Anyone who has ran their own business will have undoubtedly experienced the frustration of chasing invoices. However, contradicting the assumption that invoices generally tend to create exasperation for businesses, is research that suggests most invoices get paid within two days.
Most Invoices Paid Within 2 Days
Research carried out by Square, providers of a suite of business tools and equitable loans to help small businesses succeed, found that invoices take, on average, two days to get paid.
The study, which was carried out between July 2020 and July 2021, found that 60% of invoices sent from the likes of business owners, contractors, and freelancers, are paid on the same day they were received.
Invoices of High Worth Take Longer to be Paid
The higher the worth of the invoice, the longer it typically takes to be paid, the research found. For example, invoices between $100 – $299, take an average four days to be paid. Those for $1,000 or above, typically take around six days to be paid by the customer.
Invoices Sent by SMS are Paid the Quickest
The research also looked at the best delivery methods for fastest invoice payments. It found that invoices sent via SMS are the fastest, typically being paid within two days. When sending an invoice by SMS, 70% of businesses are paid on the same day.
Invoices sent by emails are paid, on average, within three days. And invoices that are shared manually take the longest to be paid, within an average of five days.
It’s no secret that unpaid invoices, or ones that are slow to be paid, can cripple a small business, decimating cash flow and vital operations. The findings of this report are therefore positive to the small business and freelance community, confirming that not all invoices are put to the bottom of the priority pile and left unpaid for weeks, even months.
Importance of Invoicing Software
The study also reiterates the value of utilizing invoicing software to make the payment process quicker and more seamless, helping small businesses and freelancers avoid the pitfalls of late or, worse still, unpaid invoices.
As Saumil Mehta, General Manager of Customers and Square Point of Sale, commented:
“Businesses of all sizes need access to cash flow, no matter the industry or complexity. Invoicing software is a great tool for businesses to lean on in order to get paid faster, but also to remove friction in their invoicing processes so that they can keep track of all their payments in one, unified system.”
“By tapping into Square’s ecosystem of products, businesses can use Square Invoices as another payment method to ensure they’re giving customers more flexibility and options in how they pay, all while streamlining payment processes on the back-end to save time by removing manual work.”
“These numbers directly highlight how invoicing software can alleviate the stress of tracking down payments by ensuring businesses get paid in a timely fashion. We can also see invoicing software gives businesses the flexibility to send payments in a variety of ways that work for their customer base whether that be SMS, email, or other forms,” Mehta continued.
‘Hot’ and ‘Cold’ Periods
The data also looked at so-called ‘hot’ and ‘cold’ periods for sending invoices. The end and beginning of the month are ‘hot’ times to send invoices. December is considered a ‘cold’ period, with businesses closing their books and collecting final payments before the End Of Year.