The Impact of Unpaid Invoices on Small Business Owners… And Their Wives

18 Mar The Impact of Unpaid Invoices on Small Business Owners… And Their Wives

Small businesses are crucial to Australia’s economy, and maintaining cash flow is paramount to keeping them afloat. However, a recent study* by Intuit QuickBooks Australia has revealed that Aussie small business owners are struggling to manage unpaid invoices and cash flow issues, with significant consequences for their business and personal lives.

According to the research, small businesses spend over an hour and a half every week chasing late or unpaid invoices, with almost two in five businesses dedicating between one to three hours per week to the task. This amounts to a total of $2.17 billion owed across Australia. In fact, in 2023 small business owners expected an average of $8,684 owing in unpaid invoices at the year’s end.

Unpaid invoices have a ripple effect on other small businesses. Over a quarter of small business owners reported missing a supplier payment or deadline due to a lack of cash flow resulting from unpaid invoices. 

Business admin, such as chasing invoices, was also found to be a significant problem for many small businesses. Around 67% of small business owners take business admin home with them, which results in approximately 104 hours of the year being spent managing their business’s admin manually instead of spending time with their family or on hobbies.

Furthermore, the study showed that 53% of small business owners found it challenging to manage business admin tasks without using a mobile app, such as QuickBooks Online’s companion app. One in ten small business owners reported that using a mobile app to manage their business admin had improved their work-life balance.

It is worth mentioning that a recent news article has reported that the wives and partners of tradesmen often take on the role of doing the business admin, including invoicing. The report reveals that many small business owners in the trade and construction sector struggle with admin tasks, so their partners end up taking on the responsibility to ensure that the business runs smoothly. However, this often results in their loved one being overworked and undervalued, leading to negative consequences for their mental health and overall well-being.

To overcome the stress of unpaid invoices and negative cash flow, small business owners can implement the following tips:

1. Send invoices straight away: QuickBooks Online users can use the mobile app to download and send invoices straight from their job site, reducing the admin pile-up and improving the speed of payment.
2. Follow up early and often: Small business owners can avoid waiting until invoices are overdue to follow up with customers. Schedule reminders a few days before the due date and follow up immediately after the due date has passed.
3. Offer incentives for early payment: Consider offering discounts for customers who pay their invoices early or on time. This encourages prompt payment while maintaining healthy business relations.
4. Include payment options: Make payment options clear and precise. QuickBooks Online users can accept online payments with PayPal, making it easier for customers to make convenient and instant payments using credit cards, debit cards, or PayPal accounts.
5. Seek financial advice and support: Small business owners can seek guidance from financial experts such as accountants or bookkeepers to improve their cash flow effectively. These experts can help create cash flow budgets, monitor and forecast cash flow, as well as identify potential cash flow issues.
6. Consider alternative funding options: In case of negative cash flow, alternative funding options like small business loans, invoice financing, or factoring can offer quick access to funds for short-term cash flow issues.
7. Recognise and address the gendered role that business admin and invoicing play in small businesses. Business owners need to ensure that the burden is evenly shared between themselves and their partners to avoid causing negative consequences for their relationship and overall well-being.

 

By implementing the above tips and seeking support whenever necessary, small business owners can reduce the stress of unpaid invoices and negative cash flow, improving both business and personal life.

*Intuit QuickBooks, October 2023 

 

By Jess Hart

Jess Hart is the Senior Acquisition Marketing Manager for Small Business at Intuit Australia. Having graduated from University of Technology, Sydney with a Bachelor of Communications in 2012, Jess has worked across disciplines including marketing, social media, public relations and digital customer experience. She is passionate about helping Aussie small business owners find success, whatever that means to them. Jess currently resides in Sydney, Australia.