Unpaid invoices are plaguing New Zealand small businesses and coming at the cost of work-life balance, according to research released by Xero.
The research shows that 71 per cent of small and medium enterprises (SMEs) dread chasing unpaid invoices and nearly a third of SME owners normally do this type of business admin in the evenings.
Craig Hudson, New Zealand Country Manager of Xero, says getting paid should be one of the top priorities for a business, but chasing unpaid invoices and other business admin shouldn’t come at the cost of evenings and weekends.
“The most recent OECD Economic Survey of New Zealand found our productivity as a country is in decline. Though we are working more hours, it is not resulting in better productivity so SMEs must take a good look what they are spending their time on.
“Nearly 30% of small and medium business owners told us they want to spend less time at work. After looking at the results of our survey, we can see this should be a reality without compromising business revenue.
“A lot of SMEs aren’t setting themselves up to save time where they have the option to, and this includes invoicing. For example, if you’re a business owner spending your own time chasing payments, you are missing a trick – a feature, Invoice Reminders can be set-up to do this automatically,” says Mr Hudson.
Just over a third of SMEs are concerned about cash flow and it’s no wonder when Xero’s research showed that most late invoices aren’t just a little late – 61 per cent of businesses are paid two weeks or more after the due date and one in 10 SMEs wait on average more than a month for their invoices to be paid.
New Zealanders can be too relaxed about paying on time, but businesses also need to set themselves up to get paid quickly.
“Almost a third of businesses told us they don’t ask for payment until they’ve completed a job. This is outdated, instead businesses should be invoicing as soon as they can and asking for part payments throughout a project. This gives SME owners the best chance at regular cash flow, without having to spend evenings and weekends getting invoices out the door and chasing late ones.
“Close to half of all SME owners told us they would spend more time with their family and friends if business administration was less time intensive and 43% would pursue a hobby or personal passion with this extra time. It’s not an exaggeration to say that getting invoicing right can be life changing,” says Mr Hudson.
This research was conducted by Perceptive Research. Online interviews were open to small and medium business owners and decision makers, surveying a total of 1,000 SMEs. 94% of people researched were from business with 20 or fewer employees and the remainder of respondents were from businesses with 50 or fewer employees.