Businesses forced to fight late payment fire with fire
Almost half of UK businesses are putting off paying their suppliers as a direct consequence of being paid late themselves, demonstrating the devastating impact late payment is having throughout the supply chain.
Forty-nine per cent of businesses admitted to this in Hilton-Baird Collection Services’ most recent Late Payment Survey, which questioned business owners and finance directors on their experiences with getting paid on time in 2013.
This consequence of late payment was second only to the inevitable need to spend more time chasing customers for payment (75 per cent). In total, 88 per cent were adversely affected by late payment last year, with businesses commonly having to increase borrowing (32 per cent), pay HM Revenue & Customs later (19 per cent) and even turn away new business (9 per cent) as a result.
To compound matters further, 27 per cent revealed the most common late payment excuse they received was that customers were waiting for their own customers to pay.
Managing Director of Hilton-Baird Collection Services, Alex Hilton-Baird, said: “The extent to which a single late payment can impact upon the supply chain is a major concern. While it’s obviously going to damage the supplier’s cash flow, it’s clear that many are being left with little option but to fight fire with fire.
“With no credible sanctions in place – statutory interest is still vastly underused and the less said about the Prompt Payment Code, the better – businesses are commonly treating invoices as interest-free loans. It’s a deeply troubling situation.”
Another initiative being considered by the Business Department is to fine late payers. However, this survey found only 35 per cent of respondents to be in favour of such a move, with 55 per cent dismissing it out of hand.
Alex continued: “Even as a deterrent, fining late payers simply won’t work as, realistically, it will be left to the businesses themselves to enforce it. If they can’t collect an invoice, how much success will they have trying to impose an additional fine? In reality, it’s down to businesses’ credit control departments to ensure they’re doing all they can to protect themselves.”
The commercial debt collection agency has published a free eBook, providing businesses with top tips and best practice advice to safeguard their cash flows from the threat of late payment. It can be downloaded here.
Note to editors:
Hilton-Baird’s latest research was undertaken in January 2014 among 361 businesses across a wide variety of business sectors, providing a representative sample of the UK’s SMEs. The full report can be found here. Hilton-Baird donated £3 to Macmillan Cancer Support for every completed survey received – a total of £822.
Alex Hilton-Baird is Managing Director of Hilton-Baird Collection Services, which is part of the Hilton-Baird Group of companies. Established in 2001, Hilton-Baird Collection Services provides award-winning outsourced debt collection services to the UK’s SME and corporate markets, as well as some of the most respected invoice financiers, leading banks and insolvency practitioners.
Hilton-Baird Collection Services was voted Commercial Debt Collection Agency of the Year in 2008, 2010 and 2011 by Credit Today magazine. In addition, two of our employees have been awarded the Commercial Collector of the Year title, with Team Leader, Charlotte Christie, winning in 2010 and Senior Collections Advisor, Peter Hepburn, winning in 2012. Such awards are testament to the continuous investment Hilton-Baird puts into making its debt collection services the best on the market, with regular training and technological innovation at the core of ensuring a fast, flexible and efficient response to business debt recovery needs.
To find out more about how Hilton-Baird Collection Services can assist, visit https://www.hiltonbairdcollections.co.uk.