More than a million SME’s are facing late payments in the UK as evidenced by research undertaken by BACS in July 2012 and confirmed by additional research undertaken by Aldermore Bank.
“Late payments are a continuing drain on small and medium sized business owners in the UK. It’s critically important, at a time when we’re looking for SMEs to drive the economy out of recession, that they are freed from the shackles of late payments” says Damon Walford, Managing Director of Aldermore Invoice Finance.
The research also showed that SMEs typically have to wait 43.4 days beyond payment terms before an invoice is settled. Additionally a UK SME will spend almost 14 days a year chasing debt; this means that delayed invoice settlement will cost smaller UK business around £700 million in 2012.
For SMEs the pressure of chasing debt on their business is huge, with 35% of those surveyed said that late payment of up to just £20,000 would be enough to put them out of business.
Mike Hutchinson from BACS said “We urge SMEs to look at taking control over their cash flow wherever they can be automating payments where possible to save valuable time and administration costs”.
Although this is a good starting point SMEs need to be doing more than just automating payments they need to be taking control of their business processes to make sure they are invoicing their customers correctly on time, taking advantage of earlier payments from suppliers, managing employees expenses more effectively and to do all this they need to have a total visibility within their business.
Whilst they may have this information in a finance package, it is often not integrated with their billing, procurement and expenses systems. This means that at month-end, financial departments often have a view which is not the true view and can be up to weeks old. What SMEs need is a real-time view of their cash flow, so that they can make the right decisions at the right time.
They need software that is integrated to give them a 360o view of what is going on. They need to be planning & projecting what their cash flow is going to be year-on year, quarter-on-quarter, week by week and if necessary day-to-day. An accurate cash flow projection can alert businesses to trouble well before it strikes.
Using more sophisticated joined up software to centrally manage and control payables and receivables, automate payment and clearing processes, quickly and efficiently create and file tax returns, organisations gain real-time visibility data enables organisation to become more nimble and efficient and at the same time enhancing their cash flow.
Companies looking at managing their cashflow more efficiently are looking at SAP’s Business ByDesign. A fully integrated business solution offering support for a company’s business processes and delivered as a service providing a cost-effective solution with no need for hefty capital investment.
SAP Business ByDesign provides you with timely and accurate visibility into your cash inflows and outflows so you can make sound cash management decisions. It enables you to analyse and forecast liquidity using real-time data reporting. It also provides complete transparency into every financial transaction with full audit trails, approvals, and document flows.
To see how SAP Business ByDesign could help your business watch the following demonstration: SAP Business ByDesign
For more information on how SAP Business ByDesign can help your business, please visit www.incloudsolutions.co.uk
Add a Comment