Online accounting helps SMEs get paid faster

  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 – soRead More

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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.

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