Late payments affect business from financial and operational perspective

It’s an issue that’s close to our hearts and a conversation that matters.

But another conversation, one that’s often lost amid all the talk about lost revenues, invoice-chasing and the rest is the human cost of late payments. Because when businesses aren’t paid on time, it doesn’t just affect the bottom line – it affects people.

Xero teamed up with PayPal to find out more about how late payments affect, not just businesses but their owners too. 500 small and medium business (SMB) owners shared how they dealt with this ongoing issue.

Here are the key findings:

Impact on personal finances 

Businesses are comprised of people – and people need to be paid on time if they’re going to avoid stress and enjoy their work. It goes for entrepreneurs just as much as employees.

Overall, 35% of SMB owners claimed late payments meant an increased risk of debt – and 52% said they’d used their own money, or that of their friends and family, just to keep going.

Late payments can stop entrepreneurs from tending to relationships and their wellbeing. If you’re not getting paid on time, you might not be at your best.

So, it’s no surprise that 73% feel much more optimistic about their business when they have positive cash flow. The more reliable and regular your income, the better!

Impact on personal wellbeing 

Running a business is an act of love, but it can also place a strain on entrepreneurs – particularly if they don’t know when the money they’re owed is coming in. Late payments can affect:

We don’t want SMB owners to give up. They’re essential to the economy – they make up 99.9% of registered businesses, after all.

Making late payments history

What if late payments were no longer an issue? What if every entrepreneur was paid on time and in full? The survey found it would make a real difference to finances, wellbeing, and overall attitude. When asked, business owners said:

Happier, healthier business owners

Small business owners have enough on their plates. Running a business is hard enough as it is, without losing sleep over a late invoice.

There are things entrepreneurs can do to minimise these issues and bring more positivity into the workplace. Automated accounting tools make managing invoices simple and straightforward.

But, beyond that, we’d encourage everyone across all links of a supply chain to pay their invoices promptly and without fuss. It’s not just the business that’s affected: it’s the people who work for it. Everyone benefits when everyone is paid on time. Let’s make late payments history.

Because your personal life almost always overlaps with your business life, we make the process simple and stress-free and take our duty of care seriously by considering a range of solutions before making recommendations that are right for you. Call Omnis Group’s Accountants in Perth on 08 9380 3555.
Omnis Group are Xero Gold Partners

Source: Xero

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Justin Flavel

Managing Director

Justin’s experience spans across 20 years in accounting, financial analysis and general business practice.

Although born and bred on the land, Justin’s interest was more in spreadsheets, ledgers, and finance which led him to attend university. In 1992, Justin graduated with a Bachelor of Business majoring in Accounting and Finance. As well as qualifying as a CPA member and becoming a Fellow of the Taxation Institute of Australia, he began gaining practical experience in small and mid-tier accounting practices.

During the late 90s, Justin decided to expand his horizons and travel through Europe. It was during this time that he seized the opportunity to expand his knowledge on the workings of large organisations by taking on roles in multinational corporations.

Today, Justin’s passion is in facilitating businesses to grow and evolve. His focus is on acting in the role of business mentor to help clients develop the full potential of their businesses. He joins clients on their unique journey, and provides the tools and knowledge they need along the way to make the right decisions.

Justin’s aim for his clients parallels his own philosophy and personal journey—focusing on his own career growth and business success while maintaining balance in his life with his wife and three daughters.

Omnis Group Managing Director - Justin Flavel