Chasing debt can be a laborious and draining task for businesses of all sizes. Unfortunately, far too many companies spend excessive time and effort trying to recoup overdue payments.
According to a survey of 1,000 CEOs, founders, directors and senior management, the UK SME sector is crippled by late payments, with businesses chasing over £50bn worth of unpaid invoices.
Collecting a debt can be time-consuming for many businesses, taking precious resources that could otherwise be used to cultivate customer relationships, improve the business or find new customers.
The risk of having to chase debt is a major factor when deciding which customers to do business with. On average, each small business is chasing five unpaid invoices at once and spending up to two hours every day trying to get them paid.
The situation is even worse for those based in London – on average they’re waiting on seven payment requests totalling almost £9,000. Meanwhile, Scotland-based businesses are dealing with six overdue bills taking on average one hour and fifteen minutes out of their days attempting recovery.
Time Spent on Chasing Debt
It is estimated that businesses in the UK spend an average of 10 hours per week chasing overdue payments, which equates to roughly 500 hours per year. This enormous amount of time could be better spent focusing on improving the business or finding new customers. In addition to this lost time, staff wages must also be considered when calculating the total cost of chasing debt.
Costs Associated with Chasing Debt
The costs associated with chasing debt goes beyond just lost time and wages; there are other financial implications. For example, many companies outsource their debt collection efforts to free up internal resources for different tasks. This means additional costs associated with hiring third-party collection agencies or lawyers specialising in debt recovery. These costs can add up quickly and drastically reduce profits if not managed properly.
Impact on Cash Flow
The most significant impact that chasing debt has on a business is its impact on cash flow. Late payments can cause cash flow issues, leading to delays in paying suppliers or employees, resulting in decreased productivity and customer satisfaction. Delayed payments also affect credit ratings which can further limit the company’s ability to secure financing from banks or other lenders.
Chasing down unpaid debts is a costly process for any business – both financially and timewise – but it doesn’t have to be so difficult if you know what steps you need to take beforehand and have systems in place that help you manage your accounts efficiently.
Fortunately, businesses can gain access to efficient and user-friendly solutions that automate much of the process. This eliminates the need for manual processes, reducing costs and time associated with debt collection. Additionally, automated systems can reduce human error in data entry and ensure that companies adhere to compliance requirements when collecting payments.
Saascoms specialises in customer engagement solutions and offers a range of products to help automate the process of collecting past-due debts. Automating this process frees up cash flow for a business, which could be more effectively used elsewhere. In addition, it helps businesses avoid costly legal action that may not be successful.
To learn more about Saascoms solutions, please don’t hesitate to contact us today. We would be happy to answer any questions you may have.
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