Own an SME? Use Peasy to let your clients earn Avios by paying your invoices promptly

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• Genghis says:

  19 Jun19 June 06:02

  “ do you have issues with late payment at the moment, and are your creditors the sort of people”

  Creditors should be debtors.

  • Chrisasaurus says:

    19 Jun19 June 11:47

    Oh I dunno, Avios for not paying suppliers Sounds good to me!

• Ken says:

  19 Jun19 June 06:33

  A very expensive way of funding working capital.
  Schemes like these reward those who pay within or just outside terms and rarely gets the problem customer to pay on time.

  • David says:

    19 Jun19 June 09:12

    Hi Ken
    Depending on how you set you rewards, Peasy’s usually no more costly than Invoice Discounting – but the crucial point is that Peasy’s about collecting debtors, not borrowing more. Most businesses tend to address the symptoms of poor cashflow by borrowing more. Peasy addresses the root cause by getting invoices paid!
    Also – the rewards dynamically reduce over the term of credit – and we found even good payers paid quicker, and overall, payments within terms improved by 40%.

    • ken says:

      19 Jun19 June 09:46

      Hi David,

      I’ve never been a fan of invoice discounting either !

      I do hope it works though as slow payment is a scourge in the UK (certainly as opposed to Northern Europe) but suspect it needs a huge cultural change for businesses and accountants.

      Some large business behaviour is shameful.

• Andrew says:

  19 Jun19 June 07:37

  “companies only pay for the amount of Avios or the donation”

  And how much does an avios cost the company? Do Peasy expect a commission? Some rather important details are missing from the advertorial.

  • Ian M says:

    19 Jun19 June 08:13

    Haha yeah, the most important question – how much does the avios cost the invoicing company? – is not addressed.

  • Ian M says:

    19 Jun19 June 08:16

    Even the pricing section of the Peasy website doesn’t tell you! Useless

    • David says:

      19 Jun19 June 09:06

      Hi Ian
      The point of Peasy is its up to the invoicing business to decide the value of the rewards by setting the % of invoice value they choose for a) Immediate payment b) Payment within terms.
      It’s pre-set at 5% (immediate) down to 1% (in terms) but can be flexed up or down.
      Sorry if it’s not clear…
      David (Founder)

      • Andrew says:

        19 Jun19 June 09:34

        It really isn’t clear David.

        We get that you can choose what percentage to give away in rewards but how much does it cost a company to award a customer 1 avios?

        If I want to give 1% on a £1000 invoice how many avios will that customer end up getting?

      • Ian M says:

        19 Jun19 June 09:45

        Hi David,

        Thanks for the reply, but like Andrew says, it really isn’t clear at all. I can’t find the information anywhere on your website.

        • David says:

          19 Jun19 June 13:18

          If you issue an invoice for say £1000, and have setup reward values as 5% for immediate payment and 1% for payment in terms, the Avios awarded would be 4000 (immediate payment) down to 800 (payment in terms). Approx. 1.2p each. Hope that answers your point.

        • Mawalt says:

          19 Jun19 June 15:43

          If you ask Rob, he will tell you never to buy Avios at 1.2p, so this is clearly a non-starter.

        • Rob says:

          19 Jun19 June 15:49

          But that’s not the question. The question is whether offering your customers 4 Avios per £1 to pay their invoices quickly is worth it to your business, or whether it is more effective than a 5% prompt payment discount (which is taxed).

• JamesCM says:

  19 Jun19 June 08:34

  What’s SME stand for? In my line of work it’s Subject Matter Expert but it’s obviously not that in this context.

  • Rhys says:

    19 Jun19 June 09:16

    Small & medium enterprise!

• HAM76 says:

  19 Jun19 June 09:31

  Hmm, maybe I’m sitting in my own little bubble, but for us most late paying customers belong to two groups. Larger corporations and public entities that either pay late or demand corresponding payment terms upfront. These customers can’t use Peasy due to compliance issues. The other group is consumers and small businesses that don’t have the money to pay all invoices and tend to pay whenever money comes in. Their behavior doesn’t change.

  The small business owner that pays late, but has the money to pay earlier and is a small enough business so that owner benefits from the Avios and hasn’t to deal with compliance issues, seems to be quite a niche market to me. Mostly they negotiate a rebate for early payments, anyway.

  • Chrisasaurus says:

    19 Jun19 June 10:01

    Well in this case, least would be a defacto debate and Would also nearly standardise the rebate offer, potentially helping with those customers who would otherwise insist on a slightly better deal every year

    And it depends who you are as a business. A lot of us deal exclusively with small to medium businesses where if our invoices aren’t such a chunk of our customers cash flow as to make it irrelevant, could drive behavioural change.

