Cash flow, and the ability to predict cash flow, is vital to the success and survival of most SMEs (small and medium enterprises).
However, a staggering39 per cent of invoices issued in 2019 were paid late. This had left UK SMEs holding the bag for an estimated £50 billion in late payments and, unfortunately, this situation is getting worse.
The average number of days an invoice was paid late doubled to 23 days in 2019, up from 12 days in 2018. Late invoice payments are also worth £10,000 more on average than those paid on time. The number of SMEs affected by late payments hit 54 per cent in 2019, and78 percent of them are being forced to wait a month or longer than their agreed payment terms before being paid.
The issue of late payments has put many SMEs in serious financial trouble. The average amount owed to small businesses rose to £25,000 per company in 2019, up from just over £17,000 in 2018. Meanwhile, most SMEs report that on average, debts of £35,000 could result in their closure.
What is FreeAgent and how can it help?
FreeAgent is an innovative and effective cloud-based accounting solution for freelancers and small businesses owners that helps them manage their invoices, expenses, payroll, tax returns and other accounting tasks.
In order to cut down on the 56.4 million hours that SME waste chasing late payments, mostly after business hours, FreeAgent has a number of automation options.
Automated invoice reminders let customers know when they've missed paying an invoice FreeAgent users can set up a schedule of automated invoice payment reminders in their ‘Invoice Reminder’ tab, which will send payment reminders based on the invoice due date in FreeAgent.
FreeAgent users can check on individual invoice reminders through their status and history to see if, or when, they’ve been sent and responses to these reminders go straight to their business email address.
Using FreeAgent gives small business owners greater control over their payment follow ups and a simple way to stay on top of their credit control.
Optimise and humanise your credit control with Chaser
While FreeAgent provides an excellent cloud-based accounting platform, credit control is not their primary focus. Chaser is an award-winning credit control solution that can be integrated into FreeAgent with just a few clicks.
Adding Chaser to your FreeAgent account gives you a range of benefits, including:
1. Adding the human touch back to automation
Automated reminders can be easy to dismiss. The minute chasers start to look and feel like automated emails they lose such a huge amount of their impact. If it doesn’t feel like a human being on the other end of the process, it is so easy to ignore.
Chaser’s automatic invoice reminders add the human touch back in.
All our invoice reminders come from the user’s normal email address with the ability to set a personal email signature that matches the user’s normal emails, and fully editable content to match their regular communication style . This makes our automated service indistinguishable from manually sent reminders.
Our chaser templates can be edited to reflect the different relationships our users have with their different groups of customers, for example, long term clients, bad payers, or customers who need to be chased in a different language. Our reminders can also be set on multiple different schedules, which can be edited to reflect the best time to contact particular customer groups for prompt payment.
Reminders for multiple invoices for the same customer can also be automatically set to send together, avoiding bulk individual sending that is a red flag for automation.
2. Providing varied and individualised payment options
Each of our invoice reminders has a link to a unique payment portal. These portals can be customised to reflect a user’s brand and offer a wide range of payment options. Alongside the usual credit and debit card options, we also offer support for Stripe payments.
Each Payment Portal also allows both the customer and the user to see all the outstanding payments on their account, promoting prompt payment.
3. Protecting customer relationships
Here at Chaser, we fully understand the importance of the relationship SMEs build with their customers and how important the repeat business those relationships create is.
Our scheduling system prevents users from damaging their customer relationships by chasing invoices that have already been paid by timing their reminders to the date and time of the user’s bank reconciliation.
Once customers have paid, our system allows users to automatically send a “thanks for paying” message within 24 working hours of an invoice being marked or reconciled as fully paid on FreeAgent.
Additionally, all communication between our users and their customers can be captured by our revolutionary communication platform. This means no messages are lost in the churn or require trawling through a packed inbox to find.
All reminders, replies from customers, and responses from the user are automatically captured within Chaser, streamlining the communications process.
4. A new approach to debt collections
In our experience, approximately 80 percent of invoices can be successfully collected through email chasing alone. However, we’re committed to getting our users 100 percent of the money they are owed.
Most SMEs would rather write off bad debt instead of dealing with the time-consuming handovers and aggressive tactics of most conventional debt collectors.
Chaser’s innovative debt collection service uses polite persistence instead of harassment. We act as mediators, creating a solution that suits all parties while preserving our user’s relationships with their customers.
Handovers take just a few clicks, as all the data is already held in Chaser and our pricing system is transparent and up-front.
5. Chaser helps small businesses get paid
Small businesses that add Chaser to their FreeAgent account benefit from an average 16 debtor-day reduction. Using Chaser also reduces the total average manual chasing time by 3.5 weeks a year.
This combination of reduced late payments and reduced time-wasting results in an equivalent cash flow boost of 7.1% of turnover. This is a one-off investment that more than pays for itself, and businesses can reinvest in their growth and continued success.
FreeAgent provides award-winning cloud accounting software specifically designed to meet the needs of small businesses, contractors, freelancers and their accountants. More than 100,000 UK businesses use FreeAgent to manage their business finances.
FreeAgent empowers business owners to look after much of the day-to-day bookkeeping admin, which means accountants can spend more time delivering valuable services such as providing tax or business advice.
FreeAgent has won numerous high-profile industry awards, including accolades at the AccountingWEB Software Excellence Awards, British Accountancy Awards, ICB Luca Awards and Computing Technology Product Awards. The company is a FCSA partner and has been listed twice on the Deloitte Fast 50, as well as being named “one to watch” in the Sunday Times Tech Track 100.
In 2018, FreeAgent was acquired by the NatWest Group where it is run as an operationally independent entity.