Online accounting and invoicing is helping many SMEs to get paid faster than was the case two and a half years ago, according to accountancy software provider Xero.
In late 2011, the e-accountancy platform saw invoices paid an average of 48 days after the date on which they were issued – so 18 days overdue on accounts subject to 30-day payment terms.
But in the most recent data, published in late May, there has been a 15-day improvement, and the average invoice is now cleared in 33 days.
Significantly, the same companies, using the same payment terms, were included in both sets of data – so it is not simply that Xero’s user base now contains more 30-day accounts.
Xero’s Grant Anderson explained: “The data is based on the period of time from invoice date to payment date, so it is [total] days to get paid.
“Xero looked at the same businesses over the whole period to eliminate any skew from adding in new businesses that may have different payment terms.”
In a blog post discussing the report, Xero advise several measures to help drive down payment delays even further:
- Invoice immediately upon completion of a job.
- Use online invoicing to avoid delays caused by sending out paper invoices.
- Track overdue invoices and chase them promptly.
- Use experts to spot and fix procedural bottlenecks.
“We’re not satisfied with 33 days – and you shouldn’t be either,” Mr Anderson wrote on the Xero blog, and where there is the potential to drive even faster payments, we would be inclined to agree.