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Capital is the number one thing needed for a small business to work and yet debt recovery is the greatest problem for owners, particularly sole traders. A recent study commissioned by PayPal and Intuit Australia shows that the total debt owing to small businesses amounts to around $26 billion. This has forced 25 percent of small businesses to take on loans or use credit to cover their expenses, compounding their debt problems and even forcing some to close.
When it comes to paying their invoices Australia’s are trailing behind, often leaving small businesses high and dry indefinitely. According to a Late Payment Report by MarketInvoice which compared data from over 80 countries, Australians take an average of 26.5 days later than the due date to pay their invoices.
Traditional debt collection methods bring with them a range of risks such as monetary and potentially reputational cost.
New smartphone app CollectMORE has been created to help small businesses wanting a solution.
Businesses can enter information about the debt and they are then given advice. It also includes recommendations on precautions and steps to take in order to avoid a bad debt in the first place. Owners that are reluctant to call outstanding clients are able to use the app to create a personalised call script.
The app was created by Paul Metcalf, the Managing Director for CollectMORE Debt Solutions based in Brisbane. For the past 16 years, he has helped small businesses to financially and strategically manage the money they’re owed by using quick yet effective methods.
“Getting paid on time is a perennial issue for small business owners everywhere and cash-flow is the lifeblood of a business’ success,” said Metcalf.
The app with be of most benefit to the 1.5 million Australian sole traders, specifically builders, painters, plumbers and electricians. Tradies operating in the construction industry are at the highest risk of getting swept up into a vicious cycle of debt.
“Often the tradies or subcontractors are not paid, because the builder hasn’t been paid, and he hasn’t been paid because the construction company hasn’t been paid. It is a never ending cycle,” explained Metcalf.