Time To Pay Trumps All
Jim Logan in his Small Business – Cash Flow Blog explains how frustrating it can be dealing with larger customers that take a long time to pay their bills.
Experian’s survey of 366,633 companies shows businesses of all size are extending the time taken to pay their invoices. Big companies are the worst offenders, taking on average 80.6 days to pay their suppliers – often smaller businesses.
Ouch!
This isn’t anything new. There are few surprises in this analysis. Except maybe one…the problem is getting worse. Average payment times have lengthened over the last decade. And they aren’t likely to shorten anytime soon. There’s little recourse.
Jim goes on to suggest that if your customer is making a habit out of paying slowly, you should investigate them and confront them on it. Using FreshBooks you can compare your clients and the time they take to pay you with our Time To Pay report. That report is a great way to see who your best customers REALLY are.
Something Jim neglected to mention was that if you can get your invoice in the hands of your customer sooner, then by default, you will get paid sooner. Our customers have been telling us this for years. In fact, we know from surveys that FreshBooks users get paid over 12 days faster AS SOON AS they start using FreshBooks.
Based on a subset of our users of mostly small service based businesses with average monthly revenues of less than $10,000 per month we are seeing:
- The average number of days to get paid is: 27 days
- The average size of each invoice is: $337.11
- The best month for business is: September, followed by November
27 days is a lot better than the 80.6 days, but we think there is room for improvement.
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10:28 am
[...] As a follow up to a post I wrote about dealing with larger customers, once again Jim Logan in his Cash Flow Blog has some good suggestions for composing a good collection letter. With a FreshBooks system you can use his advice and have it sent automatically with the automated late payment reminders. Here is what he recommends having in each letter: Clarity. The collection letter is no place for subtlety. Without being rude, you need to be clear. Clear on what the situation is, what is owed, what you expect, and what will happen if the addressee fails to respond. Nothing is to be implied and $5 words should be avoided. Simple, straightforward, non-interpretive language is all you need. You need the reader to get it. [...]
10:44 am
[...] You can read more about Jim’s blog from the posts: Streamline Your Collections, and Time to Pay Trumps All. [...]
2:26 pm
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