If you’re a small business owner, there’s no doubt that at some point in time you’ve had to struggle with an unpaid invoice. Whether it was for a small amount that just niggled at you, or if it was for a large sum that caused a real headache – an unpaid invoice or business debt is not something you should have to deal with. And yet, recent reporting has shown that Australian small businesses are owed up to $26 billion dollars at any one time thanks to unpaid invoices.
If you don’t insist on upfront payments for your business, you may end up waiting on payment for a crippling period of time, during which your cash flow is interrupted and you have to spend hours chasing down unpaid invoices. We don’t think this is a best-case scenario for any small business owner, which is why at Strathmores we advocate the mantra of getting in early and taking care of debts before they become a problem.
We are a dedicated debt recovery and small business specialist agency operating in Brisbane and Melbourne. If you have been dealing with a small business debt for far too long or are looking for a trusted capital collection agency, contact us today on 1300 347 929 or get in touch online.
Small business debt statistics
The most recent statistical information from the Australian Bureau of Statistics has shown that there were just over 2 million small businesses in Australia as of June 2014.
- Small businesses make up 97.4% of all Australian businesses
- The construction industry makes up the largest share of small businesses
Non-employing businesses and micro-businesses (a business with up to four employees) are less likely to survive as a business than other small, employing businesses.
- Just under 56% of non-employing businesses and 68% of micro-businesses operating in June 2010 were still operating in 2014.
- This is compared to a survival rate of 76.9% of small businesses, 81.4% for medium-sized businesses and 83.7% for large firms.
Small business owners have reported that they spend up to 12 days per year (total) chasing up unpaid debts.
- 27% of all small business owners do not insist on upfront payments
- Many business owners have been forced to take loans or use credit to pay wages and suppliers
- 60% of business owners agree that late payments are standard in their industry
What can you do to avoid bad debts?
When you are a small business owner, it’s important to take all the necessary steps you can to protect yourself against potentially harmful debtors. This might include taking a few extra steps prior to taking a new client or customer on, but it will pay off in the long term.
- Always perform a credit check. When you are looking to take on a new customer or business contact, make sure you do your due diligence and reduce your risk by conducting a credit check. You can then enter into a contract with your eyes open.
- Ensure your terms and conditions are comprehensive. Before you even consider getting involved with a new customer or client, make sure your terms and conditions clearly detail your process for collecting payments. This might include reference to your debt collection process and might also include an upfront deposit or payment to be made prior to any new work taking place.
- Get onto problems early. When you are collecting payment from your customers, it is absolutely vital to tackle problems early on. The longer a debt goes on, the harder it is to chase someone up for it.
- Partner with a debt collection agency. A debt collection agency has the strategies, tactics and capacity to manage debts early on before they become an issue.
Prevention is better than collection, so make sure that you have a systematic approach in place to keep your invoicing up to date and be sure to tackle unpaid debts promptly. It is also a good idea to have credit limits in place and make a note of anyone who is reaching their credit limit so that they do not go above their set amount.
Contact Us Today
When you are spending up to 12 days per year chasing up unpaid debts, it’s time you aren’t spending on your business. Think of what you could be achieving with those 12 days. Think about what they are worth to you. At Strathmores we are committed to making the lives of small business owners across Australia easier. We do this by tackling debts and unpaid accounts early on, and with systems and strategies that have been tried and tested to get results.
When you are ready to partner with a company who understands debt recovery and can partner with you to grow your business, call us on 1300 347 929 or get in touch online and we will call you back.