Annual business insolvencies surged past 11,000 in the 2024 FY. Further pain is continued, and at the centre is Australian SME’s. Based on our surveyed clients, payment delays continue to grow. Here’s 5 easy tips your business can implement to make sure you get paid on time.
As tax debt grows, the cost and access to finance becomes increasingly difficult, and inflation runs, more and more Aussie small businesses are struggling. The Australian recently predicted 1in 5 Aussie SME’s are considering shutting their doors.
In a recent survey of our clients, reported payment delays from SME clients were up almost 50% in the final two months of last financial year (when compared to the same period last year). Late payment is a reliable and worrying precursor to an increased number of business failures.
The below are 5 tips used by our clients to help facilitate faster payments from their clients.
1. Clear Payment Terms
Set clear payment terms from the outset. Ensure that your customers understand when payments are due, and include this information in all your invoices. This transparency helps to avoid any confusion and sets the expectation that timely payment is a priority for your business.
2. Incentivise Early Payments
Offer discounts or incentives for early payments. This not only encourages prompt payment but also builds goodwill with your customers, reinforcing a positive relationship.
3. Automate Your Invoicing Process
Utilise automated invoicing systems to send out invoices promptly and track payments. Automated reminders for upcoming and overdue payments can significantly reduce the incidence of late payments.
4. Maintain Strong Customer Relationships
Building and maintaining strong relationships with your customers can lead to more reliable payment behaviours. Regular communication and a solid understanding of your customers’ business needs can make them more inclined to pay on time.
5. Consider Credit Insurance
Many of our clients use their credit insurance policy to not only protect them if a customer goes broke, but also as a “third party” blame to encourage clients to pay them. Most customers will understand the consequence of being referred to a credit insurer as a late payer.
At Debtor Protect, we specialise in helping businesses like yours protect against bad debt. With our tailored credit insurance solutions, we can double your credit limits, cover new customers in Australia and overseas, and provide expert advice to help your business grow with confidence.
If you’d like to learn more about how our services can support your business, feel free to reach out to us. With over 50 years industry experience, our team are here to help you secure your payments and ensure your business thrives.
Ian Markus
Director, Debtor Protect. 0481 772 123
