The two biggest productivity drains for Singapore’s small business owners are chasing overdue invoices and being paid late, according to new research from Xero, the global leader in online accounting software. Small businesses spend an average 25 days each year, or 5 workweeks, chasing overdue invoices — more time than they spend on any other single task.
Xero’s research identifies key obstacles to growth and highlights the importance of finding solutions for the island’s small businesses, which the government calls “the heart of Singapore’s economy.”
Late payments affect nearly every small business in Singapore, with nine out of 10 saying they have clients who do not pay on time. As a direct result of late payments, small businesses face a backlog of work (59 percent), reduced productivity (46 percent), cash flow issues (38 percent) and reduced morale (31 percent). A quarter of businesses also struggle to pay staff. “Small businesses in Singapore are spending an eye-watering amount of time chasing overdue invoices,” says Alex Campbell, Managing Director Asia at Xero. “Cash flow is a major issue for small business owners. Not being on top of it can seriously dampen growth efforts and, even worse, put Singapore’s hard-working entrepreneurs out of business.”
“To combat this problem and ensure steady cash flow, small businesses need to digitise their accounting processes. Online invoicing and payments enable small business owners to invest their time more efficiently, driving business growth.”
The research also revealed:
- 12 percent of small businesses experience late payment from at least half of their clients
- 52 percent of small businesses experience late payment from at least a fifth of their clients
- The majority of small businesses (53 percent) have to wait at least 11 days after the due date to be paid
- Almost a third (31 percent) have to wait an entire month (30 days) longer for payment than contractually agreed
Key reasons for customers paying late include waiting on a late payment from another supplier (52 percent) and having financial problems (46 percent). A fifth (21 percent) of respondents saw their own outdated accounting technology as the problem. Xero’s own aggregated data found that electronic invoicing has already helped its customers in Singapore receive payments faster by almost a third, from 43 to 29 days from 2014 to 2016.