Bridging the cash flow divide for SMEs

Being able to manage customer payments efficiently can be a case of make or break for small enterprises.

Cash flow problems can be a major headache for the owners and operators of small to medium enterprises (SMEs), with industry research suggesting some 23 per cent of payments to small business typically arrive late. The flow-on effects can be devastating: restricted business growth, missed capital investment opportunities and the inability to make timely tax payments.

“From the dawn of currency, cash has been king,” says Bruce Coombes, managing director of payment and finance solutions experts QuickFee. “Managing cash flow is not just about how much money is in the drawer under the counter today, or how much money is in the bank. It’s what’s coming.”

Despite financial safeguards against overdue payments such as increasing use of incentives and penalties, customers’ failure to pay according to agreed terms is the second-most common reason SME owners struggle to maintain cash flow, research from US accounting software company Quickbooks reveals.

Wanting to help businesses combat the problem of missed payments while at the same time remaining empathetic to their clients’ cash flow circumstances, QuickFee has introduced a range of secure payments solutions for professional services firms – from financing and fee funding to providing secure online payment portals.

“Our entire product range is designed to help. Whether you’re the largest accounting firm in the land or you’re a service provider starting out, we’ve got something that will help manage that cash flow.”

Most recently, QuickFee has developed an instalments payment solution that takes a buy now, pay later approach to services. QFI (Quick Free Instalments) enables services businesses, such as accountants or lawyers, to offer clients the opportunity to pay their invoices in four interest-free, monthly payments, yet get paid the full amount from QuickFee within two days.

“We basically bridge the gap between a service provider’s right to be paid today in full, and a client’s desire to pay over a period of time,” Coombes explains. “We’ve been doing this for 11 years. We’ve been providing this sort of finance long before [the advent of] buy now, pay later.”

Coombes notes SME finances can often run into trouble when operators are forced to make so-called grudge purchases: payments for necessary services that cannot be avoided, such as advice from an accountant at tax time.

“If you think about SMEs, every single one has to go and see their accountant every year. Whether they like it or not, they still have to do their taxes … So, let’s make it easy, especially when it’s often a one-off cost. Why pay it all at once when the service basically lasts 12 months? SMEs want the option to not pay for it all upfront, when their cash flow has already been squeezed thanks to all the other initiatives they’ve got running.”

While many buy now, pay later services require new credit in the form of payment plans, QFI operates on a customer’s existing credit, does not charge late fees and is simple to sign up for.

“We put it on your existing credit card, using your existing limit, and there is no new credit whatsoever. The service provider gets paid straight away; customers get four months to pay these monthly instalments. That’s why we say it’s a very responsible approach.”