Pranav Sood, VP Small Business at GoCardless, says about 75% of SME owners would give up up to 10% of annual revenue to avoid chasing late payments.
Women decision makers feel far more awkward about money conversations than men, with Wales the worst region at nearly half of respondents versus about 20% in London.
GoCardless attaches a payment method to each invoice, giving owners visibility and predictability over when money arrives, and Sood urges buyers to weigh total cost over cost per transaction.
Automated payments spare small business owners the awkward chase for late money
Late payments hurt small businesses in cash flow, but also because owners find chasing money awkward enough to give up revenue to avoid it. Automating collection by attaching a payment method to each invoice removes the conversation and makes the timing of cash predictable. The pandemic pushed SMEs to adopt such tools, and that shift looks permanent.
Takeaways
Chasing late payments is emotionally costly for SMEs. GoCardless research found about 40% of surveyed SMEs feel very awkward chasing late payers. About 75% of owners would give up up to 10% of annual revenue to avoid the conversation, which Pranav Sood found most surprising.
Discomfort with money talk varies by gender and region. Around a third of women decision makers are too uncomfortable to discuss money with customers or suppliers, against about 20% of men. About 55% of women fear seeming rude or pushy, against just under 40% of men. Wales is worst at nearly half.
Late payments hurt finances, time and morale. Sood names three impacts. Working capital suffers, which threatens payroll and debt commitments. Owners lose time chasing and reconciling partial payments. The emotional toll is felt by almost every owner and cannot be quantified.
Attaching a payment method to the invoice fixes timing. GoCardless ties a payment method to each invoice, either instant bank pay through open banking (live in the UK, coming elsewhere) or direct debit, called ACH in the US. Owners gain visibility and predictability over when money arrives.
Small businesses report real gains from automation. GoCardless serves about 70,000 small businesses monthly. Matt's online acting classes had unpaid no-shows and fixed costs, and he saved time and collected more. Eva's baby ballet studio stopped delegating chasing, and everyone now pays on time monthly.
The pandemic accelerated an existing shift to digital. Sood argues businesses now value software, and cloud tools proved easier than SMEs expected. Fear of changing how they work was overcome because the choice was removed. He sees the shift as an acceleration of a trend that is here to stay.
Choose payment providers on ease, support and total cost. Look for integration with ledgers such as Xero, Intuit or Sage, live payment status reporting, and strong support when things go wrong. Check hidden fees and the time spent maintaining the system, because the cheapest per transaction may not be right.
Choosing a payment provider
Ease of use, including integration with general ledger software such as Xero, Intuit or Sage, and live reporting on payment status.
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On this episode 2
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Quality of support and guidance, since payments are critical and need help when things go wrong.
Total cost beyond cost per transaction, including hidden fees and the time and effort of maintaining the system. Upfront discovery is crucial.