NZ SMBs using online accounting tools get paid 25% faster
New Zealand small to mid-sized businesses (SMBs) using online accounting are getting paid 11 days faster now than they were in 2011, according to research undertaken by online accounting software leader Xero.
New Zealand businesses using Xero are getting paid 32 days after invoicing their customers, down from 43 in 2011, resulting in significant cash flow improvement.
The statistic comes from the aggregation of eight million invoices raised through Xero in the two years since October 2011 from the same sample of New Zealand SMBs.
With online invoicing, small business owners can see if invoices have been opened, send invoices from a mobile device, and, via automated bank feeds, regularly check their bank account balance to stay on top of collections.
Xero New Zealand Managing Director, Victoria Crone, says online accounting can help businesses get paid faster by cutting time out of the actual invoicing process, resulting in a significant improvement of cash flow.
“It’s easy to forget to pay an invoice, especially when it arrives days later with payment instructions buried in the fine print. With online invoicing, the invoice arrives instantly, and then customers can pay easily through a “pay now” button on the invoice," she says.
“Faster and more efficient cash collection means business have more money in the bank, resulting in less debt and therefore less interest to pay, allowing them to invest back in their business, buy equipment, improve processes or expand operations.
"Cash availability is such a key part of every small business’ success or failure."
The data is based on aggregated, anonymous data and was generated by comparing monthly invoicing activity for 43,000 businesses on Xero worldwide over the two years to October 2013.
The results showed that, per month, SMBs processed twice as many invoices in the Xero systems totalling US$1 billion more in value compared to two years ago. Xero partly attributes this to the global economy recovering from the after-effects of the 2008 downturn.