Late payments are among the largest problems facing small and medium enterprises (SMEs) today. Collectively, SMEs in the UK are owed £55 billion in overdue invoices.
Cash flow is vital to SMEs, and unpaid invoices can diminish cash flow, with potentially disastrous results.
Around 30 percent of businesses in the UK listed maintaining a consistent cash flow as their most considerable challenge. This is especially true in light of the financial uncertainty caused by the Covid-19 pandemic.
A lack of cash flow can also cause a debt spiral. Around 26 percent of UK businesses listed poor cash flow as the main reason they were unable to pay their suppliers, causing a knock-on effect of late payments
Here at Chaser, we’re passionate about getting SMEs the money they are owed in the most efficient and friendly way possible, and a combination of Xero and Chaser is the best way to do it.
Why cash flow becomes a problem
On the face of it, having consistent cash flow seems relatively straightforward. You do your job, and you get paid for it.
However, the data says it’s not as easy as that. Information gathered by Xero themselves indicates that 52% of all invoices are paid late. This leaves the average small business with a £63,881 hole in their accounts.
So what are the principal causes of cash flow problems?
Chasing for payments is expensive and time-consuming
The reality is that many SMEs don’t have a full-time accounting team that they can dedicate to chasing late payments. In order to follow up on a late invoice, people need to be pulled away from other tasks and spend time chasing that payment.
Time, of course, is also money.
Around a third of SMEs in the UK spend more than £500 per month, just to chase late payments. These costs add to the existing debt, which can actually put a business in danger.
The average SME has £38,000 in outstanding payments at any one time, meanwhile just under 20 per cent of businesses admit that debts of between £20,000 and £50,000 would be enough to drive them into insolvency - highlighting just how hard-hitting the impact of late payments can be on SMEs’ survival.
While SMEs are predominantly the victims of late payments, having a disorganised accounting system doesn’t help.
If you’re relying on outdated pen and paper credit control solutions or multiple, disconnected spreadsheets, it can be easy to fail to follow up on invoices, have unspecified payment terms, and be too lenient with bad debtors.
Poor and disorganised credit control practices set a terrible precedent for future invoices.
There aren’t good options for bad debt
When it comes to consistent non-payment, most SMEs often simply write off the money they are owed rather than escalate it to a debt collection agency.
The primary reason for this is that traditional debt collection tactics put the customer relationships they’ve worked so hard to build at risk.
These relationships, and the repeat businesses they bring, are too valuable to risk through aggressive debt collectors employing customer harassment methods.
How Xero helps you overcome these issues
Using Xero to chase overdue invoices streamlines the process, cutting down on the amount of time you need to spend and reducing frustration. Xero users have access to the following features:
Easy payment options
Xero makes getting paid as streamlined as possible with payment service options. Customers can both access their invoice and click the “pay now” option to make an immediate payment.
Multiple payment options can be set up, including Stripe, standard credit or debit card options and even direct debit payments.
Rather than spending your precious time chasing unpaid invoices, Xero allows you to set up automatic payment reminders. Using Xero Invoice Reminders lets you automate the process of informing your customers of an upcoming invoice or if they’re late on an invoice payment.
Highly organised accounting
The Xero dashboard lets you keep up to date with your accounts receivable. Using the dashboard enables you to track outstanding invoices and how long they’ve been outstanding.
You can also set credit limits that prevent customers with significant numbers of unpaid invoices from accessing goods and services until those invoices are paid.
How Chaser makes Xero even better
Xero is excellent accounting software, but there’s always room for improvement. Xero’s reminders are deliberately simple. Chaser lets you add a massive range of functionality to your credit control process.
Chaser can be quickly and securely integrated with Xero and offers you the following additional benefits:
Comprehensive payment solutions
The Chaser payment portal allows customers to pay you directly through their invoice using our Payment Portal.
Each Payment Portal is individualised to each customer’s account and offers multiple, flexible payment options for their invoices. Both you and your customers can use the dedicated summary page, which shows the full details of all paid and outstanding invoices.
Customers can even pay for all their upcoming invoices in one place for the most effort-free and straightforward payment experience.
Automation with a human touch
Automated emails might be simple and easy to send, but they are also simple and easy to ignore. As soon as a customer realises that a payment reminder is automated, it loses a lot of its impact.
Chaser adds the human touch to automated credit control. This means you get all the streamlining and time-saving benefits of automation, while still having the impact of emails appearing to come directly from a person. By using multiple, intelligent schedules, these reminders can be set to send at varying times and dates to suit your different customer groups, for example, good payers, bad payers or long-term clients. This avoids the homogenous bulk-emailing that is so indicative of an automated service.
Chaser emails appear to come from your regular email address. You can set an email signature to match your standard emails and tailor our email templates to reflect the specific relationships you have with different customers.
All the information at your fingertips
Chaser’s comprehensive suite of data analytics makes it easier than ever to keep track of your accounts receivable. All communication between you and your customers is captured in the Chaser app and is fully searchable.
The content of phone conversations can be added through the note system and your colleagues can check those notes, keeping everyone on the same page.
After six years of providing excellent credit control solutions for SMEs, we’ve found that 80% of invoices can be successfully collected through automatic email chasing alone. However, sometimes SMEs need the option to escalate cases further
As we’ve already mentioned, most SMEs would rather write off bad debt than risk their customer relationships with aggressive debt collectors, but Chaser Collections is entirely different
We use a compassionate but firm approach to make sure you get the money you are owed without damaging the relationships you’ve spent time and effort building.
Instead of harassing your customers, our ethically-trained collectors act as mediators, helping both sides come to a payment arrangement that benefits all parties.
Speed up payments with the Payment Portal
Collecting customer payments on time is no easy feat for businesses selling their goods or services on payment terms, and with the difficulties faced by the economy since 2020, getting paid on time is becoming more and more challenging for businesses.
In addition to sending automated payment reminders, Chaser users can send all of their customers access to a dedicated Payment Portal. This gives Chaser users and their customers full visibility over all paid and due invoices, as well as easy access to relevant, downloadable documentation in one central location.
Through offering multiple payment options to suit your customers’ needs in one location, including instant card payments and international bank transfers, customers increase their chances of prompt invoice payments.
So, if you, like many other SMEs, make use of Xero and are struggling with unpaid invoices, read on to find out how a Chaser integration can help you.