In the final part of Mark Robinson’s advice series supporting Small Business Advice Week 2015, Canon’s SME expert looks at how small businesses can take measures to control the costs of running a business and tackle late payments from suppliers and customers.
Last month, a report surfaced showing that the majority of the UK’s small and medium-sized enterprises are waiting more than 30 days for payments from suppliers. The country’s five million smaller firms are currently owed an estimated £26.8 billion in overdue payments, and as a result are losing out on business or are faced with the choice of accepting crippling payment terms.
Experts are correctly calling upon the government to tackle this issue, which is increasing at an alarming rate. However, there are also some measures closer to home which small business owners can apply themselves to ensure a constant cash flow, paving the way for business growth.
The ever-growing administrative burden
Take the ever-growing paperwork pile, which will be an all-too-familiar image for many small business owners. A large number of new bills, invoices and requests come into firms every day, often taking up valuable time and resources.
Findings from Canon research suggest 28% of SMBs and small office/home offices (SoHos) in Europe spend too much time on general administration and paperwork. In the UK this figure was even higher at almost a third (30%). As a result, many firms in the UK say they do not spend enough time cultivating and generating new business.
With so much time consumed by paperwork, it’s easy to see how the ongoing administration and bureaucracy can quickly become an insurmountable barrier to keep up the cash flow.
Putting principles into practice
But what would happen, if SME and SoHo owners spent less time on bureaucracy and more time on building the business? More importantly, how would they find the time? With 41 per cent of UK SME and SoHo owners agreeing that bureaucracy is a challenge for their business, it is going to be difficult for small firm owners to move their focus from operations to business development.
Delegating tasks and responsibility to trusted team members is all very well if you have the resources, but what about if your workers are already stretched to capacity, or if your business is a one-person operation?
Reducing the admin burden with technology
Thankfully, technology can provide the answer. By using a digital approach to managing information – which can include a digital cash flow dashboard, digitising paper documents, and allying cloud with mobile connectivity – SME employees can receive and update finance information on the go, such as sales contracts and invoicing records. Rather than dealing with the paper mountain on their return to the office, small business owners can deal with admin from any location. This saves time and means they can process invoices quicker and get them out faster, chasing on overdue payment as early as the contracted payment terms allow.
Being fully digital also means business owners know exactly when and how much money is coming in, what is coming out and how much is left for investments, meaning they can schedule payments for suppliers on time and overall have a better overview of how the business is performing.
Small firms face a huge cost control challenge, but they can start overcoming the barriers without having to wait for the government to take measures. By adopting new technologies and embracing the digital transformation, small business owners can drastically reduce the amount of time spent on lengthy admin tasks and use their time more productively by focussing on activities that add to the bottom line.
For more SME advice, take a look at part one (save money with an energy-efficient office), part two (the power of social media) or part three (the skills you need to start a business) of this series, or follow @CanonBusinessUK on Twitter.