invoicing

10 Surprising Statistics About Billing

It doesn’t matter if you’re sitting behind a lemonade stand on the side of the road or the desk of a swanky Manhattan office, all businesses boil down to one fundamental concept: cash flow. No matter what line of work you may be in, the ultimate goal is to make sure you bring in more money than you send out. Of course, roughly half of that battle is billing, so here we’re going to take a look at 10 surprising statistics about billing.


1: 67% of SMEs on the island of Ireland have had issues with late payments

According to the Close Brothers Business Barometer, which surveys over 900 SME owners and senior managers across the UK and Ireland, over 67% of SMEs on the island of Ireland have had issues with late payments, with almost half being forced to lay staff off as a result.

 

2: Those affected by late payments were forced to write off up to 10% of their turnover

The same study found that over half of those affected by late payments were forced to write off up to 10% of their turnover in the preceding year, with some being forced to write off as much as 25%.

 

3: 40% of businesses say they don’t have the time to follow up on unpaid resources

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According to research conducted by financial services firm Bacs, which handles Direct Debit payments in the UK, late payments aren’t just an issue of the money coming in eventually. The cost of chasing unpaid invoices in the UK adds up to over £2 billion, with 39% of businesses spending 4 hours a week or more chasing payments, 12% hiring a person specifically for that purpose, and 40% saying they don’t have the time or resources to follow up at all.

 

4: 53% of managers approve of the use of freelancers for short-term work

Another study by Close Brothers found that, despite some criticisms, there is continued interest in the gig economy, or the use of freelancers for short-term work. 53% of managers approve of this type of working relationship, with 28% saying it was due to the flexibility it allows, and 25% saying it was a more cost-effective solution.

 

5: 1-In-3 Businesses wait more than a month past due dates to receive payment

While most businesses will allow for a grace period when it comes to late payments, almost one in three wait more than a month past due dates to receive payment, with a further 20% being required to wait at least 60 days past their terms and conditions

 

6: 90% of 4 million invoices that go through the public sector annually are on paper

In response to a 2014 EU directive that stated “Member States shall ensure that contracting authorities and contracting entities receive and process electronic invoices which comply with the European standard on electronic invoicing”, the public sector in Ireland is set to handle 90% of its invoices electronically. Currently, 90% of the roughly 4 million invoices that go through the public sector annually are on paper.

 

7: Over €4.4 million stolen from Irish businesses this year in Ireland

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There has been a dramatic rise in a form of invoice fraud this year in Ireland, with over €4.4 million being stolen from Irish businesses. This was done by scammers who contacted Irish businesses impersonating their business partners, claiming to have updated bank details for future payments. When the next payment is made, it goes into the fraudulent account, which may not be noticed by the intended recipient for some time. Perhaps the most worrying aspect of this is the scale of the theft, as the €4.4 million was stolen with just 132 fake invoices.

 

8: 25% of Ireland’s national income goes to just 10% of the population

At the end of 2018, there were roughly 137,200 employees earning minimum wage in Ireland, or about 7.6% of the workforce. Additionally, about 24,500 people, or 1.4% of the workforce, earned less than minimum wage at that time. On the flipside, 25% of Ireland’s national income goes to just 10% of the population.

 

9: It takes one full-time employee to manage the payroll of about 250 employees

According to a 2009 study by the Willis Company, it takes one full-time employee to manage the payroll of about 250 employees. In Ireland, the cost of managing payroll is about €60 a year per employee, if they are paid monthly, and about €156 a year if they are paid weekly.

 

10: 86% of SMEs across the UK and Ireland are not availing of any sort of billing services

Despite the complexity and time-consuming nature of managing a billing department, the Close Brothers Business Barometer found that 86% of SMEs across the UK and Ireland are not availing of any sort of billing services.


Some of these facts, such as the problems with late payments, may seem all-too familiar to you. Others, such as the entry on paperless invoices, might just be an interesting tidbit of trivia. Ultimately, billing will always be an incredibly important aspect of any business, so whether you found these facts surprising and interesting, or obvious and dull, the more you know, the less likely you are to encounter any issues.

8 Great Go To Resources For Billing & Invoicing

According to the Close Brothers Business Barometer, late payments are an issue that affects 67% of small-to-medium sized businesses in Ireland, with over half of SMEs being forced to let employees goes as a direct result of late payments. Cash flow management is critical to the success of any business, but while larger corporations may be able to juggle a bit more, late payments can be absolutely crippling for smaller businesses or self-employed people. With that in mind, here are 8 great resources for managing your billing and invoicing.


1: Freshbooks

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With over 5 million users worldwide, Freshbooks is the biggest accounting solutions software on the market. First founded back in 2003, Freshbooks was an early entrant to the online accounting market, meaning it has been developing and perfecting its software longer than any of its competitors.

But the main reason for Freshbooks’ mass appeal is most likely due to its interface, and the ease with which it can be used. Freshbooks presents complex financial tasks in a minimalistic, step-by-step manner, so that even people with no experience in billing or invoicing can do the job.

