How small business owners can get paid on time – here are 5 strategies
Not getting paid on time can have a big impact on a small business’ cash flow. During the COVID-19 pandemic many SMEs struggled to pay salaries, find new clients while working from home and with customers not paying their invoices in time.
The SA SMME COVID-19 Impact Report shows that a total of 38,6% SMEs indicated that they had customers who did not pay their invoices. The report also revealed that 67,4% of SMEs said that they experienced stress or anxiety from not being able to cover expenses during the pandemic.
To help entrepreneurs on the road to recovery from the devastating impact of COVID-19, SME South Africa recently launched the Small Business Bounce Back Guide in collaboration with Sage, to provide much-needed help and inspiration to the country’s SMEs.
Included in the Guide are hacks to help small business owners to limit the impact of late payments.
Take the hassle out of chasing payments
After delivering a service most entrepreneurs don’t expect that they will have to chase after payment, said Velly Bosega, digital media entrepreneur, who founded SME South Africa in 2014. Bosega is the CEO of 356 Oak Holdings, the parent company of SME South Africa.
Bosega added: “You cannot avoid chasing after payments because it affects the cash flow in your business. However, this process does not have to be strenuous.
“You can start by removing the human element from the booking and payment process and then introduce an automated system, like accounting software, for example,” he said.
Below are strategies from the Small Business Bounce back Guide on how to limit the impact of late payments:
● Invoice accurately – make sure that your invoices are error-free and comply with the customer’s requirements
● Make it easy for customers to pay – start by offering a range of convenient payment options, including debit and credit card options, integrate payment solutions such as SnapScan, Zapper, QR code, EFT, and instant EFT.
● Communicate clearly – ensure customers are aware of your payment terms and include this on every invoice as a reminder.
● Put processes in place to remind customers to pay – for example, add receipts to your emails and resend the invoice so you could see if the recipient opened them.
● Automate processes – make use of accounting solutions to automate parts of the invoicing process.
Also in the Small Business Bounce Back Guide small business owners can get access to information on the following: business compliance, funding, marketing, financial management, and more.
