After aggregating some 16 million invoices in our database, we’ve found out that worldwide on average Xero users are getting paid more than two weeks faster than they were in late 2011.
In October 2011, Xero users were getting paid after an average of 48 days. Now they’re getting paid in an average of 33 days – a 15 day difference.
This is great because ready access to cash is such a key part of every small business’s success or failure. If you have cash, you pay your bills and the lights stay on. If you don’t have cash, you can’t pay your bills and the lights go out. No matter how many outstanding invoices you have out in the field, it’s the cash in the bank that actually fuels your business.
How do we get paid even faster?
We’re not satisfied with 33 days — and you shouldn’t be either. The lower we can get this number, the healthier your business will be. So here are a few ways you can use Xero to get paid faster and turn more invoices into cold, hard cash.
Use Xero’s mobile accounting app to invoice immediately after a job is complete. This lets you enjoy the freedom to send or approve invoices without being tethered to your workstation, or you can get them do whenever you have a few moments to spare.
Use online invoicing
Online invoicing can help you get paid faster by cutting time out of the actual invoicing process. It’s easy to forget to pay an invoice, especially when it arrives days later with payment instructions buried in fine print. With online invoicing in Xero, the invoice is sent electronically direct to the customer, who can pay instantly through a “pay now” button right on the invoice.
Use the aged receivables report to chase late invoices.
Online invoicing makes the process faster. But some customers are just tardy payers, whether their invoice is online, offline or chiseled in stone. Pull up the aged receivables report and you can see who has the biggest outstanding invoice, and who has the oldest outstanding invoice. This way you can make a few targeted phone calls which should have a much higher impact on your cashflow.
Invite an advisor to clear up bottlenecks
Accountants are a great resource that small businesses don’t tap into often enough. Your accountant (or other advisor) can spot all kinds of problems that you may not notice. Or, even better, he or she can spot small problems that you can quickly solve before they develop into major cashflow bottlenecks in the future. It might cost a little bit, but it is more often than not a worthwhile investment.
Those are just a few things we thought of. How are you using Xero to get paid faster? Let us know in the comments.