Freshbooks accepts many forms of online payment, such as PayPal, Apple Pay, Google Checkout, Stripe, and major credit cards, consolidating them all in one place. However, there are limits to how many customers can be invoiced per month, which depends on the pricing plan you choose, so this may not be the best option for businesses with high levels of first-time customers.

2: QuickBooks

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QuickBooks was developed by the financial software firm Intuit, which has been working in this field since 1983, around the time computers really started to go mainstream. Despite the head start it had over FreshBooks, the launch of their first product did not go well, allowing Freshbooks to move in and take a larger share of the market.

Since then, QuickBooks has ironed out these issues, and now has over 2 million users, making it one of the leading solutions on the market. The most notable distinction between QuickBooks and FreshBooks is volume, with Freshbooks limiting the number of invoices that can be sent by pricing plan, while QuickBooks allows any number on any plan, despite being the cheaper option. If you deal with a small number of regular customers, FreshBooks may be the best choice, while QuickBooks is better suited to tracking a high number of accounts.

3: Xero

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While both FreshBooks and QuickBooks focus more on the most fundamental aspects of accounting, Xero is a product that aims to take people to the next level of detail. In addition to calculating, tracking, and accepting payments, Xero enables users to quickly create all sorts of financial status reports, such as debt to equity ratios, current liabilities to net worth, owner’s equity statements, and much more.

Xero has recently increased its pricing, making it one of the slightly more expensive options. It is probably not suited for very small businesses, freelancers, or self-employed people, and it will take a bit of getting used to before you can use it to its full potential, but if you are looking to get more data on your business without getting a new degree, Xero can help bridge the gap between amateur and professional accounting.

4: Zoho

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Zoho was developed specifically to meet the needs of new and growing businesses, with its main focus being on flexibility and ease of use. Even their most basic package contains some of the most important features for a fledgling business, such as custom invoices, recurring transactions, and bank reconciliation. Zoho makes it easy to track multiple projects or expenses at once, allowing you to automate certain tasks or seek approval for others. There is also a long list of plugins to help you personalise the customer experience, such as plugins to track deliveries, help you manage your email, or a chatbot to help with customer enquiries, making this a superbly affordable choice for people who are just starting out and may not have a lot of experience.

5: Wave

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Founded in 2010, Wave is a much newer entrant to the market than those we have looked at already, but that hasn’t stopped it from becoming a major player. Wave has a very simple online dashboard that essentially boils down to a few clicks and some typing, but allows you to create professional level invoices and graphs. Perhaps the biggest appeal of Wave is that it is completely free to use, with no limitations. The company makes its money by charging 1.4% + €0.25 on all European card payments, or 2.9% + €0.25 on all non-European cards. While this arrangement may not be suitable in the long run, it enables new business owners to get the support they need, without investing any resources beforehand.

6: Sage

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Dating as far back as 1981, Sage is one of the oldest accounting software firms in the world. In the nearly three-decades since, they have built one of the most flexible and secure forms of accounting software available on the market, offering all the features you would expect, from the basics such as automated invoicing and cash flow management, to the more complex issues such as tax filings or fraud. Although Sage does have various products in different price ranges, they are most popular among large corporations that deal with a high volume of customers. Unless you clearly intend to use particular features of this product, or plan to upgrade your subscription in the future as your business grows, there are not many reasons for a new business owner to use Sage rather than some of the alternatives listed, many of which offer similar features with less complexity at a lower cost.

7: Zipbooks

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Zipbooks is another relatively new entrant to the finance software scene, and like many of the newer companies, it gives customers the chance to avail of its most basic features for free. Invoicing, payments, financial status reviews, and bank reconciliations are all available for free on their starter pack, with a 2.9% fee attached to all card payments. There are not as many bells and whistles in the free starter pack as you might find in the likes of a well-established brand like Sage, nor is there the same level of third-party plugin support as there is for Zoho, but there are three tiers of paid plans, allowing you to unlock any extra features you may need as your business grows.

8: Invoicely

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Most of the options listed above focus on startups or small businesses, but soe operations are even smaller than those. These days, many people make money from a hobby, or run various small online businesses. For situations like these, software such as Invoicely can help people manage a small volume of transactions, even under multiple brands, for free. All of the more advanced features such as project management, delivery tracking, or multiple users are available through their paid subscriptions, making this an ideal choice for people who want to see if they can turn their pet project into a viable business.


As you can see, many of the features offered by these products are more or less the same, regardless of which software you choose. But with different levels of detail, support, prices, and customisation, these products are far from identical. For some businesses, features such as delivery tracking or dealing in multiple currencies are crucial, while for others they are completely redundant. To determine which software is best for you, you need to look ahead and see which direction you hope to move in. While you can always switch at any time, getting it right the first time will make it much easier for you to learn what you need, and successfully manage your business in the long run.

