Eight years after Adam and Victoria Cozens began roasting coffee in their garden, they now have eight coffee shops, a thriving online coffee subscription service and a growing wholesale supply business. And they’ve achieved this, in part, because they have the confidence that they’ll be paid on time, every time – with minimal fuss for themselves and their customers – thanks to automated payments from GoCardless, a bank payment company.
The challenge
In the last quarter, payments to UK small businesses were being made 7.3 days late on average.
The issue is so persistent, in fact, that the UK government recently put businesses on notice that enough was enough. Pointing to data showing that late payments are leading to 50,000 business closures a year, the Department for Business and Trade said it is planning a raft of new measures to tackle the ‘scourge of late payments’.
As Co-founder and Managing Director of the independent small London business, Perky Blenders, Adam Cozens has witnessed firsthand how payments being made on time can change the way a business operates. “We work with suppliers and distributors, so if one payment from another business is late in our chain, it impacts multiple businesses, hinders growth and creates cash flow issues,” he said.
Though Adam welcomes the government’s announcement, he also acknowledges that any regulatory changes will take time to work their way through – time that many small businesses may not feel they have. “One piece of advice we would give to other small businesses who are concerned about late payments is to look into automated payment solutions,” he said, referring to actions independent businesses could take right now.
This is a decision that the team behind Perky Blenders made early on in their journey. They knew they didn’t want the hassle and stress of managing – or chasing – payments from wholesale customers. “I was an engineer, Victoria had a background in tech customer service, while my younger brother, Tom, was a barista,” Adam explained. “Between us, we just wanted to focus on really good coffee.”
Searching for a solution wasn’t always plain sailing, however.
“I was looking for automated payments and it was starting to feel like it would be anything but simple for a very small business to set up direct bank payments,” said Adam. “But when I found GoCardless it seemed miles ahead of anything else. We took a closer look and its simplicity and usability shone through. We knew customers would trust it and that we’d be able to onboard them quickly.”
Solution
Perky Blenders uses GoCardless integrated with Xero to invoice customers and then automatically collect payments whenever those invoices are due.
Onboarding customers with GoCardless is super efficient, according to Victoria. “An online form simply links to GoCardless and it’s all really seamless and effective,” she said. From there, the integration with Xero enables true end-to-end payments automation. Once an invoice is issued, collections are automatically scheduled and those payments are in turn automatically reconciled in the accounts. The system also notifies customers when a payment is due to be taken and provides Perky Blenders with total visibility into payment statuses or failures.
All of this leaves the team with more time and energy to pour into growth instead of chasing payments and managing different systems.
“It’s not something we’ve had to worry about,” said Adam. “The integration provides the flexibility to invoice each customer within days and the confidence that GoCardless will automatically take the payment on the due date, whether that’s payment on invoice, 60 days, whatever.”
“Our Xero is very, very busy,” added Victoria. “Anything that helps us to make our lives easier when it comes to accounting and bookkeeping is a huge win.”
Results
The benefits of not having to worry about payments can be measured in two of the most important resources for any small business: time and money.
“GoCardless just cuts down so much time; time on the phone, time chasing emails, time following up,” said Victoria. “I think I estimate that I save personally two days a week of work just by using GoCardless.”
Meanwhile, Adam says the money the team has saved by dodging unwanted payments admin runs into the thousands of pounds, and GoCardless keeps the cash flowing nicely. “It’s easier for customers to pay, so we get cash into the bank faster,” he said. “We estimate we’ve saved about £20,000 on admin costs so GoCardless is a real asset to our business.”
Freed from the need to chase customer payments, Adam and Victoria can instead focus on building strong relationships that contribute to lasting, profitable partnerships.
“Consistently touching base with customers is hugely important, but if you’re always starting or ending those conversations talking about bad debt, then the relationship will suffer,” said Adam. “Thanks to GoCardless, we get to have more of the conversations that matter, sitting down with customers and talking about what’s next for their family, their business.”
Having a seamless, automated payments process also creates a strong impression with customers, allowing Perky Blenders to work with a wider range of sizeable businesses. “It’s an expectation from larger businesses that you’ll be able to pay via direct bank payment, so it’s definitely reassuring as a small business to be able to offer that service,” said Adam. “We get feedback that it’s a useful way for them to manage their payments with us.”
Perky Blenders feels certain that, when it comes to payments, they have the right partner for right now and the right partner for whatever the future might hold.
“Taking everything together, GoCardless makes us feel confident,” said Adam. “From day one, we were looking at ways of making sure that we had a system that would scale with us, and GoCardless has certainly made us feel confident that we can do that.”