In the UK, businesses that use online accounting are getting paid an average of 36 days after invoicing their customers, down from 59 in 2011, resulting in significant cash flow improvement. This statistic comes from analysis of three million invoices that UK SMBs raised in the two years since October 2011.
The survey, carried out by accounting software firm Xero, shows that the UK has had the biggest drop in the amount of time it takes to receive payment. The reduction to 36 days represents a 39 per cent decrease, compared with 37 per cent in Australia and 31 per cent around the globe, including the USA.
With online invoicing, small business owners can send invoices from a mobile device, see if invoices have been opened, and with automated bank feeds, they can regularly check their accounts and stay on top of collections.
Xero’s analysis compared monthly invoicing activity for a group of businesses over the two years to October 2013. The results showed that, per month, SMBs processed nearly twice as many invoices in the Xero system and added nearly US$1 billion in value compared to two years ago. Xero attributes this to the global economy recovering from the after-effects of the 2008 downturn.
Gary Turner, Xero UK managing director, said: “Using cloud technology to issue invoices and to monitor outstanding debtors is a major contributor to improving SMB cash flow.
“Cash availability is such a key part of every small business’ success or failure. With the debtor day timeframe shrinking, businesses have more cash in the bank. If you have cash, you pay your bills, the lights stay on and you sleep at night!
“Better cash collection results in less debt and therefore less interest to pay. With better cash collection SMB owners have more money to invest back in their business, to buy equipment, improve processes, or expand operations.”