By Neil Aitken, Paym
Since the financial crisis there has been a significant increase in the number of people that, instead of seeking employment at a business owned and run by someone else, have instead decided to go it alone and become self-employed. In fact 80% of new businesses that started in 2013 were sole traders.
While the rewards for becoming your own boss are significant there can also be challenges that you won’t face when working for someone else. Most small business owners will say that one of the biggest challenges they face is getting paid on time. Poor cash flow is one of the major causes of business failure but there are ways to speed up payments reaching your bank account:
1. Don’t rely on cash.
Being paid in cash is a simple and convenient way of doing business but, in the last five years alone there has been a 14% fall in ‘physical’ cash use and in May 2015 cash fell behind other payment methods for the first time. People are less likely to have cash to hand to pay for things than they used to and this can easily lead to a delay in payment.
Offering customers choice and convenience should be a priority for any businesses at every stage and payment is not different. Giving them the choice to pay you in a way that is simple, secure and easy for them will improve the chances of getting your money on time and reduce the time you have to waste chasing up payment.
2. Get paid straight into your account.
Cash is ‘immediate’, but a trip to the bank branch isn’t. Finding time to visit the bank when you are working can be difficult and, in the case of cheques (if you still accept them and your customer still uses them) can add days more waiting until the funds to clear your account.
Credit and debit cards are one option but these can be expensive for smaller businesses and not always practical for sole traders. However, with new technology it is now possible to offer alternative payments quickly and cheaply.
3. Embrace technology
Smaller businesses and sole traders need to embrace technology that allows them to be paid on time and in full without extra cost to their bottom line. Seventeen banks and building societies representing over 40 million customers have come together to launch Paym -an easy, quick and secure way for consumers to transfer money via a mobile phone number. which in turn is helping customers to pay small businesses who regularly receive cash-in-hand payments for providing a service; from building work to mobile hairdressing.
You can cut administration time for businesses as there’s no cash handling to contend with, and payments are received directly from the customer’s account, making late payments and time consuming bank visits a thing of the past. It also puts an end to embarrassing moments when they are unable to pay because they don’t have enough cash on them or were not aware that they could not pay with a card.
As a sole trader or small business, you will have many priorities in the day-to-day running of your business; taking away the burden of chasing payments from customers means you can concentrate on other areas of the business that need your attention and time. The benefits of embracing this technology aren’t just to the business either, they will also make paying for goods and services quicker and safer for customers, making it a great incentive for repeat business.