How to overcome the increasing costs of late payments

It’s no surprise that late payments are a growing problem for businesses. In a recent study we found that one-in-five people have paid a bill late to prioritise another bill.¹ And research by AMCA found that 25% of Australians had experienced payment difficulty or concerns in the previous 12 months for at least one of their essential services bills (telco, energy, water).²

For businesses, late payments don’t just mean less stable cashflow, they also increase servicing and collection costs, ultimately reducing overall profitability. 

Understanding the real reasons for late payments is the first step toward improving the customer experience. Our research with Australian consumers has shown the following are key reasons people are late paying their bills. 

1. Increased cost-of-living pressures 

80% of consumers report significant cost increases over the last year.

With current economic conditions, it’s not surprising that Australians are struggling to manage their financial commitments. Two-thirds of all bills are being paid manually, which consumers say help them better control their cashflow. But even so, six-in-ten Australians say that cost of living pressures are directly impacting their ability to pay bills by their due date. 

2. Payment experiences are too complex

53% of bill payers want ‘one-click’ bill payments.

When a customer receives a bill or a reminder, they are often presented with obstacles to pay, such as the need to log in to their account or track down the correct reference number to complete the payment. 34% of Australian bill payers say streamlined digital payments with minimal clicks would help them pay bills on time.

3. Flexible payment options aren’t available

Half of late billers (51%) say more flexible payment options would increase on-time bill payment.

Consumers want options. 33% of late bill payers say paying in instalments would be helpful, while 32% say flexibility to change the payment date would help them pay on time.

3. Payment processing issues

33% of Aussies have paid their bills late because of payment processing issues.

Paying bills is generally not considered an enjoyable activity so when the process is difficult and complex it’s even more frustrating for consumers. One-in-three people who have switched providers mention billing and payment issues as a factor in their decision.

4. It’s hard to keep track of due dates

47% of late bill payers say they simply forgot or were too busy to pay

Keeping track of the six to nine (on average) bills that need to be paid on a fortnightly, monthly or quarterly basis can be challenging. 42% of bill payers say a text or other reminder would help them pay bills on time. Consumers also have strong preferences for how they want to be reminded. 58% say they want a reminder a week out, 47% want a reminder the day before the due date and 15% want to receive multiple reminders before the bill is due. In fact, 12% of Australians intentionally wait until they receive a reminder before paying. 

So, what can businesses do to help reduce late payments?

The payment and payment reminder process are both a key part of the overall customer experience. With 74% of Australians saying the customer experience helps them decide between buying options³, it’s critical businesses optimise this part of their experience.

Some of the ways you can do this include:

• Make the payment process easy and quick across all of your channels - contact centres, as well as email and SMS communications.
• Send payment reminders via multiple channels and at multiple times.
• Offer flexibility in your payment terms, where possible.
• Offer a range of payment methods beyond the traditional direct debit and credit/debit cards. Look to include options like PayPal, Apple Pay, Google Pay and PayTo.

Implementing these steps requires expert knowledge and resources, and that’s where Glider can help. Speak with one of our experts about how we can help you tackle the rising costs of late payments.