business owners or managers are spending two working weeks a year chasing late payments. Automation of these tasks allows you to focus on what’s really important – growing your business.
Watch our video on how to set up automatic invoice reminders.
Adding a ‘Pay Now’ function on your invoices speeds up payment times
We are all more likely to do something straight away if it takes minimal effort. An invoice with an option to ‘Pay Now’ is far more likely to be paid instantly rather than a client having to log in to their Online Banking, possibly having to set up a payee and transfer the funds.
Online Payment Gateways, such as Stripe or PayPal, allow you to collect payments with minimal stress for both you and your client. Invoices sent with these payment options, in general, get paid around 20 days earlier.
Setting up direct debits for clients with ongoing payments allows for automatic collection
If you do ongoing work for clients that require regular payments, GoCardless will be your saving grace. Rather than having to wait for your client to action payment for an invoice each time, GoCardless can allow you to set up a Direct Debit and automatically collect payment when it’s due. The transactions are also automatically reconciled in Xero, so you can continue to keep track of who has paid you. Xero will also send you a notification if any payments fail straight away, to prompt further investigation if necessary.
With online invoicing, in conjunction with automatic reminders and online payment gateways, you can eliminate many of the delays and barriers to payment. That means you’ll get paid faster, have better cash flow and have more time and money to make your business grow.