Is your business affected by slow debtors?
Understand the top reasons for slow payments so that you can avoid the fallout.
Waiting for your end customers to pay? Suffering the squeeze of low cash flow because of unpaid invoices?
You’re not alone. Many SME labour hire and recruitment businesses across Australia – and around the world – feel the ripple effect caused by slow payments.
At worst – recruitment owners take pay cuts themselves to cover the difference, they slash sales budgets or put a hold on marketing. At best – you can outsource your back office and get expert help credit checking future customers and have late paying customers pursued on your behalf.
It’s important to understand why your customers are slow to pay so that you can reduce the impact on your business now, and in the future.
In our experience, there are three main reasons why SME labour hire and recruitment businesses experience slow payments.
1: Being Held Ransom
Unfortunately, it is common that recruitment agencies suffer the consequences of large corporate companies looking for the lowest cost funding. This can be a time-consuming process and if you are not persistent about following up your payment, you may find your invoice gets lost in the pile. Ensure your customers – both large and small – understand and agree to your payment terms before you start work.
2: Admin Adversity
Slow payments are often the result of the recruiter’s paperwork not being in order. This can include invoices not being set out correctly, the invoice being sent to the wrong person, or the invoice not including all the relevant references required by the customer. Be sure to check all of these details are correct before you submit the invoice to ensure the payment process is as easy as possible for the customer.
3: Failure to Follow Up
It is often the case that those who make the most noise, get paid the fastest. Many recruiters will consider a sale is complete when the invoice is raised, however, it’s not over until payment is received. A strategic and consistent follow up process is required to keep payments coming in on time.
How can you reduce your slow payments pain?
If you are suffering the effects of slow paying customers, contact APositive to find out how payroll funding, invoice finance and back office optimisation can help free up the cash flow you need to grow your team, marketing campaign, take advantage of sales opportunities and more.
Whether it’s temporary cash injections you’re after or ongoing payroll support, we provide debtor finance, fast. By doing this we are helping labour hire and recruitment businesses pay salaries on time; cover business overheads, meet statutory obligations and fund office and travel expenses.
Check out APositive’s easy five step process that is helping to improve the cash flow of labour hire and recruitment businesses just like yours.