Why streamlining invoicing is a smart move
Cashflow is even more crucial as nearly one quarter of Australian businesses expect the next three months to be difficult.
Twenty-two per cent of Australian businesses expect it will be difficult or very difficult to meet their financial commitments during this quarter – a considerable rise from the 17 per cent who indicated this twelve months ago.
The March 2022 ABS survey into business conditions and sentiments also found that 40 per cent of businesses surveyed had experienced an increase in their operating expenses over the previous month.
For some small to medium enterprises, an increase in operating expenses is enough to tip them into dangerous territory. Particularly if the business is also awaiting payment of its invoices.
The issue of late payments was highlighted in September 2020 when the small business ombudsman Kate Carnell drew attention to big businesses that delayed paying smaller suppliers.
She noted that profitable companies, such as Premier Investments, were using Covid-19 as an excuse, yet suppliers regularly waited 120 days to be paid.
Carnell’s call to legislate for 30-day payment terms resulted in the Payment Times Reports Register for companies with an income of more than $100 million, but it falls short of her ambitions by not imposing penalties for delayed payments.
While the register is useful to consult before doing business, until there is a lasting change in business culture, streamlining of invoicing systems may deliver an immediate fix for South Australia’s 143,000 SMEs.
Richard Barry of South Australian tech company bzTrack says automating cashflow forecasting is also a smart move. bzTrack’s invoice processing solution seamlessly integrates with accounting packages, such as MYOB and Xero, and includes this capability.
“Cashflow is the lifeblood of SMEs. When businesses can easily see when money will be coming in, they can be proactive and ‘hurry it up’ using things like invoice discounting,” says Barry.
“Another thing you can do is to customise reminders or set more reminders for a customer who has a history of paying late.”
Barry says at least half of the time businesses spend in setting up, creating, tracking, reconciling or paying invoices could be better used for growth.
“Businesses are crying out for greater visibility, security and flexibility in business-to-business payments – but they can’t afford to lose more time to this,” he says.
“Credit checking through Creditor Watch, ABN verification, even paying other people’s invoices… It all adds up and is a particular impost on smaller businesses and teams.
“With bzTrack, it’s done. There’s also a single sign on to pay bills, and multiple payment options. You have greater flexibility in how your payments are sent and received.”
Barry recommends keeping an “eye on each customer’s payment data” and adjusting individual payment terms to reflect changes in circumstances. This could be that invoices are paid in full up front, having a deposit or 14 day terms.
He says Australia is moving toward using eInvoicing as the standard, something that has already been adopted overseas. In Denmark and Finland, around forty per cent of invoices between businesses are sent this way.
The Australian Government wants eInvoicing to be widely adopted, due to its efficiency and reduced risk of fake invoices, email scams and ransomware compared with emailed or posted invoices.
This is something already on bzTrack’s roadmap. Barry points to the recent Federal Budget as evidence that digital technologies like electronic invoicing are the way forward.
To boost small business productivity and security the government announced a $120 tax deduction for every $100 spent on digital technologies such as cloud computing and eInvoicing. This means every dollar spent delivers a $1.20 tax deduction. bzTrack falls into this incentive category.
Barry says now is not the time to “hire an IT person to develop a custom bells and whistles” program that proves hard to use.
“With solutions, while it’s great to be clever, it’s much better to be useful,” he says.
“Using a platform like bzTrack can improve the cashflow of every SME – and free up time.
“That’s time that could be spent on strategy, prospecting and growth. That’s useful.”
By Indaily. Published on Wednesday, April 20 2022.