{"id":4363,"date":"2018-05-04T12:00:52","date_gmt":"2018-05-04T11:00:52","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=4363"},"modified":"2025-07-14T13:07:05","modified_gmt":"2025-07-14T12:07:05","slug":"chasing-payments","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/chasing-payments\/","title":{"rendered":"Chasing payments? Here’s how tech can help get your money"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tChasing payments? Here’s how tech can help get your money\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"Ashley\t\t\t\tAshley Thompson<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n\n\n
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Tired of chasing payments? In a perfect world, all customers and clients would pay you on time, every time. But in reality, 17% of all payments<\/a> to UK small and medium-sized enterprises (SMEs) are late.<\/p>\n\n\n\n

Because of that, more than 50% of them currently experience or expect to experience a negative impact on company investment, their ability to pay their suppliers and their ability to pay staff an annual bonus.<\/p>\n\n\n\n

The fintech industry is looking to enhance customer experience by using technology and legislative help to offer elevated security measures and mobility tools. How can this help with the pain of chasing payments, if at all?<\/p>\n\n\n\n

What are the other industry trends that could make getting paid on time easier? And what can SMEs expect in the fight against late payments?<\/p>\n\n\n\n

Tech advancements in the chasing payments battle<\/strong><\/h2>\n\n\n\n

It looks like 2018 is going to be the most exciting year in fintech to date. Banks and traditional payments services providers (PSPs) are teaming up with tech firms to bring more advanced solutions to market that make managing money easier for SMEs.<\/p>\n\n\n\n

Understanding that chasing payments is a key challenge, some of these advancements specifically target those barriers.<\/p>\n\n\n\n

Research by Sage reveals the biggest hurdle for chasing late payments for 34% of SMEs globally is their desire to protect client relationships. Nicola Anderson, VP Marketing at GoCardless, says that makes adopting instant payment technology a no-brainer for SMEs looking to avoid the awkward conversation.<\/p>\n\n\n\n

She says: \u201cAnything that speeds up payment for SMEs is a good thing, whether that\u2019s introducing a decent accounting software<\/a> package, or encouraging customers to pay invoices automatically by direct debit.<\/p>\n\n\n\n

“These measures obviously improve cash flow<\/a>, but they also take away a lot of needless stress and anxiety away from business owners and allow them to spend more of their valuable time on building the business.<\/p>\n\n\n\n

\u201cUsing the latest technology available and efficient payment practices will mean that accounting is more under control. Not only does it take the pressure off having that awkward conversation, SMEs get paid faster and those funds are free to move around other areas of the business.”<\/p>\n\n\n\n

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Using direct debit can help your business to get paid on time<\/figcaption><\/figure>\n\n\n\n

Benefits of using direct debit<\/strong><\/h2>\n\n\n\n

Direct debit, an example of technology for speeding up payments, is a type of automated payment in which a customer authorises a merchant to take recurring payments (of fixed or variable amounts) directly from their bank account, whenever they are due. More SMEs are automating their accounting from end to end by integrating a direct debit solution into their accounting software.<\/p>\n\n\n\n

Your customer’s invoice is sent straight from the accounting software, your customer authorises the first and future payments only once (which can be done directly from the invoice).<\/p>\n\n\n\n

After that, your customer doesn\u2019t have to take any further action. Some customers will prefer to set up their payment method at the point of engagement or contract prior to the invoice.<\/p>\n\n\n\n

This is an even better scenario because you don’t need to talk about payments after the initial customer onboarding, and your customer\u2019s payment will automatically draft on the agreed date.<\/p>\n\n\n\n

Future payments are debited automatically and the direct debit solution notifies the customer three working days before each payment is taken. Funds are automatically updated within the software in real-time and the invoice is automatically reconciled.<\/p>\n\n\n\n

Intelligent tech and ‘smart’ payments<\/strong><\/h2>\n\n\n\n

Looking toward the future, GoCardless Head of Product Management Duncan Barrigan says he expects this type of technology to evolve with more intelligence.<\/p>\n\n\n\n

