Delayed payments are one of the most common dilemmas many business owners face. It’s not that easy to go after clients due to unpaid invoices, but it’s something that comes with owning a business and it should be dealt with accordingly. If not, uncollected payments can cause quite a few issues like disrupting cash flow and hindering the growth of your business. In recent years, there has been a growing number of Australian SMEs that are struggling to collect payments from clients. Some reports have indicated that small business owners spend a lot of time chasing unpaid invoices for work that’s already been done.
In a recent survey, about roughly 500 Australian businesses are struggling with collecting payments from clients. 34% of those businesses found it even more difficult to pursue debtors and around 50% of them are challenged by the debtors when they attempted to collect payments. Many debtors employ a delaying tactic to avoid paying the business with the exact amount. The most common excuses are being unsatisfied with the quality of the work and tough economic conditions which is why they are unable to settle their accounts.
Around 60% of debtors with outstanding invoices point to increased cost of living for not having enough money while 13% say that the household bills are one of the reasons they cannot pay on time. This is exactly why it is always worthwhile with speaking to your local debt collection agency.
Why is debt collection important
Businesses need to be paid for their products/services to keep it running. Delayed payments stifle innovation and growth which is something most entrepreneurs tend to avoid. SMEs and large corporations are both susceptible to bad debts at some point. While the latter can manage the situation more effectively, the same thing cannot be said with small businesses. SMEs rely on reimbursements so that their business can survive.
Poor debt collection can result in a total collapse of the business due to insufficient cash flow, especially during the important stages of operation. Without the necessary funds, businesses might run low on supplies which can negatively impact their net profits as well as the stock levels of the company. When the amount of collectibles balloons up, SMEs might struggle to pay off its obligations as well. Proper debt collection can improve cash flow and keep your business afloat. This also helps free up your resources and reduce the risk of incurring losses.
How SMEs can improve their debt collection
As a small business owner, you might not have the necessary skills to chase bad clients. Or you might have ran into an existing client that has suddenly faced financial difficulty. Collecting delayed payments can be quite a challenge, especially if you’re not used to chasing unpaid invoices. This becomes even more difficult when a client has a substantial outstanding invoice that requires immediate payment so you can keep your business running.
If you have tried everything in your power and yet there is still no payment, perhaps it’s time to look for external help. Turning to experts who excel in debt recovery can do your business wonders and save you the time and energy from having to constantly pursue bad clients. It gives you peace of mind knowing that client debts are being handled by people with expertise.
Calling on someone to act on your behalf.
Multiple outstanding invoices can completely disrupt your business growth and make matters more complicated. Debt recovery specialists are capable of dealing with multiple bad clients and collect payments on your behalf. This allows you to spend more time running your business in order to maintain smooth operation. The most effective way of dealing with outstanding invoices is by acquiring the services of a debt collection agency.
Debt collection agencies know their way around legal issues when it comes to collecting payments from bad clients. They can help businesses avoid legal conflicts and make things much easier for SMEs to get paid on unsettled invoices.
With help from professional debt collectors, the process of collecting payments is simplified. SMEs can focus on operating their business without devoting too much time and energy into chasing bad clients with outstanding payments. If you are struggling to collect payments, consider having it handled by a debt collection agency.