Many business owners are all too familiar with the challenges presented by late invoice payments. These can often lead to a number of complications and difficulties within the business itself. In fact, 23% of UK SMEs report that late payments have put their business at risk of closure.
Here are some ways late invoice payments are affecting growing UK businesses, and effective solutions to counter this challenge.
Long Payment Terms
Invoicing customers involves sending an invoice to them for goods/services which have been sold to them. The money which a company is owed is called accounts receivable, and the money the customer owes is called accounts payable.
One of the main challenges with invoicing is the lengthy time it takes for accounts receivable to be paid in full (usually between 30-120 days). When coupled with the possibility of late payments, this can put a stop to business cash flow and lead to a drying up of funding. It can then be difficult for a business to move forward with their growth and development.
Pursuing Late Invoice Payments
UK businesses need to keep track of every invoice they issue, closely monitoring when payment is due. When an invoice payment is late, pursuing it can take up a lot of resources in terms of admin, time and money.
UK businesses which are growing must be as efficient and effective as possible. Their funding must be put to good use (especially those which are bootstrapping) and not used for unnecessary expenses. Many businesses have had to deal with late payments, which ultimately cut into their efficiency and overall profitability.
Cash Flow and Growth
A small business can be both healthy and successful, yet still be incapable of growth due to cash flow issues. With money spent on chasing late payments, cash flow can slow down as a result.
Many UK businesses have reported the various knock-on effects they experience. These include being unable to hire new staff, purchase better equipment and generally reinvest back into the business.
This is why many of them require cash flow solutions to keep operations ticking along on a daily basis. When they start growing, these businesses can then expand and develop their capabilities and operations, taking the necessary steps to becoming larger, more successful enterprises.
How MarketInvoice Can Help
MarketInvoice helps you get an advance against your outstanding customer invoices, quickly and easily. You can get access to funding in days – not weeks or months.
We’ve advanced more than £1 billion to thousands of businesses across the UK. We help entrepreneurs take charge of their cash flow and not let lengthy payment terms get in their way.