Back to Blog

Running a small business is no easy task. It comes with its unique set of challenges, one of which is dealing with overdue invoices. The frustration and financial strain that overdue payments bring can be overwhelming for small business owners and accounting firms. Shockingly, according to a study, a staggering 49% of invoices generated by U.S. businesses end up slipping into the overdue category. 

In this blog, we’ll highlight this prevalent problem and explore how traditional payment methods often exacerbate the issue. But fear not, we’ll also present a solution that can transform the way you handle invoices and B2B payments – instant payments. 

... a staggering 49% of invoices generated by U.S. businesses end up slipping into the overdue category.

The struggles

Overdue invoices represent a formidable hurdle for small businesses (SMBS), and the challenges they pose are multi-faceted. First and foremost, the issue of cash flow constraints stands out as a paramount concern. When invoices go unpaid beyond their due dates, it disrupts the delicate balance of a small business’s cash flow. This disruption can snowball into a crisis, making it difficult to meet day-to-day operational expenses, pay hardworking employees, and seize growth opportunities that might move the business forward. In essence, overdue invoices can shackle the financial liquidity of a small business hindering its ability to thrive and expand in a competitive marketplace. 

Moreover, the burden of managing overdue invoices places a substantial drain on valuable resources. Pursuing late payments often demands a significant allocation of time and manpower that could otherwise be directed toward strategic endeavours. The more time and effort expended on chasing delinquent payments, the less capacity a small business has to focus on innovation, customer experience, and growth initiatives. All these problems make it super clear that small businesses really need help with overdue invoices. They’re spending a lot of time and effort on this issue, which could be better used to make their business stronger and more sustainable. 

In essence, overdue invoices can shackle the financial liquidity of a small business hindering its ability to thrive and expand in a competitive marketplace. 

The traditional payment methods and their pitfalls

Traditional payment options, such as paper checks and ACH transfers, have been the go-to choose for many businesses. According to a recent survey, 78% of organizations leverage ACH for both credit and debit transactions. A whopping 92% of companies opt for paper checks when receiving payments, and 86% rely on them for making outgoing payments. Despite their enduring popularity, these traditional payment methods have their fair share of drawbacks, particularly when it comes to worsening the issue of overdue invoices. 

Slow Processing: Paper checks and standard ACH transfers can be super slow, taking up to a week or more to finish payments. But even Same-Day ACH transfers, which are faster, have their limits because they still depend on when banks are open. 

Lack of Visibility: Once you send out a check or initiate an ACH transfer, it’s like sending your payment into a black hole. You have no real-time tracking or confirmation that the payment has been received and is on its way to the intended recipient. This lack of transparency can lead to uncertainty and anxiety, especially when you’re trying to keep a close eye on your finances. 

Human Error: When payments are processed manually, there’s always a risk of mistakes. Whether it’s a typo in an account number or an oversight in the payment amount, these errors can result in discrepancies in payments. Rectifying these mistakes can be time-consuming and further delay the settlement of invoices. 

The solution: Instant payments

Instant payments can be a significant breakthrough for small businesses dealing with overdue invoices. Let’s break down why they outshine traditional methods: 

Immediate settlement: Instant payments work by transferring funds immediately within 30 seconds upon approval, which means there’s no waiting around for days or weeks for payments to clear.  

Cost-effective: Modern payment solutions like Forwardly provide the convenience of instant payments at a highly affordable rate of just 1% (minimum $1, maximum $10 per transaction). You can save on hefty processing fees to credit card companies and enjoy a simpler, more economical way to handle payments. 

Improved cash flow: The steady and predictable stream of funds that instant payments offer can be a lifeline for small businesses. It ensures that you have the financial means to meet your operational expenses, pay your employees on time, and invest in opportunities for growth. This financial stability can help your business thrive even in uncertain times. 

Better supplier relationships: When you consistently make timely payments, it goes a long way in building strong relationships with your vendors. They’re more likely to view you as a reliable partner, which can lead to benefits like better terms, discounts, and preferential treatment. A solid network is invaluable for a small business’s sustainability and competitiveness. 

Better financial planning: With real-time transaction data, you can have a clear picture of when and how much money is coming in. This makes financial planning and budgeting much more accurate, enabling you to make informed decisions for the future. 

Competitive advantage: Prompt payments give you a competitive edge in the market. Vendors and service providers are more likely to prioritize your business if they know they’ll receive their money quickly. This can lead to better deals, higher-quality vendors, and even attract more customers who appreciate your reliability. 

Faster transactions reconciliation: Instant payments offer real-time transaction data, making reconciliation a breeze. This efficiency not only saves time but also reduces administrative costs, freeing up resources for more strategic tasks within your business. 

Reduced Burden on AR department: Modern payment solutions simplify payments, significantly reducing administrative burdens on AR departments. Auto payments, faster reconciliation, and improved efficiency free up resources for more strategic tasks while saving costs. 

The power of auto payments

To further streamline the invoicing and payment process, consider auto payments. Automated payments involve setting up recurring payments for invoices, reducing manual intervention, and ensuring timely settlements.  

This not only saves time but also reduces the burden on your accounts receivable department, allowing them to focus on more strategic tasks. With automated invoice processing and payments, you can bid farewell to outstanding debts and achieve a zero debtors’ status. 

Choosing the right instant payment solution

Partnering with the right instant payment solution is important for dealing with overdue invoices and managing your finances better. Here’s what to look for: 

Reliability: Ensure that the payment solution is secure and dependable, safeguarding your financial transactions. 

Integration: Seamless integration with your accounting system like QuickBooks Online and Xero can simplify the payment process and improve the efficiency. 

Cost Efficiency: Opt for a solution that offers affordable processing fees, helping you save on transaction costs. Watch out for services with high monthly subscription fees as they can add up when combined with processing fees.  

Automation: Look for features like automatic payments to streamline your invoicing and payment workflow. 

Customer Support: Access to responsive customer support can be invaluable when you encounter issues or have questions. 

Financial freedom with Forwardly

Overdue invoices can be a significant headache for small businesses, but they don’t have to be. Instant payments, combined with automated payment processes and seamless integration with accounting systems can transform the way you handle your finances. From boosting cash flow to improving supplier relationships, the benefits are manifold.  

So, why wait? It’s time to simplify your invoicing and eliminate overdue payments. Choose Forwardly as your payment partner today! With 24/7/365 instant payments, free same-day ACH, up to 80% lower processing fees, seamless integration with your accounting system, and automatic payment features, you can regain control of your cash flow effortlessly. Don’t let overdue invoices hold you back – take charge of your financial future now. 

Read more

Read our article on how to Turn Invoices into Cash with Our Invoice Factoring Guide

Turn Invoices into Cash with Our Invoice Factoring Guide

The best feeling in the world as a business owner is getting paid. The worst?… Continue reading Turn Invoices into Cash with Our Invoice Factoring Guide

From the Blog: Forwardly vs Melio Payments- Choosing the Right Payment Partner

Forwardly vs. Melio Payments- Choosing the Right Payment Partner

Running a business is tough, and success often hinges on the most important responsibility that… Continue reading Forwardly vs. Melio Payments- Choosing the Right Payment Partner

Get paid instantly 24/7/365

Sign up for Free See pricing