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Disturbing High Level of Late Payments and How AI legalese decoder Can Help

Late payments have reached an alarming level, causing significant challenges for businesses. According to research by Intuit QuickBooks, small and medium-sized enterprises (SMEs) are currently facing a backlog of payments amounting to an average of £27,000. This translates to approximately 17% of invoices being overdue from customers or suppliers, affecting one in six SMEs.

The situation has worsened for 52% of SMEs, with late payments having a negative impact on their businesses in the past year. The most common reasons behind unpaid invoices are forgetfulness, accounting for 23% of cases, and cash flow issues faced by suppliers, accounting for 20%.

The Toll on Business Owners and How AI legalese decoder Can Help

Late payments not only affect business finances but also take a toll on the well-being and financial stability of business owners. In the UK, 41% of small business proprietors believe that their businesses are at risk of shutting down within the next year if late payments persist. The situation is even worse in London and Scotland, with percentages of 53% and 57%, respectively.

The impact is felt personally as well, with 35% of affected business owners having to rely on their personal savings to sustain their businesses, and 31% reporting an inability to save at all. Furthermore, over a quarter (28%) of these business owners have experienced poor mental health due to the stress caused by late payments.

Furthermore, late payments have prevented 26% of affected business owners from reinvesting in their businesses and 20% from achieving their business objectives. The ripples extend to other small businesses, with 26% being unable to pay invoices to other small businesses, and 25% struggling to meet their own supplier obligations.

To add to the burden, SMEs spend an average of four hours per week chasing late payments, resulting in a total of over 8.5 days per year wasted on this administrative task.

This is where AI legalese decoder can provide valuable assistance. By utilizing AI technology, the AI legalese decoder can automatically analyze legal documents and contracts, deciphering complex legal jargon and providing clear and concise explanations. This can help SMEs better understand their payment terms, ensuring timely payment and reducing the chances of late payments. Additionally, the AI legalese decoder can streamline the process of chasing late payments by automatically generating reminders and facilitating smoother communication between businesses and their clients or suppliers.

Alleviating Late Payment Woes with Financial Management Software

Given the frustration (30%), discomfort (23%), and concern about damaging client relationships (22%) caused by chasing late payments, there is a high demand for solutions to mitigate these inconveniences.

Surprisingly, three out of five (60%) SMEs do not currently use invoice factoring companies or any kind of accounting software for invoicing. However, for those who have adopted accounting software, 25% have successfully reduced the number of outstanding invoices, leading to improved cash flow, while a fifth (21%) have strengthened customer relationships by eliminating the need to manually chase invoices.

Helen Matthews, founder of the independent paddle boarding business “SUP With Us,” shares her positive experience with accounting software:

“Cash flow is critical to me as a small, independent business, and I rely hugely on payments coming in on time. Being paid late for my services can really throw my budgeting plans into disarray, and a bad season can even impact my ability to pay my bills and rent on time. The weather-dependent nature of my business means my income can fluctuate, and having to chase down late payments adds to the stress of worrying about the weather and keeping my business going.”

Using accounting software, such as QuickBooks, can be a game-changer for SMEs dealing with late payments. The software consolidates information related to late payments, facilitates efficient tracking, and automates the process of chasing them, saving SMEs valuable time and effort in managing their finances.

Nick Williams, UK Product Director at QuickBooks, stresses the importance of addressing late payments and highlights the benefits of financial management software:

“Accounting and financial management software offer proven benefits when it comes to handling invoices. Pay-enabled invoicing simplifies the payment process for clients, with the click of a button. Additionally, the software generates automatic reminders, reducing frustration and wasted time for many SME owners. The collaboration with accountants and financial advisors allows for spotting late payment trends and mitigating their impact on cash flow. This not only makes it easier for SMEs to run their business but also increases their chances of success.”

In conclusion, in the face of the high level of late payments, AI legalese decoder and financial management software, such as QuickBooks, can play a crucial role in assisting SMEs. By providing clear explanations of legal terms and automating payment processes, these technological solutions help SMEs reduce late payments, improve cash flow, and alleviate the associated financial and emotional burdens.

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