Late Payments to Small Businesses Continue to Rise
As many as two thirds of businesses are directly affected by late payments, according to the latest figures.
A survey of members of the Institute of Credit Management (ICM) finds that almost half of businesses have seen late payments rise this year with nearly two thirds of those surveyed saying that they’re having to chase payments quicker than they have been in the previous 12-18 months.
As many as 40% of businesses quizzed said that they were actually chasing payments before they were even due!
Whilst the Government is trying to reduce red tape to allow businesses to be less restricted, 64% of firms polled expressed the need for Whitehall to step in and do more to protect UK small businesses against the late payment threat, although exactly what the Government is expected to do, was not made clear.
Mark Nuttall, Equifax’ Director of Commercial & SME, said:
"Clearly chasing for payments earlier is important to protect a business’s cash flow, especially where a pattern of late payment emerges amongst a number of customers. With the delaying of payment becoming increasingly the ‘norm’, credit management departments are chasing payments quicker."
"Whilst this doesn’t necessarily mean customers have to pay early, we’re concerned that businesses are withdrawing or aren’t offering the best credit terms to organisations that are good payers, potentially stifling trade and growth in the economy."
Mark Nuttall added that:
"Doing credit checks on new customers should be a ‘given’ in today’s economy. But organisations also need to utilise monitoring tools to stay alert to changes on existing customers’ financial status."
The ICM’s Chief Executive Officer, Philip King, said that small firms should be more proactive about late payments:
"We are urging business owners to tackle the late payment culture head-on by improving best practice. This way, we can reduce the impact of bad debt and help businesses begin to thrive again, ending this damaging cycle of needlessly late payment."
Small businesses wishing to learn more should read our business advice articles on: