Simple digital decisions to improve payment times for SMEs

Opinion editorial
Andrew Baines, MYOB General Manager – Financial Services

Anyone who has run their own business before, knows it’s not easy and that hard work often comes with the territory. However, that doesn’t mean that the admin that goes along with trying to grow your business should eat into your productivity and more importantly, your downtime to recharge.  

Unpaid invoices and late payments can have a serious impact on cashflow and business performance, and in turn, stress levels and mental wellbeing. Unfortunately for many New Zealand business owners, spending hours on monthly invoicing runs and chasing up payments is far from an unusual occurrence.

Our 2023 MYOB Business Monitor showed that more than a quarter of New Zealand’s SMEs sometimes struggle with late payments from customers while nearly 1-in-10 said they often or always do.

This struggle is contributing to poor cashflow, productivity losses and additional business pressure. In fact, 48% of SME owners and decision-makers polled in our Business Monitor said that late payments from customers would put some level of pressure on their business over the following 12 months.

Chasing invoices for payment has long been one of the toughest challenges for small businesses. It’s also a major pain – awkward follow ups and phone calls, unanswered emails and promises of payments that don’t eventuate.

Additionally, late payments can have a knock-on effect in that, when small businesses are waiting on payments, they themselves can be late in paying their own suppliers, causing more businesses to stall.

So, when the days of waiting for the cheque to arrive in the mail and then get processed by the bank are largely behind us, what can businesses do to improve the status-quo and help remove some of this burden on their time and their balance sheets?

Firstly, brave the change and ditch the spreadsheets, and move to an online platform to manage your business. Our insights show that more than a quarter (29%) of New Zealand’s SMEs are still using Excel spreadsheets to track their finances throughout the year and 1-in-10 rely on paper records, but this comes with a number of risks – potential for incorrect data and duplication, lack of forecasting accuracy, and productivity impacts.

If you’re already digital, also make sure you’re set up with a business management platform that helps to automate processes and provides your customers with multiple payment options to make payment as easy as possible.

For example, thanks to Stripe’s payment technology, our MYOB Business online solutions all allow New Zealand merchants to enable online payments on their invoices. A simple ‘pay now’ button gives customers the option to pay instantly using their Visa or Mastercard, or through Apple Pay and Google Pay. These transactions are then automatically reconciled in the platform, saving business owners time and hassle while allowing them to get paid up to three-times faster.

And last but not least, make sure you’re eInvoicing enabled. To clarify, eInvoicing isn’t sending an email invoice or PDF – it’s is a direct digital exchange of information through both parties’ online invoicing systems. It takes no more than a couple of hours to set up in your business management platform, and while the prospect of this initial one-off time investment may not sound appealing, our insights have shown that SMEs estimate they could save an average of 3.4 hours a month thanks to some of the automation provided by eInvoicing. That’s more time back to invest in what you’d rather be doing in your business. It is also much more secure. Sending invoices by email leaves you open to email scams, fraud, phishing, and ransomware attacks, and eInvoicing reduces this risk thanks to a system that is much more direct and secure.  

Slow payments and a lack of cashflow can be the difference between a building a thriving business – one that’s ready to enter more markets, launch new products and capitalise on new opportunities – and simply surviving.

Leveraging digital business platforms to help improve payment times can make a significant difference to your business performance, productivity, and profitability. Heading into the final quarter of the year, I’d encourage any business owner to make sure they’ve got the right tools to empower and equip your customers to pay promptly.

For more information about MYOB and how the business management platform could help you to streamline your finances and boost your business growth, visit www.myob.com