7 Practical Steps to Avoid the £44.5 Billion SME Late Payment Nightmare

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7 Practical Steps to Avoid the £44.5 Billion SME Late Payment Nightmare

Zurich research suggests that over 50% of small and medium-sized enterprises are owed money beyond their payment terms - the total amount owed is estimated at £44.5 billion!


Getting paid promptly is a massive headache for SME business owners – it’s time consuming, costly, stressful and potentially terminal for your business.


There’s no ‘silver bullet’ and the voluntary Prompt Payment Code, sponsored by the Government, doesn’t give all the solutions.


At Bloom we believe that by being proactive and adopting the following practical steps, the cash will roll in quicker…


Take these 7 steps to improve your business cash flow…


  • Implement real time bookkeeping and accounts or enlist a specialist such as Bloom to help you.  At Bloom we use Xero, the leading online accounting system to manage our clients bookkeeping and accounts in real time.  You will typically get paid faster with online invoicing.  Automated bank feeds allow you to keep track of the current payment status of all your accounts receivable.  Ageing reports, broken out by the number of days since the invoice was issued, are updated in real time to allow you to spot potential collection problems early.


  • Prompt Invoicing – keep up to date with your invoicing.  The sooner you invoice a customer the sooner you will get paid.  Xero allows you to create invoices quickly, anytime, anywhere and on any device.  It also reduces repetitive data entry with tools that speed up your invoicing, including recurring invoices, bulk invoicing, replicating past invoices and inventory items.  Invoices can be sent by email to ensure your customers receive your invoices immediately, avoiding any postal delays.


  • Direct Debit facilities are costly credit products provided by Banks and the preserve of larger corporates.  Where you receive recurring payments, don’t issue an invoice and wait for the cheque to come in the post, you can speed up cash collections and streamline your admin by making use of a service such as GoCardless which easily integrates with cloud accounting systems such as Xero.


  • Establish clear payment terms – don’t hide them away in the small print.  Late payments are a double whammy – you’re providing a credit line to your customer which may force you to draw on an overdraft facility from your bank!


  • Consider offering pricing incentives for customers who pay early – turn trade credit into a positive sales objective.


  • Establish internal credit control policies – write them down.  Ensure everyone is clear about these policies and observes them.  They aren’t there just for your administration staff.  Sales teams need to understand the financial impact of late payment.


  • Automate credit chasing – in a polite persistent personalised way.  The tools are available to automatically chase unpaid invoices and speed up the collection of cash. At Bloom we use Chaser which connects to Xero and sends personalised emails using your email address automatically once an invoice becomes overdue.  Copies of invoices or statements are automatically attached to your Chaser emails.  A personalised “thank you” is also sent automatically to your customer once payment is received.


Have you tried some of the above actions?  What’s been your experience?


For further information and advice on the subject please feel free to contact the Bloom team directly.

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