    But, still no idea what 1% actually means to the customer or whether peasy take a slice on top

  • David says:

    19 Jun19 June 10:15

    We’ve found that even businesses who pay slowly, (or suffer poor cashflow) will prioritise paying invoices that work in their best interest first. Peasy won’t get invoices paid if they’re bankrupt – but it will get your invoice to the top of the ‘pay first’ pile.
    Unlike any other ‘settlement’ terms – Peasy reduces dynamically – so the quicker the payment, the bigger the reward.
    Peasy’s primarily aimed at SMEs, and our Enterprise version will be more equipped to serve big business as the only option will be charitable donations, which will appeal to their CSR responsibility.
    David (Co Founder)

  • memesweeper says:

    19 Jun19 June 13:08

    ‘Larger corporations and public entities […] can’t use Peasy due to compliance issues’

    You might be surprised to find that they will. 🙂

• MT says:

  19 Jun19 June 10:35

  What I don’t like is they seem to hide the bit of information that is the thing everyone will want to know. How many avios the customer gets. If they pay a 10k invoice and get 5% saving thats £500 but how many avios are they getting for that as peasy pockets the £500.

  Makes me suspicious when such obvious and important details are missing. Maybe I am going blind but it really didnt jump to me!

  • Chris H says:

    19 Jun19 June 10:47

    Totally agree. If £500 gets them Avios at 5p an Avios point, then I would rather offer them the cash discount. If they get 1p or better value, then I would offer them the points. Is that not the advice Rob normally offers as value?

    • Rob says:

      19 Jun19 June 10:55

      But the value of a point to a specific person varies. BA sells plenty at 1.6p each (actually more for smaller quantities) when they are not on promotion. If you need a few to top up you will pay more than if you are looking at getting 100,000 from scratch.

      You also miss a big point – tax. If I reduce HFP expenses by £5 then I only personally pocket £2.50 after tax and NI. 500 Avios is therefore substantially more attractive to me than a £5 prompt payment discount on an invoice.

      The reason Avios generally works as an incentive is that you are usually giving someone something which they value at MORE than you pay for it.

      The reason Nectar failed, essentially, was that everyone knows a point is worth 0.5p but businesses had to pay more than 0.5p for them (so Nectar made a profit). This meant that it DID actually make sense to give cash and not points to the general public.

      • MT says:

        19 Jun19 June 11:29

        I agree the value varies per person, but what it seems impossible to find out is how many avios a customer is going to be offered for the discount. Before I would sign up / offer a product to my clients I need to know what I am offering them. I would never dream of associating myself with something that could harm my reputation. If it is not a set amount, can you imagine if I had 2 clients one got offered 1000 avios for the same discount as another got offered 1500 avios, even though it isn’t me making that decision they are going to hold me responsible.

        My point is simply the most important detail of the scheme is not mentioned and this cannot be an accident, thus I do not see this as something I would associate my reputation with.

        • David says:

          19 Jun19 June 11:47

          If 2 customers are sent the same value invoice, the only possible way they could get differing amounts of rewards would be because one of them paid quicker.
          David
          (Founder)

      • ken says:

        19 Jun19 June 13:40

        “You also miss a big point – tax.”

        I’m no tax expert but for this type of scheme its possible that inland revenue would consider them a benefit in kind.

        Why ?

        They are not incidental like a flight but would likely be considered as being provided soley by reason of their employment.

        Would be interested if Peasy had a view on this.

        • Rob says:

          19 Jun19 June 13:55

          There is a general HMRC rules that miles have no value. BA and Amex wouldn’t (easily) be able to have points-earning business credit cards otherwise.

        • ken says:

          19 Jun19 June 16:15

          “There is a general HMRC rules that miles have no value”

          This isn’t quite true (see HMRC EIM21618).
          Its really BA who say they have no cash value

          There is no BIK because the airmiles belong to the employee as soon as they are earned by flying in the normal course of their job & earned at the same nominal rate as all customers of the airline.

          Otherwise you would have employers buying airmiles (or petrol vouchers) and distributing them to evade NI and PAYE

          This seems much closer to an employer buying miles and distributing them and an employee therefore benefiting.
          Or the benefit in kind for a directors interest free loan.

          Would you ever get assessed ?
          Highly unlikely.

        • Rob says:

          19 Jun19 June 16:20

          It is a rebate, in EXACTLY the same way that getting miles for business credit card spend is a rebate. Rebates are not taxable.

