Accelerate and improve invoicing, finance firm tells SMEs

FactorONE offers five tips on tackling late payments and cashflow issues, while finance rates continue falling

Accelerate and improve invoicing, finance firm tells SMEs
Greg Charlwood advises speed in invoicing.


With small to medium enterprises (SMEs) are still suffering late-payments and cashflow issued, despite recent minor improvements, finance firm FactorONE has offered tips to reduce debtor delays.

Dun & Bradstreet’s latest quarterly Trade Payments Analysis shows businesses are waiting an average of 51.7 days for payment.

Though appalling, it ranks as the shortest wait since 2007, but it is still a long time for small businesses to sweat on being paid.

FactorONE general manager Greg Charlwood says slow payments impact on an SMEs’ ability to pay suppliers on time and reduces SMEs’ ability to grow.

Charlwood has five steps small businesses could take to smooth payments and ease cashflow pressures, with one requiring time and research, the other four steps are "relatively simple but can reap major benefits".

They are:

  • take a hard look at the big picture on effective business financing
  • be methodical and time-sensitive when raising invoices
  • make invoices easy to pay
  • ensure you credit check potential and existing customers
  • separate sales from debt collection.

On invoices, speed is of the essence.

"We recommend to clients that they issue the invoice as soon as the job is done or goods are despatched. Don’t wait until the end of the month," Charlwood says.

Ease of payment seems only logical and includes making sure invoices include all relevant details, such as the customer order reference, the date payment is due, relevant bank details, who to contact if there is a query and a full description of the goods or services provided.

There's no profit in a sale unless payment is actually made and made on time, so regular customer credit checks, at least every few months, is advised.  

FactorONE also has advice on employee function.

"Make sure those responsible for any sales are not responsible for collecting payment," it says.

"Have two distinct roles within your organisation where responsibilities are clear."

On cashflow, the company backs factoring as a finance option.

"With factoring, or debtor finance, facility limits are based on accounts receivable balances, so the amount of cash available grows in line with sales, providing ongoing access to the funds required to complete the next order, without having to wait 30 days or more for customers’ payments," it says.

"Most factoring facilities do not require real estate security so there is no need to use the family home to secure the borrowing facilities required to run your business effectively."

The advice comes as the latest Australian Bureau of Statistics (ABS) figures show commercial and lease finance, continuing a fall that has been pronounced for the past six months.

The trend series for the value of total month-on-month commercial finance commitments fell 2.8 per cent in November, compared with October.

Revolving credit commitments fell 7.7 per cent and fixed lending commitments fell 1.2 per cent.

The seasonally adjusted series for the value of total personal finance commitments fell 2.2 per cent. Revolving credit commitments fell 3.1% and fixed lending commitments fell 1.4 per cent.

After hitting more than $46 billion mid-year, total commercial finance has headed down past $38 billion, whereas it had risen fairly steadily through 2013, from $30 billion to more than $40 billion.

The trend series for the value of total lease finance commitments fell 2.3 per cent in November and the seasonally adjusted series fell 4.4 per cent, following a fall of 4.6 per cent in October.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook