Running a small business is hard when your business customers don’t pay their invoices on time. It can end up causing a cash flow crunch and prevent you from growing. Here’s how you can solve the late payment problem by offering your business customers a way to buy now, pay later.
If you run a small business, you’ve probably experienced late payments from your business customers. It’s a chronic problem in the sector, with a 2016 report showing that 54% of Australian small businesses have waited over six months for a bill to be paid, and a 2018 report showing that Kiwi businesses were paid on average 8.3 days late in June of that year.
The situation got worse during COVID-19. Payments were overdue by 49 days on average in Australia in June 2020, a 342% increase from June 2019, according to CreditorWatch. In New Zealand, late payment times peaked in May 2020, when they waited an extra 30.7 days on average to be paid.
The knock-on effect of late payments on small business cash flow is clear. Your monthly utility bills don’t stop just because you haven’t been paid by a business customer, not to mention all the other recurring costs of running your business, from stock orders to office supplies to a new phone system for the office. More than three-quarters of Australian small businesses and nearly half of New Zealand small businesses admit to struggling financially due to late payments.
One way to solve the late payment problem is by letting your business customers use a buy now, pay later solution like hummpro at checkout. Here are four reasons why you should consider it.
1. Grow your sales
A recent survey by NZ Post found that over 40% of retailers see BNPL as a positive for their business, delivering incremental sales that otherwise wouldn’t have been made, while a survey of Australian retailers in 2019 found that BNPL usage was correlated with increased loyalty. The idea is that consumers are more likely to click ‘buy’ if they don’t have to pay the full cost of a product or service upfront, and it stands to reason that your business customers will think the same way.
2. Reduce your risk
Unlike traditional trade credit, when you let your business customers use BNPL at checkout, you don’t wear the risk. You get paid the full amount upfront when the transaction is processed, and if they miss their repayment, it’s hummpro’s problem, not yours. It also doesn’t cost you anything to offer hummpro at checkout, so there’s no reason not to.
3. Support your business customers
Instead of establishing payment terms with each customer, offering BNPL at checkout is a one-size-fits-all solution that saves you time. And your business customers benefit too, with access to interest-free credit and flexible repayments options with hummpro.
4. Manage your cash flow
Since you get paid upfront when your business customers use hummpro, you don’t need to worry about late payments causing a cash flow crunch. This means you’ll never have to put off an important purchase, such as a stock order or piece of equipment, because you’re waiting for a customer to pay their bill.
Solve the problem of late payments by offering your business customers a way to buy, now pay later with hummpro.