Why Waiting for Late Payments is a Flawed Business Strategy
In the world of business, cash flow is king. A company's ability to maintain a steady cash flow can be the difference between its success and failure. Yet, many businesses operate with a reactive approach to debt, hoping the customer will call or worse, waiting for customers a known percentage of customers to not pay on time and then scrambling to recover the owed amounts. This strategy is not only flawed but can also be detrimental to a company's long-term viability.
The Cost of Waiting
Waiting for customers to default on their payments can lead to significant financial strain. According to a report from 9News, data from Origin Energy revealed that 70,000 customers needed support to help pay their bills on time, marking a 50% increase from the previous year. Such statistics highlight the growing challenge businesses face in ensuring timely payments from their customers.
When businesses wait for debts to accumulate, or with their current tools have few ways to stop them, they not only face the challenge of recovering the owed amounts but also bear the brunt of lost opportunities. Funds that could have been reinvested into the business or used for expansion are instead tied up in unpaid invoices.
Prevention is Better Than Cure
The old adage, "an ounce of prevention is worth a pound of cure” rings true in everyday life and also rings true in the context of business debts. Instead of adopting a reactive approach, businesses should focus on proactive measures to prevent debts from arising in the first place.
This could involve implementing stringent credit checks before offering terms to new customers, setting clear payment terms, and regularly reviewing and updating these terms based on customer payment histories. Additionally, businesses can invest in technologies and tools that offer reminders to customers about upcoming payments or even facilitate automatic deductions.
Rethinking Business Strategies with HelpPay
Some CEOs of large service organisations rightfully worry about their margins, which can be as low as 3% - 5%. However, it's crucial to note that these figures also take into account the current state of why their margins are the way they are. The fact is the costs of lower cash flow from unpaid bills, debt write-downs, debt collection and legions of staff to chase customers is spread across the whole customer database.
If you don’t change the inputs, you won’t change the outputs
This is where tools like HelpPay come into the picture. As a self-servicing debt prevention tool, HelpPay offers businesses a proactive approach to managing their receivables. Instead of waiting for debts to accumulate and then chasing after customers, businesses can leverage HelpPay to ensure timely payments and minimize the risk of bad debts.
By focusing on prevention, businesses can not only improve their cash flow but also foster better relationships with their customers. After all, customers rarely want to fall behind on their bills and often turn to the people that love and trust them most, before contacting the company they’re about to fall behind on. Discrete, digital, self-servicing tools and an increased range of options has been the focus of many companies for over a decade – now it is available for pre-debt and avoiding debt.
In today's competitive business landscape, companies cannot afford to be complacent about their receivables. Waiting for customers to default on their payments is a strategy fraught with risks and missed opportunities. Instead, businesses should shift their focus to prevention, leveraging tools and strategies that ensure timely payments and minimize the risk of bad debts.
By adopting a proactive approach, businesses can safeguard their cash flow, strengthen customer relationships, and set themselves up for long-term success. After all, in the world of business, prevention is not just better than cure; it's essential for survival.
Helppay is a 100% Australian owned and operated company that partners with service organisations in complex and highly regulated industries to improve cash flow, reduce customer debt and enhance companies social standing by removing debt from the communities they serve..
HelpPay's B2C app makes getting and giving help easy and trusted and Helppay's B2B platform and API enables businesses to offer a debt prevention service and track performance in conjunction with existing customer soltutions and billing programs.