The Stuff.co.nz headline says it all: Firms paying bills faster. Whether or not this is true for you and your business will depend largely on your internal processes.
The Stuff article says:
The latest quarterly Dun & Bradstreet Trade Payments Analysis, which examines the ability of firms to pay their bills on time, reveals average payment times dropped 2.6 days to 42.2 days during the June quarter to levels not seen since the third quarter of 2007.
This means on average people are paying their bills 2.6 days more quickly than they were previously. How does your business compare? If your customer payment times are not improving, you may need to look at your internal processes. What is it in or about your business that makes people pay you slowly? Are you idle when it comes to following up your slow payers? Do you have relaxed terms of trade? Do you have a large number of ‘bad’ customers? Whatever it is, it’s important that you understand the cause of the problem.
On the other hand, do your customers pay you more quickly than customers of the average business? If so, it’s important that you stay ahead of the game. Continue to refine your processes, keep tabs on potential problem customers and maintain your strong cashflow.
As we talked about in January (when the previous quarterly statistics were released), low customer payment times will help your cashflow and, as you’re no doubt aware, cashflow is critical to a healthy business. Hamish Mexted from iif Chartered Accountants can work with you to manage your cashflow, helping you to build a better business.