Home > Uncategorized > Late payments to SMEs. What to do?

Late payments to SMEs. What to do?

 
Here is some interesting research from Close Brothers invoice finance. Not surprising perhaps but highlights the impact of late settlements on the whole business market

Close Brothers’ data shows 34% of all SMEs still see overdue invoices as a problem for their business – almost a fifth of these firms (17%) warn the issue is seriously affecting their ability to trade.

That is almost one in five SMEs that are frankly admitting to difficult cash flow problems. In fact I would suggest the figure is higher being an issue that many would not wish to readily divulge.

David Thomson of Close Brothers said SMEs needed better protection from government and regulators. “The UK’s record on late payments is very poor – while other countries have seen late payment rates come down as their economic fortunes have improved, the UK’s business culture seems to be one in which it is acceptable not to pay SMEs on time,” he said. “SMEs often lack the power to hold large organisations to account and need greater support from government to help them do so.”

Maybe but the correlation between late payments and the overall economy is pretty flimsy. The UK has outperformed most western economies in recent years and yet they problem is “getting worse”.

I believe that aside from strong professional credit control, there is no easy answer to this.

My advice to SMEs is to forget pie in the sky wishful “regulation” and ensure you get your basics right first.

And remember that that is far more than simply “chasing the debt”.

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Categories: Uncategorized
  1. February 22, 2017 at 3:48 pm

    I agree Clive, too many businesses fail to get the basics right. In fact, i recorded a webinar just thbis morning on that very subject that we’ll be broadcasting during Credit Week at the end of March. There’s no silver bullet to fix the late payment issue: legislation, voluntary codes like the Prompt Payment Code, the Duty to Report Regulations coming into force on 6 Aoril requiring large companies to declare their payment practice, the Small Business Commissioner, and good credit management that gets the basics right all play their part in improving the situaton and changing the culture.

  2. February 23, 2017 at 9:02 am

    Philip. many thanks. Given that Tescos and others have nonchantly brished off practices which are arguably worse than simple late payment im not sure that declarations of practices are going to make any difference at all. Wheres the effective pressure going to come from?

    You are absolutely right and yet the skills of effecive credit control still go unrecognised.

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