Like the sky is blue and the grass is green, there is nothing that is more assured than the notion that if a person does an honest day’s work, there’s probably another person that will forget to pay them on time.
Or worse, not pay them on purpose.
It is a concept that has existed and will continue to exist for as long as the Earth keeps spinning.
Rarely, however, do we pause to consider what the true cost of a late payment actually is. What goes on behind the scenes as a result of an overdue invoice? Who does it really affect, if anyone? And what is the true cost in these situations?
You may be surprised to learn that the length of time awaiting overdue invoices to be paid is roughly, on average, around the two-month mark. In some of the more extreme cases, it has ballooned out to over 4 months or more.
While that might not sound that bad for one invoice, when a business owner is awaiting the payment of several, it’s a different story. Some reports suggest that small businesses are awaiting nearly $40,000 in unpaid invoices, having to chase those non-payments in excess of 5 times.
You may also be staggered to learn that poor cash flow, a direct result of late payment, is responsible for 1 in 2 collapses of small to medium businesses throughout Australia. To really hammer that home, there is a total of $19 Billion that doesn’t reach the pockets of business owners each year because of a lack of on-time payment.
Late payment truly is the bane of small to medium business owners’ lives the country over and livelihoods are at stake.
Time spent chasing up late payers is time not spent on the job. It is money not spent on putting meals on the table. It is bills piling up simply because, in a sick twist of fate, the person chasing payment can’t pay their suppliers themselves. It is businesses closing.
There is an obvious concertina effect that unpaid invoices have on the people who rely on that money – the hard working Australians and their families.
Imagine if all the hours spent chasing unpaid invoices could actually be put into strategies to attract new business – advertising, cold calling, networking and the like. Imagine if all the money that small business owners put into employing debt collectors to recoup their unpaid invoices could be put towards improving their overall product or service.
And now imagine this; one report suggests that if all invoices were paid on time nearly 500,000 new jobs would be created. That would ease the pressure on the government to provide welfare to those half a million people and it would usher a new era of national productivity. Paying bills on time could equal jobs for Australians that don’t have them. The answer is so simple.
Imagine what a world that would be.