UK SMEs using online accountancy programs get paid an average of 23 days quicker than they did in 2011, according to research undertaken by software vendor Xero.
Around three million invoices that UK SMEs raised in the two years since October 2011 were analysed. In the UK, businesses that use online accounting are getting paid an average of 36 days after invoicing their customers, down from 59 in 2011, resulting in significant cash flow improvement.
The UK has had the biggest drop in the amount of time it takes to receive payment. The reduction to 36 days represents a 39% decrease, compared with 37% in Australia and 31% around the globe, including the US.
Analysis compared monthly invoicing activity for a group of businesses over the two years to October 2013. The results showed that, per month, SMEs processed nearly twice as many invoices and added nearly $1bn (£590m) in value compared to two years ago. Although the technological improvements have helped, the upswing can partly be attributed to the economic recovery since the 2008 recession.
Gary Turner (pictured), Xero UK managing director, said: “Using cloud technology to issue invoices and to monitor outstanding debtors is a major contributor to improving SME cash flow.
“Cash availability is such a key part of every small business’ success or failure. With the debtor day timeframe shrinking, businesses have more cash in the bank. If you have cash, you pay your bills, the lights stay on and you sleep at night.
“Better cash collection results in less debt and therefore less interest to pay. With better cash collection SMB owners have more money to invest back in their business, to buy equipment, improve processes, or expand operations.”
What can you do to ensure your employees know the company policy and stick to it? Hear from other CFOs and experts in our free-to-view video
What are the next big technologies which can help keep cyber criminals at bay?
The application of robotics in finance functions is moving faster than predicted. Although, companies are cautious in how they are applying artificial intelligence to ensure results first, many are stepping up their investigations
Boards are failing to protect their companies and customers against cyber attack, despite more companies taking out cyber insurance, according to new research