Overdue invoices costing 75% of business time new survey shows
Businesses and accounts departments are spending too much time chasing overdue debts when that time would be better spent in advising their sales teams on who to do business with or not in the first place.
An online survey conducted by Debt Register, a new digital payment platform, found that almost a third (32%) of all businesses spend up to three-quarters (between 51% – 75%) of their time chasing overdues when they could be doing other things, and almost a quarter (24%) spent even more (76%+).
Those who spent the most time chasing debts were teams working in the healthcare sector: 80% of firms surveyed from drugs companies to care providers were devoting 51% or more time on the phone or emailing to get money that was rightfully theirs to collect. Manufacturers were also struggling to get the cash: 44% spent more than 50% of their time in pursuit of their money and more than a quarter (28%) spent far longer (76%+).
The most ‘efficient’ appear to be those in the services sector (accountants, consultancies etc) where 43% spent less than 50% of their time on overdues, and of those, almost a quarter (23%) spent anything between 0 – 25% chasing the cash. Businesses in the energy sector also appear less troubled; 60% spent less than 50% of their time on overdues.
In the technology sector, exactly half spend half of their time or more (32% more than 50% and 18% more than 76%) on overdues, whereas a similar picture emerges in banking and finance (48% spent more than half of their time chasing down late payment).
The research is published in the context of new technologies and platforms now being available that can automate the overdue payment process, dramatically improving cashflow without tying up a team’s time or having to resort to expensive (and often unproductive) legal action.
Gary Brown, founder of Debt Register, says the figures make uncomfortable reading: “In an ideal world, businesses would be following up on invoices before they are due, and not when they are already late,” he says. “There are several tools out there that can deal quickly with overdues and free the credit manager to steer their companies towards businesses that they should be trading with, and away from those who present a greater risk.”
Philip King, and advisor and industry champion, agrees: “Of course the fundamental role of the credit manager is to keep the cash flowing, but that also means working with the wider business to define appropriate credit terms with customers and agreeing who is/isn’t a good risk. In these tough times, businesses will be trying to hang on to their cash for longer which is why it is even more important to have the right processes and the right tools in place to ensure a credit manager’s time is spent on the areas that require their particular skills.”
Debt Register is, first and foremost, a global payment accelerator that enables a credit manager to identify late invoices on their ledger and allow the platform to do the rest. Debt Register contacts the debtor automatically and in the appropriate language, requesting that the payment is settled, and ensuring the invoice is correct and not in dispute. In trials, the purpose-built digital platform can resolve debts anything up to 10 times faster than traditional legal action, and for a fraction of the cost.
By leveraging its relationships with leading credit reference agencies (CRAs) to report unpaid and overdue debts, debtors are encouraged to settle any overdues promptly to avoid their credit scores being negatively impacted.
Debt Register is available globally and designed to suit any business regardless of industry.