He says: \u201cWith open banking<\/a> rolling out across Europe, bank-to-bank payments such as direct debit are fast becoming the most powerful way for small businesses to get paid<\/a>.<\/p>\n\n\n\n

“Small businesses will be able to tell their banks to share relevant data with app providers, allowing us to make payments that are \u2018smarter\u2019 [e.g. could be triggered when money is in your customer\u2019s account] and more secure [authorised through online banking, for example].<\/p>\n\n\n\n

“It will also mean that we will be able to make instant bank-to-bank payments to merchants where needed. For small businesses, all of that means better cash flow and less time chasing payments.”<\/p>\n\n\n\n

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Legislation is in place but is it helping your business get paid faster?<\/figcaption><\/figure>\n\n\n\n

Legislative advancements<\/strong><\/h2>\n\n\n\n

GDPR and PSD2 legislature<\/a> have been prominent across UK headlines as of late but the effectiveness of the duty to report payments practices and performance has sparked recent news.<\/p>\n\n\n\n

The duty to report in summary is an extension of the Prompt Payment Code, which was first introduced in 2008 as a best practice for large companies to maintain good credit standings. By signing the code, companies voluntarily committed to publishing their payment policies online and following certain standards for payment practice.<\/p>\n\n\n\n

The duty to report payment practices and performance legislation, effective from April 2017, requires all companies over a specified threshold (turnover, balance sheet total, number of employees) to report on their payment record. This gives SMEs the opportunity to see which companies are committed to paying their suppliers on time and do business with them based on that repute.<\/p>\n\n\n\n

Is this enough to make a difference? This article suggests not<\/a> but also notes Stevens & Bolton Senior Associate Oliver Kidd\u2019s call for patience before judgement.<\/p>\n\n\n\n

He said: \u201cWhilst the regulations came into force in April last year, the reporting obligation is linked to each company\u2019s financial year, so not every company within scope was required to take action immediately.<\/p>\n\n\n\n

“It\u2019s also not entirely clear that every company with a duty to report is fully aware of that fact, as I wouldn\u2019t say the regulations have been particularly widely publicised.”<\/p>\n\n\n\n

Payment performance<\/strong><\/h2>\n\n\n\n

Even businesses that are reporting aren\u2019t necessarily doing so accurately, thus far. So far, 350 companies have uploaded information in the designated centralised portal with varying levels of completion and consistency.<\/p>\n\n\n\n

\u201cWhat isn\u2019t clear is whether there is any procedure in place for the data to be reviewed centrally before it is published. There are currently some 30 plus companies on the list appearing to have reported only their company details and nothing at all about payment performance,\u201d Oliver added.<\/p>\n\n\n\n

Where the legislation falls short, is it assumes SMEs have the flexibility to turn down large suppliers or good business opportunities because of poor practices. Furthermore, it doesn\u2019t enforce any sanction for non-compliance or for reporting false information, giving companies no accountability in that respect.<\/p>\n\n\n\n

Despite a soft approach, Oliver says the fact that this issue has this level of legislative attention is a positive sign for SMEs and progress toward the necessary culture change.<\/p>\n\n\n\n

\u201cThe regulations have at least put the issue of late payment on the agenda at boardroom level. Failing to report when required or reporting misleading information attracts criminal liability and potentially hefty fines, so the regulations should not be ignored,\u201d he concluded.<\/p>\n\n\n\n

What your business can do to get paid on time<\/strong><\/h2>\n\n\n\n

While the industry metamorphises, the most immediate solution for your business to deal with late payments<\/a> is to utilise technology to eliminate the need to ask.<\/p>\n\n\n\n

This technology limits the need for additional conversation after the work is done, but you can also set the tone (and speed) for your transaction with your customers as seamlessly as your usual touchpoints with them:<\/p>\n\n\n\n