Franchise Services
Easy money B
usiness owners could be
forgiven a grimace when they pay for a sandwich with a tap of their card, touching in to public transport, or watching
the latest ad for a contactless payments device. Why, when it has never been easier for big businesses to accept payments, do small businesses and franchises suff er from late payments that cost them more than £2billion a year?
This fi gure relates only to the actual cost of overdue payments, such as chasing customers, dipping into savings and overdrafts to cover the shortfall, and employing specialist staff to pursue the money rightfully owed to them. In all, the UK’s small and medium-sized enterprises are owed some £14billion.*
The day-to-day running of a business can be admin heavy and time consuming without the stress of chasing late payments – and the consequences are much worse than just the worry and frustration of not being paid on time. A quarter of businesses have been at risk of bankruptcy thanks to unpaid invoices, while seven per cent of smaller fi rms are in the ‘danger zone’ of being owed between £20,000 and £50,000, according to electronic invoicing network Tungsten.
“Everyone from the smallest home- run business to the biggest multinational corporation understands that cashfl ow is the oil that keeps the gears of the free market turning”
Even when late payments do not immediately threaten bankruptcy, the consequences can still be crippling to a short-staff ed business, with struggles to pay employees on time and much of the boss’s valuable time wasted chasing payments. Everyone from the smallest home-run
James Frost
business to the biggest multinational corporation understands that cashfl ow is the oil that keeps the gears of the free market turning, so why has late payment become such a problem? Is it time pressure, laziness, apathy – or a mixture of all three?
Whatever the reason, it’s certain that psychology has an important role to play. Everyone knows the feeling of receiving a bill in the post, and placing it on the low-priority pile of things to do ‘tomorrow’. Perhaps it’s unsurprising that things should happen that way in even the biggest of businesses.
But if psychology is one of the reasons why so many companies are waiting weeks or months for their invoices to be paid, it’s also part of the solution. The key to getting invoices paid on time is to make them as easy to pay as possible, as it’s clear that the established methods of requesting payments aren’t working for Britain’s smaller businesses. That’s where services such as Pay by Link can have a dramatic eff ect. This involves embedding a ‘pay now’ button or link within the body of a reminder email or
James Frost, chief marketing offi cer at Worldpay UK, on how a nudge can solve the late payment problem
other document. The psychology behind it is clear: payment reminders are not exactly compelling content, and you only have a few seconds of the recipient’s attention, so you should make it as easy as possible for them to get the pesky payment out of the way.
It may only take a few seconds to make a payment, but the process of clicking out of an application or document to do so can have a huge impact on whether an action actually gets done. Small nudges like these can have a signifi cant impact on whether an invoice is paid on time, thus preventing many of the subsequent business headaches associated with late payments. Until then, services such as Pay by Link provide a simple, effi cient and businesslike way for small fi rms to obtain what is rightfully theirs.
Worldpay Financial services
https://business.worldpay.com/lp/ paybylink
0808 208 5180 October 2017 |
BusinessFranchise.com | 197
*Source: Bacs Payment Schemes
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