
The late payments problem
A majority of SMEs we spoke to in our survey said they have at least ten outstanding invoices to chase every month.The average cost of an outstanding invoice is between ?1,000-?5,000, which is essentially money lost for these small businesses.While the results show the average value of an SME’s unpaid invoice to be relatively low, (only 5.7% of SMEs questioned said the average cost of one of their invoices were ?10,000+), it could explain why SMEs are a victim of late payments.

“I have found the problem to be with high net worth clients not paying on time with invoices. They just don’t seem to relate to how it can affect a small business and the impact that can have on our day to day business.”The survey reveals that late payments continue to be a problem for SMEs, with a majority of those we questioned spending one to three hours a week chasing them.
Lack of time efficiency
Over half of the SMEs questioned in our survey (56.2%) said they didn’t automate their invoicing and payments processes. This means SMEs are using manual approaches to chase payments. However, our results show they are too busy running their businesses to chase them properly in the first place, which is reflected in the few hours they dedicate to it each week.
Customer attitudes towards payment
One way that SMEs can maintain steady cash flow is if their customers stick to their agreed-upon payment terms, however, our survey shows they don’t. In fact, 41.9% of SMEs said their customers stick to their payment terms “most of the time,” this was followed by 25.7% that said customers “almost always” abide by their payment terms, while 18.1% said customers pay them on time “some of the time.”
What the survey results show is that customers can have a laissez-faire attitude towards payment terms with their suppliers; the findings show that some consider payment terms to be flexible, an attitude that we know can be terminal to smaller businesses.

“Technology coupled with a personal touch are the best ways to manage late payments to a minimum.”
Automation vs manual approaches
On the topic of technology, 27.6% of SMEs questioned said “automating invoice and payments processes” would help tackle the late payments issue best. However, a majority of the SMEs included in the survey don’t take advantage of automation technologies to chase payments. When we asked them why they don’t use automation software one business said they “didn’t think of it,” while another said it was “on the to-do list”. Other SMEs questioned said they didn’t know what software to use, while one said implementing software seemed “complicated” and another thought their business was “too small” to warrant the software. While smaller businesses can hone their “personal touch” in order to build good relationships with their paying customers, ensuring late payments are chased automatically isn’t something they’re capable of doing manually. That’s why invoice and payment automation can help SMEs chase their late payers, ensuring steady cash flow and enabling business growth by letting teams get on with running the business instead of chasing payments.
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