January 18 2022
It’s the start of a brand-new year, which means making New Year Resolutions.
With this in mind, take a look at a different way of invoicing this year.
Use carrots and not sticks to get invoices paid!
A study by Xero published in 2022, revealed that half of all payments made to Australian businesses were late- costing SMEs AU$1.1 billion per year. The study also showed that the majority of those businesses impacted by late payments experienced a ‘cash flow crunch’ — limiting their ability to invest, grow and employ more staff. On average, payments made were 6.4 days late.
One of the industries that’s been hugely affected by late payments and businesses folding, is the construction industry with a large number of companies going bust over the past 3 years.
The solution that many invoicing software platforms offer for this is issuing late payment fees — usually 1% to 1.5% of the overdue amount. (and this can only be issued if the original sales contract outlines this). Issuing penalties might have a positive impact — i.e. a customer pays up, but the negative emotional connotations of issuing a threat can have a significantly negative impact on your relationship with that business and put future transactions at risk.
So what’s the alternative?
Offering a payment plan upfront is one solution where you can essentially finance their business for them. Another is to offer your customers incentives for paying early — reward them.
Over the past couple of decades, studies have shown us that people react more positively to being rewarded for something rather than being punished. Long gone are the days of hitting a puppy to get them to sit or stay, and the number of employee reward programs that now exist far outweigh any ‘stick’ programmes for non-compliance.
By offering your customers a discount on an invoice amount if they pay you early is a win-win for both parties, PLUS it can encourage future trading between businesses. You can also avoid hours of chasing via email or phone.
Setting up Invoice Discount Templates on bzTrack is very easy — and you can apply them to one customer or offer everyone a discount for a fixed amount of time.
This is just one way that bzTrack is helping businesses across Australia better manage their cash flow.
Xero Compatibility
bzTrack is free to join and free to send invoices plus it works alongside Xero- syncing all your invoice and bills together. This is really useful as you might have a sales or operations team who are out on jobs — they can send the customer an invoice on-the-go which will then appear in the business’ Xero account to be dealt with by whoever ‘does the books’, leaving the salesperson free to move onto the next job.
It’s equally handy for tradies who want to invoice on-the-go too and leave the main admin up to someone else.
Multiple accounts? Not a problem
If you’re a larger organisation using several business bank accounts, you can also use bzTrack and know that the platform supports multi-banks. You can pay bills from one account, receive funds into another account — plus when you’re logged into bzTrack, you don’t have to keep opening tabs to log into multiple bank accounts as they’re securely connected once you’re in, saving you time to move on to running your business.
On bzTrack, you can keep track of all your transactions from your Dashboard and schedule payments accordingly. You can quickly see what money is coming in each month and what bills need to be paid (and when). Reminders can be automated to reduce the number of hours you might end up spending chasing payments at the end of the month!
Peace of mind
bzTrack also provides peace of mind when it comes to knowing who you’re trading with. ABN verification ensures you’re dealing with a fully registered business, and credit checking tools mean you can run a quick (or thorough) report on a business that you might be starting to work with and set your payment terms accordingly. Our partner CreditorWatch provides credit reports and having them easy to access from the platform means you can stay informed from one centralised place.
Right tool for the job
Providing your staff with the right tools to do the job is increasingly important in today’s world — not only because it means you’re showing empathy, but because happy staff mean a more successful business. So even if your role might not be accounting or bookkeeping, you can keep track of payments in and out, using a service that’s simple to use.
The bzTrack team is based in Adelaide and on hand to answer any questions. We’re passionate about helping small businesses across Australia get paid easily.
Find out more and talk to a member of the team to see how bzTrack can help you avoid difficult conversations with customers and get paid quickly!