Managing Customer Invoicing Payment Behaviour: The good, the bad and the ugly

Effective invoicing & cash flow management is fundamental to the success of any business, and arguably the more important half of this is the money you have coming in. Without receiving the money you are due in a timely manner, it becomes impossible for you to pay your own bills, debts, and employees, and your whole operation can fall apart very quickly. Even if you manage to stay afloat by using cash reserves or loans, the impact this has on your output, interest, and credit rating can be very damaging to your business.

Having clear invoice and payment policies and implementing them consistently is crucial to ensuring you maintain as much control over your cash flow as possible. But no matter how clear and consistent you may be, you will always encounter customers who have varying degrees of respect for your policies. Below, we examine the good, the bad, and the ugly customers you are likely to encounter through your invoicing process, and advise you on how to approach each one.

If you need expert support with your invoicing, contact Shelbourne Accountants today.


The Good

“The Good” customers are those who pay their invoices on time, early, or instantly. Needless to say, these are the most desirable customers to have. Having a reliable idea of how much money you can expect to get in and when makes it much easier to manage your cash flow and ensure that you can pay your own expenses on time. This is especially true if “The Good” is a regular customer, as opposed to one who engages you sporadically or as a once off.

Your top priority with “The Good” customers is to maintain a positive working relationship. There are many aspects to this, from the basics of being friendly and polite, to the more advanced, such as anticipating when they may be interested in a new product or service, or quickly and faithfully resolving any disputes that may arise. With customers like these, even down selling, where you suggest that a cheaper good could help them achieve the same results, can be a good idea, as it establishes a trust that could allay any fears they have about placing a much larger order in the future.

Being considered a part of “The Good” group is a result of a pattern of behaviour, where someone consistently pays on time. Of course, all businesses have their ups and downs, so if one payment is late after many months of on-time payments, it is advisable that you show them some extra leeway, and consider waiving any late fees you may normally charge.

The Bad

As you are no doubt well aware, not everyone you do business with will take it as seriously as you would like. Whether it’s because of unprofessional behaviour or a lack of attention to detail, you will always encounter people who are difficult to work with. In terms of invoicing, “The Bad” are not the worst group, but they are far from perfect, and they can make your job a lot more difficult without really trying, which is often the case.

“The Bad” are probably best described as people who have been hired to pave the road to hell: they have good intentions, but they consistently drop the ball. Usually these are people who mean to pay you, but frequently forget. They are often unresponsive to your correspondence and can be hard to get a hold of, but will ultimately cough up when asked. Still, this can be incredibly disruptive to your cash flow, as you will have a general idea of when you will be paid, but cannot rely upon it.

The best way to deal with “The Bad” customers is to be firm but fair. You want to try and maintain as positive a relationship as possible with these people, but you ideally want the inconsistency to come to an end. If the customer’s order is a recurring one, setting up a direct debit could be a simple solution. If not, you need to make the process of paying as easy for them as possible, as it will increase the likelihood that they do. This means sending out your invoices as soon as possible, providing clear payment policy at the point of purchase, and sending out email reminders. Ideally, these should be sent a few days before payment is due, on the day itself, and a few days after, and if possible, the email should include a link to an online payment portal. If these emails go unacknowledged, they should be followed by a phone call.

If you have clearly indicated in your payment policy that late payments will incur a penalty fee, don’t be afraid to use that as leverage. It is worth considering waiving the first fee, as this will leave the customer with a positive impression rather than a negative one, and gives you firmer ground to stand on if payments are late in future. You could also offer a discount for early payment, but this would need to be available to all customers, and you would need to consider the cost of doing so.

The Ugly

Lastly, we have “The Ugly” customers. These are the people who regularly pay late, are deliberately evasive when you try to get in touch with them, and frequently dispute the amount on their invoices or the quality of the good or service provided. While it is important to look at the trend of your customer’s behaviour, you can usually identify pretty early on if someone is a member of “The Ugly”.

Many of the ways to deal with these customers are the same as dealing with “The Bad” customers: issuing invoices as soon as possible, sending out reminders, and following up with a phone call. With “The Ugly” customers, it is important to be firm when charging late fees, as failure to do so will only give them less of an incentive to pay on time. And while you don’t want to get aggressive, you need to realise that if you don’t chase these people relentlessly, you may never see your money.

In addition to those techniques, you should also try to create as much of a paper trail as possible, as this will help you resolve disputes when they arise. Immediately provide them with a clear summary of their order, and ask them to alert you of any mistakes within a certain timeframe. If none of this works, you can always sell the debt to a collection agency, but only if you are prepared to lose the customer.

Not all customers are created equal, and unfortunately, the good, the bad, and the ugly are all creatures that naturally inhabit the business world, and it is inevitable that you will continue to encounter them all. Identifying who belongs to what group and learning how to deal with each one are skills you will hone throughout the entirety of your career, but the advice laid out above should help you to get off to a good start.


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If you need expert support with your invoicing, contact Shelbourne Accountants today.