    • Andrew says:

      19 Jun19 June 10:57

      Normally Rob would. I understand that HFP needs to make a living so occasionally we’ll get paid articles which don’t offer stellar value but the fact that this doesn’t mention the conversion rate and the founder has been on commenting but has refused to give this simple piece of information suggests that the rate will be atrocious.

      • Rob says:

        19 Jun19 June 11:00

        We’re not paid for this article. If we were it would say so.

        • Andrew says:

          19 Jun19 June 11:17

          And is HFP and/or yourself acting as a referrer earning avios for new sign ups? If so then effectively it’s a paid article even if you’re not paid up front. There’s nothing wrong with that but don’t try to pretend that this isn’t an advert.

          Either way there’s absolutely no reason not to give us the basic piece of information which is how many avios the end customer is going to end up getting. If I’m losing £500 on a 10k invoice I want to know if the customer is getting 50000 or 500 avios. Without knowing this it’s impossible to know how tempted customers will be to pay early and therefore how useful the service is.

        • Rhys says:

          19 Jun19 June 11:23

          Most of our articles include affiliate/referral links, which is why you’ll see the affiliate disclaimer underneath the title.

          Sponsored (paid) articles are different – the sponsoring company get editorial control of the article. Peasy didn’t get editorial control of this article and we weren’t paid a lump sum for publishing it so it isn’t a sponsored article.

    • David says:

      19 Jun19 June 11:44

      If the invoice is £1000 and the reward’ for immediate payment is set as 5% then either £50 goes to charity, or they take 4000 Avios.
      David
      (Founder)

      • Andrew says:

        19 Jun19 June 11:48

        Is the rate always 1p -> 0.8 avios?

      • Chrisasaurus says:

        19 Jun19 June 11:49

        Perfect thanks for the clarity David

      • MT says:

        19 Jun19 June 11:53

        Thank you for the reply and I assume that is the rate of conversion. That I think is what everyone here has been wanting since the article posted as it gives us a lot more understanding.

  • AJA says:

    19 Jun19 June 11:11

    It is definitely opaque as the scheme assumes that the customer is happy to receive a discount in exchange for some Avios but you can’t tell them how many Avios that is.

    Also who actually gets the Avios? If your customer is an individual it’s clearly they who benefit but assumes they’re Avios collectors. If it’s a company I don’t think they earn Avios, I thought only individuals could be members of BAEC or any if the other Avios earning FF schemes. I think businesses would have to be members of On Business which is a different parallel scheme paying On Business Points.

    The scheme will actually cost those who enrol 1% to 5% of their revenue irrespective of the number of Avios the customers actually get.This is not a venture I’m interested in but YMMV.

    • AJA says:

      19 Jun19 June 11:14

      I’ve just seen the founder’s response to another post above, if your customer is a business they will only be able to make a donation to charity.

      • ken says:

        19 Jun19 June 11:43

        I think it referred to large business – who inevitably run a mile of “off book” incentives (unless of course its a pair of tickets to mens semi finals at Wimbledon for the CEO).

        Customers in my experience are utterly predictable.
        You know the ones who will pay early, the ones who pay end of month without needing a statement.
        The ones you have to send ‘copy invoices’ to, the ones who need chasing a little, and the ones you need constant chasing.

        You probably know the ones likely to go bust in the next 5-10 years as well but make the calculation that the margin is enough to take the hit.

        I’d love to be persuaded that this kind of scheme gets the delinquents to pay on time – but I have my doubts.

      • David says:

        19 Jun19 June 11:49

        No…. busnesses can take Avios or donations to charity!
        And the points can be distributed anyway the business chooses – in the same way Capital On Tap or American Express Business. Once points are earned, they can be put into any BAEC or Avios account.

  • David says:

    19 Jun19 June 11:43

    If the donation’s made to charity, it’s £500. If it’s taken as Avios, it’s 40000.
    David (Founder)

    • ken says:

      19 Jun19 June 11:46

      Fair play David, that seems very reasonable.

      Thanks for taking the time to respond.

• Freddy says:

  19 Jun19 June 15:53

  At least it is a better business idea compared to the luggage rental service that got plugged a while ago

• Jason says:

  19 Jun19 June 20:20

  Great idea! I would prioritise every month paying a supplier early that would offer me Avios as a reward rather than paying a company offering no reward. If you have the cash in the bank pay early and receive Avios……..and if I can pay the invoice using my BA Amex as well…..you’ve got my business………lol

  • Erico1875 says:

    19 Jun19 June 21:22

    I remember paying one (agreeable) boiler supplier £1000s with 3V cards. I just emailed him a list of 16 digit nos, exp dates etc. He thought it a bit nuts but was happy for the business.

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