Business leaders should be setting their alarm for 11.01am, according to new research, which has identified this as the most important time of day for SMEs.
That is because 11:01am has been found as the most popular time for invoices to be paid in a survey of more than 3,500 businesses Australia-wide.
This suggests that chasing overdue invoices, issuing reminders and even sending emailed receipts are best done in the morning to achieve a higher success rate.
The survey, conducted by ezyCollect, found that 16.43 per cent of SME invoices are paid between 11am and midday, and a further 18.23 per cent are paid during the lunchtime period, between midday and 2pm.
“Late payments can have a material impact on a company’s bottom line and in many instances, can be the final straw for a small business,” said ezyCollect’s managing director, AJ Singh.
“If invoices aren’t being paid on time, it can often mean that unfortunately a company could go out of business.”
Business owner Mikel Lindsaar, founder of digital development firm reinteractive, developed a number of strategies to overcome the burden of late payments in his business, particularly when dealing with larger companies that treated his business like “a bank”.
The first of those is to simply ask to renegotiate payment terms, instead of accepting those put down.
“I remember the first discussion we had with a very large customer of ours. They said, ‘Our payment terms are 45 days after the end of the month that you issue the invoice.’ I went, ‘Hang on. If I issued the invoice on the 1st of January, you're going to pay me on 15th of March?’ They went, ‘Yeah. That's our payment terms’,” Mr Lindsaar said.
“I said, ‘Look. We're not a bank. We can't afford this. We need better payment terms.’ They actually … changed the payment terms for us. We actually, for a long time with that customer, got prepaid for our work in full.”
Another strategy that has achieved success, according to Mr Lindsaar, is to offer a small discount for advanced payment.
“We offer a 10 per cent pre-payment discount. If the full payment of the invoice is received before work begins, we give them a 10 per cent credit note. When you're talking a large chunk of money that becomes a large chunk of money. If you can get that communicated to the finance people, they love it.”
Mr Lindsaar’s third strategy is also the most simple: make it as easy as possible for customers to pay.
“Become friends with the accounts payable person at the company that you're dealing with,” he said.
“Give them a call and get to know them and say, ‘Look, is there anything that we can give you to make the payment process smoother? I'm just calling up to make sure that you've got all of our account details correct because I wouldn't want to create double work for you. When I send you invoices is there anything you need on the invoice? Would you prefer the purchase order number to be more highlighted or bolder? Or is there anything we can do to make your life easier?’.”