Late payments can lead to more than just delayed revenue for small businesses. They can lead to a loss in productivity as well. A recent survey from WePay and Survata found that 59 percent of small businesses have to follow up with customers on late payments an average of two times.
For small businesses, this means that valuable resources are tied up. Instead of having your team focused on all of the different tasks that you need accomplished around the holidays, they’re tied up tracking down those payments.
The Impact of Late Customer Payments
The survey also found that late payments can be especially impactful toward the end of the year, when many businesses report earning the bulk of their revenue but may also have additional expenses to deal with. In fact, 21 percent of the respondents in WePay’s second annual SMB & Money survey said they had to deal with late payments at the end of last year.
To avoid this problem, WePay offers some tips for making it as easy as possible for clients to pay on time. First, the company recommends using software that has integrated payments like Shopify or Zoho, as well as accepting a variety of different payment methods, even if you’re not a fan of those credit card processing fees.
Then there’s the issue of fraud. Fraudulent purchases and payments can be even more harmful for your business than regular late payments.
WePay Chief Operating Officer Tina Hsiao said in an email to Small Business Trends, “Fraud and loss come in different forms, such as chargebacks, merchant-identity fraud, buyer-identity fraud, and merchant-credit risk. Attacks can also come from fraudsters who masquerade as legitimate buyers. Awareness of these types of payment risks for you and your business is the first step in avoiding them.”
Small Business Deals
Beyond that, Hsiao recommends using social data and online tools like Experian to identify those fraudulent cases quickly and putting a system in place so that your company can constantly monitor this type of activity.
There isn’t one single thing you can do to totally eliminate these issues. But if you can take a few small steps, you can minimize the effect on your small business so that you can actually get paid without having to go through those extra steps.
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Yet it is common practice to get money early and pay late. That’s what my accountant professor said.
You need to learn to work around this by having a team that will collect your payments for you.