The annual late payment research from Bacs has just been released and shows that the cost of collecting late payments has increased. It is now costing small businesses in the UK £6.7 billion to chase up money that they are owed, this is an average of £9,000 for each business.
The Bacs Late Payment research is regarded as the benchmark figure to gauge the economic performance of SMEs. The number of SMEs experiencing late payment has increased to 43% with a total bill of £13 billion of outstanding payments.
Not only does late payment have a negative impact on cash flow, there are significant costs involved in chasing late payment. Using their (often limited) administrative resources to manage late payments is channelling away time that could spent on more productive uses, such as generating sales. In some cases, SMEs suffering from overdue invoices have needed to employ someone solely to chase late payment.
Delays in late payments also has a wide-reaching effect on the operations of SMEs. The Bacs report found that over a quarter of SMEs have been forced to pay their own suppliers late. It can also have an impact on investment, staff commission, staff pay and bonuses.
Ian Cass, managing director of the Forum of Private Business, which campaigns on behalf of small to medium size businesses, adds:
“With billions of pounds tied up in late payments, there is a knock-on effect through the whole UK economy. Small businesses are working to tighter margins and with late payment affecting cash-flow it can mean that these businesses can’t invest, can’t grow and in some cases it’s so serious that it can put them out of business entirely.”
Draycir’s advanced credit control software, Credit Hound can help businesses to tackle their late payment problems. By reducing many credit-control related admin tasks, such as identifying aged debt, checking incoming payments, scheduling chasing calls and so on, it means that much more time can be focussed on the chasing itself. As a result, more customers can be chased in a day, encouraging more payments to be made faster. The To-Do list automatically organises the call list and shows who to call, when and why. Having all the information to hand on one screen is convenient and enables the caller to handle the call more confidently.
Based on configurable rules and actions, an automated credit control process enables SMEs to be more proactive. Reminder letters are automatically sent out to overdue accounts from when payment is nearly due until payment is made. The frequency and tone of letters can be controlled to suit different types of customer groups and protect the customer relationship. An efficient dispute management process within the software also helps to see what payments are delayed, the reasons why and how it’s being resolved.
Companies using Credit Hound have enjoyed seeing an immediate and positive impact on their cash flow and the cost of chasing late payments. Before having Credit Hound, CEFS Ltd used to spend 6-12 hours every week chasing late payments but now it only takes around 5 minutes a day. Accounts manager, Donna Freeman was thrilled with the immediate results that Credit Hound achieved, saying:
“As soon as Credit Hound was set up, we received £2,000 of payments in the first 2 hours alone and in just a week it has brought in £8,000.”
Credit Hound works with many leading ERP and accounting systems, including Sage 50cloud, Sage 200cloud, Sage Enterprise Management, Microsoft Dynamics 365 Business Centre (cloud and on-premise), Microsoft Dynamics NAV & GP, Infor SunSystems, SAP Business One and many more.
If you would like to find out more about your business could benefit from advanced credit control software, please contact Draycir on 0116 255 3010 or visit draycir.com/credithound or speak to your IT reseller.