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Businesses using online accounting tools get paid faster

New Zealand small to mid-sized businesses (SMBs) using online accounting are getting paid 11 days faster now than they were in 2011, according to research undertaken by Xero.

Glenn Baker
Glenn Baker
May 21, 2014 2 Mins Read
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New Zealand small to mid-sized businesses (SMBs) using online accounting are getting paid 11 days faster now than they were in 2011, according to research undertaken by Xero.
Businesses using Xero are getting paid 32 days after invoicing their customers, down from 43 in 2011, resulting in significant cashflow improvement. The statistic comes from the aggregation of eight million invoices raised through Xero in the two years since October 2011 from the same sample of New Zealand SMBs. 
With online invoicing, small business owners can see if invoices have been opened, send invoices from a mobile device, and, via automated bank feeds, regularly check their bank account balance to stay on top of collections.  
Xero New Zealand MD, Victoria Crone, says online accounting can help businesses get paid faster by cutting time out of the actual invoicing process, resulting in a significant improvement of cashflow.  
“It’s easy to forget to pay an invoice, especially when it arrives days later with payment instructions buried in the fine print. With online invoicing, the invoice arrives instantly, and then customers can pay easily through a “pay now” button on the invoice.
“Faster and more efficient cash collection means business have more money in the bank, resulting in less debt and therefore less interest to pay, allowing them to invest back in their business, buy equipment, improve processes or expand operations.”
Crone says SMBs using Xero shouldn’t be stopping at 32 days.“While we have seen huge improvement on debtor days in the last three years, we will be working hard to find ways to help businesses cut this time further. Cash availability is such a key part of every small business’ success or failure. If we can support our customers by continuously shrinking the debtor day timeframe, they will have more cash in the bank to allow them to pay their staff and bills, keep the lights on, and sleep better at night.”
The data is based on aggregated, anonymous data and was generated by comparing monthly invoicing activity for 43,000 businesses on Xero worldwide over the two years to October 2013. The results showed that, per month, SMBs processed twice as many invoices in the Xero systems totalling US$1 billion more in value compared to two years ago. Xero partly attributes this to the global economy recovering from the after-effects of the 2008 downturn. 
Credit agencies are also reporting general movements in payment terms. However, Xero users are paid faster than their business counterparts, outstripping the general improvement reported recently by Dunn & Bradstreet. 
Dunn & Bradstreet’s Trade Payments Analysis shows that the average New Zealand business waits 41 days to be paid, while New Zealand businesses using Xero get paid in 32 days.

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Glenn Baker
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Glenn Baker

Glenn is a professional writer/editor with 50-plus years’ experience across radio, television and magazine publishing.

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