Hitachi Capital on late payment culture

Interesting survey from Hitachi Capital which has gathered a little publicity.

In truth there are few surprises and like the poor, the feeling has to be that late payments will always be with us. The simple fact is that it will always be a balancing act between the actual business and the actual settlement period. That comes down to a lot of factors and I will say that in my credit management experience suppliers often underestimate the clout they have.

Having said that there are a few points that are worth picking up

57% of SMEs spend at least an hour a day chasing outstanding invoices and late payments

Maybe but I wonder how many SMEs actually have that stat to hand?

68% of SMEs would support legislation that makes late payment illegal

Surprised at this question. In what sense “illegal”? Criminal offence? That would be absurd surely

Of greater concern is the impact of late payments on the long-term health of the UK economy, which is estimated to have cost UK SMEs at least £51.5 billion in the last 12 months, but the true figure is likely to be much higher.

Ok it won’t be a popular point but one mans cost is another’s benefit so it has to be argued that its a £51.5 billion (how is that number calculated?) benefit to the clients of SMEs who are often other SMEs

Over a quarter of SMEs (27%) have experienced a profit squeeze because of late payments, and 12% have had to defer staff pay, equating to an estimated 1.95m UK employees that are left empty-handed on payday.

The latter is a very worrying stat but “profit squeeze”? Unless you are accounting for the cost of financing and chasing debts, cashflow has nothing to do with the P&L. I sense these might be throwaway answers to a vague question

With 21% of SMEs also turning down a contract because a customer was known to be a bad payer or offering unfair payment terms,

Possibly but I wonder if there is a touch of bravado in the responses. In fact the most vital reason for turning down business is not mentioned and that is the debtors credit rating