SMEs stand tall against late payers
More than half of British businesses are being left with no alternative but to suspend work and services in order to protect their cash flows against the continued threat of late payment, research shows.
This hard-line tactic, used by 54 per cent of businesses during 2012 according to Hilton-Baird Collection Services’ Late Payment Survey, is representative of the no-nonsense approach that many are adopting against late paying customers.
This figure is seven per cent higher on an annual basis and one of several credit management strategies that rose in popularity over the same period, including:
- New customer credit checks (used by 48 per cent)
- Writing to debtors, including solicitor involvement (47 per cent)
- Suspending customer credit facilities (45 per cent)
- Small Claims Courts and County Court Judgments (31 per cent)
The commercial debt collection agency’s annual survey also found that six per cent of the businesses surveyed had to make at least one employee redundant last year as a direct consequence of late payment.
One in 20 respondents were also forced to reduce staff working hours and shifts due to their customers’ failure to pay on time, as official statistics from the Office for National Statistics suggest the UK’s unemployment rate increased to 7.9 per cent in the three months to the end of February 2013.
Managing Director of Hilton-Baird Collection Services, Alex Hilton-Baird, believes late payment is therefore having deeper ramifications than many realise: “It is a major concern that people are losing their jobs as a direct result of the cash flow implications of late payment. This country needs people in work for the economy to move forward, but too many employers are finding it increasingly tough to sustain their existing payroll.
“It is encouraging, however, that a firmer stance is being taken by businesses to safeguard their cash flows from late payment. The decision to suspend work is not an easy one given the temptations to chase turnover in light of the shortage in demand that so many sectors are experiencing currently, but businesses aren’t shying away from making tough decisions. This bold approach could prove key to their survival.”
Note to editors:
Hilton-Baird’s latest research was undertaken among 319 businesses across a wide variety of business sectors, providing a representative sample of the UK’s SMEs. The research was conducted in January 2013, with the results providing a snapshot of businesses’ experiences with late payment and the steps they are taking to safeguard their cash flows against the challenge. The full report can be found here.
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.