Skip to content
Home » Small firms spend 130 hours each year chasing overdue invoices

Small firms spend 130 hours each year chasing overdue invoices

A recent survey found that small businesses spend an average 130 hours each year chasing late payments.

The data suggests that firms wait 30 days beyond the contractually agreed terms before payment is received.

The research, carried out by RBS Invoice Finance, suggests that two specific factors are a persistent threat to the wellbing of small companies.

  • Spending time chasing late paying customers.
  • The effect of delayed payments on cash flow.

The finance provider has provided five measures that small firms can adopt to ease the pain of late payment.

We have summarised these suggestions here:

Five tips for keeping on top of overdue invoices

Be realistic about payment times

When you work out your cashflow forecast, factor in a ‘worst case scenario’, to work out the impact that a delayed payment can have on your cash flow. The biggest single cause of business failure is running out of cash.

Early payment discount

Consider offering customers or clients an early payment discount, e.g. deduct 5% if you pay the invoice within 14 days, or for an immediate upfront payment.

Make sure the client is aware of your payment terms

Always clearly print your payment terms on all relevant paperwork, such as your invoices, order confirmations, and contracts.

Keep on top of late payment issues

Put an automated plan in place for keeping on top of any outstanding invoices.

Make sure you chase up overdue payments promptly, and ask for an accounts department contact when you first do business with a new client or customer.

Tide Business Bank Account - £50 Cashback!

Simply open an account to qualify + 12 months of free transfers for our visitors! Read our Tide review

Use online accounting software such as FreeAgent ox Xero to show you exactly where you stand with payments at any point in time.

Consider invoice finance options

Invoice finance is worth considering if you want to keep your cash flow running. In return for a fixed percentage of any outstanding sums owed, an invoice finance company will chase your outstanding invoices on your behalf.

Find out more in our guide to factoring.