Small businesses waiting for delayed invoice payments could score cash prizes from Xero, as accounting and business transaction software makes the promise of accelerated payment central to their pitches to SME customers.
Cloud-based accounting software company Xero this week launched its new Pay It, Don’t Delay It campaign, offering to reimburse small businesses left hanging by delayed invoice payments.
Some 48% of invoices were paid late in 2021, according to a report from Xero and Accenture, with the average invoice paid 6.4 days after its due date.
Australian small businesses lose out on $1.1 billion per year as a result of those late payments, the report claims.
The new Xero initiative, headlined by lauded journalist and media personality Lee Lin Chin, promises to pay some lucky winners for the value of their delayed invoice payment, up to $2,000.
The competition also offers prizes to small businesses which can prove they’ve paid an invoice ahead of schedule, with the total prize pool reaching $150,000.
“Let’s face it, Australia, no one likes a job half done,” Chin said in a video promoting the competition.
Businesses with an annual turnover below $10 million and fewer than 20 employees are eligible for the competition, which closes on March 23.
As the average payment time between large businesses and their smaller suppliers remains stubbornly long, Xero is not alone in making payment times a key component of its customer outreach efforts.
Small business payments provider Zeller has recently launched its own Zeller Invoice system, which the company claims is its most rapidly-adopted product in terms of payments processed.
The system adds to Zeller’s existing card and digital payment functionality, allowing businesses to issue online B2B invoices instead of relying on legacy systems.
Zeller claims invoices sent through its new system have an average payment time of one and a half days, with 89% of invoices filed paid no later than one day after they become due.
The company states its digital invoices are free to send, and only attract a transaction fee if the payer opts to complete their invoice online using the Zeller system.
The private sector’s belief in accelerated payment times as a selling point is backdropped by the federal government’s attempts to spur big businesses to pay their smaller suppliers in a more timely manner.
The Payment Times Reporting Regulator recently revealed the median payment time from big businesses to smaller operators was 30 days between January and June 2022, a figure unchanged from the median payment time recorded over the prior six months.
Now, lawmakers including Minister for Small Business Julie Collins have urged small businesses to share their views on sluggish invoice fulfillment times to an official review, in the hopes of finding new ways to spur prompt payment.
Concurrently, the federal government has urged small businesses to sign up for e-invoicing — a digital system allowing businesses to securely send and receive invoices through their accounting software.
Unlike bespoke digital invoicing services or the simple act of emailing a PDF, e-invoicing is built on the internationally-adopted Peppol network.
Canberra touts the system as a time-saving measure that will also cut down on invoice fraud.
Major accounting platforms, including Xero, now offer the government-backed service.
However, the payment times review unveiled the fact just 1% of Australian businesses have actually signed up for e-invoicing, meaning its potential payment-accelerating promise is yet to be fulfilled.
With cashflow concerns mounting for small businesses through a shifting economic climate, it is likely that private operators and lawmakers alike will continue advertising digital invoicing methods in 2023 — with or without the involvement of Lee Lin Chin.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
