26/04/2017
The truth about how much late payments are affecting British businesses has been revealed in a new survey from insurer, Zurich.
Its research across more than 1,000 business owners and decision makers found that 52% of businesses are owed money by late paying customers. And that’s not it, with 21% owed more than £25,000 and almost one in ten (9%) due more than £100,000.
In total, UK’s businesses are owed a staggering £44.6 billion as customers continue to delay paying their invoices for as long as possible to safeguard their own cash positions.
Understandably, the growing problem of late payments continues to adversely affect the performance of SMEs.
Of those who reported they have experienced late payment, 39% said it has had a significant impact on their cash flow, with 24% having to go into their overdraft in order to manage it.
When you consider that 64% are seeing delays of more than a month. Almost half are typically having to wait three months for payment (45%), with 14% reporting delays of at least six months.
In the month the government has introduced new payment reporting regulations on larger companies, who are often seen as the worst offenders, 50% of respondents said the government needed to do more to reduce the impact of late payment on SMEs.
So where does that leave us?
The new reporting regulations have the potential to make a small difference. Large businesses will now have to report on their payment practices on a twice-yearly basis, or risk criminal charges and their name being made public.
However, as it stands this only applies to those with an annual turnover of more than £36 million, employ more than 250 staff or whose balance sheet total stands at over £18 million, so smaller firms will still be getting away with it. Here’s all you need to know about the new regulations.
As has been the case for a while, the onus truly remains on businesses themselves to, on the one hand, pay their invoices on time in order to look after their suppliers, and on the other ensure they are doing all they can from a credit control perspective to increase their chances of getting paid.
This means doing all of the basics from the moment an order is placed, and not being afraid to take action when the late payment is impacting your cash flow or your resource.
This is why we are here to help businesses get things right from the start contact us www.fossecashflow.co.uk
