In his latest Spring Statement, Chancellor of the Exchequer, Philip Hammond promised to “tackle the scourge of late payments” by large corporations to their smaller suppliers.
According to bank money transfer service, Bacs, the UK’s small business community spent £6.7 billion in 2018 just attempting to collect invoices they were owed.
It has a knock-on effect for small firms too. Bacs also revealed that more than a quarter of small business owners have been forced to pay their own suppliers late as a consequence of unpaid invoices from larger companies.
Rachel Reeves, chairman, Business, Energy and Industrial Strategy (BEIS) Committee, said: “Many SMEs are placed in a stranglehold by larger companies deliberately paying late and ruthlessly taking advantage of their suppliers, causing these firms financial instability.”
Though no timeframe has yet been given to the strengthening of the UK’s Prompt Payment Code for payments made by larger firms to small businesses, there are steps that small companies can take in the meantime to increase the chances of punctual invoice payments from customers.
Sending invoices digitally can accelerate the payment process
In today’s digital, 24/7 world, it doesn’t make sense to keep your invoicing process offline. Sending an invoice digitally via email can accelerate the payment process far quicker than invoices sent through the post.
Most industry standard accounting software will include the ability to generate digital branded invoices using drag-and-drop templates, as well as automatically calculating VAT and other taxes due from income.
Provide clarity on business invoices to ensure frictionless payment
In order to facilitate the swift transaction of online invoices by suppliers, it’s important to make payment information as clear as possible. By outlining account details, payment terms and what exactly suppliers are paying for with complete clarity, you can avoid unnecessary misunderstandings once an invoice has been raised.
In today’s mobile-first climate, it’s also important to check that your digital invoices display equally as well on smartphone and tablet devices so that suppliers can manage their finances on the go if necessary.
Offer a variety of ways to pay invoices
It’s not a good idea to assume a supplier’s preferred mode of payment. With an ever-increasing number of alternative payment methods available today, it’s a good idea to allow clients to pay for your goods or services in a number of ways.
While the traditional payment methods of cheque and bank transfer will suffice for some suppliers, it’s also worth allowing clients to pay by debit or credit card. Some digital-native suppliers may also prefer to pay using an e-wallet or e-invoice with one-click functionality. The beauty of this is that it helps small firms to reconcile their accounts immediately.
If your small business is looking to take the guesswork out of managing your financial records and generate customer quotes and invoices with speed and professionalism, check out Intuit QuickBooks.
At TaxAssist Accountants, we’ve partnered with Intuit QuickBooks, a world-leading cloud accounting solution for small firms that offers clear, concise organisation of business finances whether you’re in the office or on the move.
To arrange your free trial of Intuit QuickBooks, call us today on 0800 0523 555 or drop us a line to arrange a free software demonstration.