Shocking truth of late payment revealed
The true scale of how much late payment is 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 tardy customers. And that’s not the whole story, with 21% owed more than £25,000 and almost one in ten (9%) due more than £100,000.
In total, the 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 worsening problem of late payment continues to adversely affect the performance of SMEs.
Of those who reported that they have experienced late payment, 39% said it has had a significant impact on their cash flow, with 24% having to dip into their overdraft in order to manage it.
It’s little wonder 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 punctually 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.
We’ve published plenty of tips on our blog and Resource Centre to help businesses get their credit control in perfect condition that we hope will help. Here are just a few of our most popular pieces for you to digest:
- Your 3 options to get paid by ‘brickwalling’ customers
- 9 credit control tasks you can do in 1 hour or less
- How to avoid an invoice dispute
- How to build a simple and effective credit control policy
- The credit control calls your business should be making
If you need help collecting any outstanding invoices that are proving too difficult or time-consuming to recover, please contact our award-winning team on 0800 9774848 or request a call back today.