Late Payments – The forecast looks bleak for 2020
Late Payments 2019 proved to be a difficult year on many fronts for businesses. Uncertainty surrounding the outcome of Brexit, changes in leadership, the 3rd general election in 4 years, a contraction in manufacturing and housing growth and the collapse of another large, high profile company, Thomas Cook, all made for a turbulent year. One […]
2019 proved to be a difficult year on many fronts for businesses. Uncertainty surrounding the outcome of Brexit, changes in leadership, the 3rd general election in 4 years, a contraction in manufacturing and housing growth and the collapse of another large, high profile company, Thomas Cook, all made for a turbulent year.
One issue that didn’t go away for a lot of businesses, despite government issuing legislation to try and resolve the matter, was the problem of late payments. Research published by Pay.UK* shows the scale of the problem. In 2019 UK SME late payment rose to a staggering £23.4 billion, up £10.4 billion on the £13 billion owed in 2018. There are also more SMEs reporting being paid late (54%) than at any time since 2015 (55%). These figures paint a stark picture for the economic security for a lot of SMEs, but it is not just a financial burden. More than a quarter of SME business owners stress about late payments even when they are away from work, while two thirds reported that late payments make running a business less enjoyable while one in ten business owners has considered seeking professional support to help them to deal with the stress and anxiety late payments are causing them.
Unfortunately, there doesn’t appear to be any respite on the horizon, if anything the mood and outlook for SMEs is worsening. UK respondents to a survey conducted by Atradius** showed a very pessimistic outlook about their B2B customer’s payment behaviour compared to their counterparts in Western Europe. 53% of respondents said that they expect a significant increase in late payments, particularly in long-term outstanding invoices. To safeguard cash flow and maintain liquidity, a greater number of respondents in the UK (42%) than in Western Europe (26%) will consider offering discounts for early invoice settlements.
With uncertainty about the details around the deal to exit the European Union still a major factor and the IMF warning that the world is in a synchronised slowdown there are still difficult times ahead for business.
What can you do to protect your business?
Ensuring that you have strong systems for credit control in place is crucial to help your business stay solvent. Having an effective credit control strategy means having processes in place that will reduce the risk of offering lines of credit and protect your business from late and non-payment. It is vital to know who you are offering credit to and performing credit checks should be part of your routine for both new customers and those who are seeking a credit limit increase.
It is known that the longer an invoice is overdue the less likely you are to be able to recover payment and so keeping on top of all of your credit management systems is key to stopping an overdue invoice becoming a debt. Early intervention and open lines of communication can often resolve problems before they become serious and impact your cash flow.
All of this takes time and skill for it to be a truly effective part of your business processes. More and more businesses are seeking to partner with an established and reputable agency to manage their credit management systems for them. Daniels Silverman is proud to partner numerous businesses in the north west and across the country helping them to stay financial stable. Working alongside your business as a white labelled partner, Daniels Silverman can save your business time and stress by implementing and running your credit management systems. We take time to get to know and understand all of our clients’ businesses and like to work alongside you as part of your team. We understand that recovering an invoice should never come at the cost of a client and we work hard to protect those client relationships. We maintain an open line of communication to enable us to deal with any queries that arise as quickly and professionally as possible.
If you are finding it difficult to get paid on time, or your current credit management systems aren’t working as well as they should, why not give us a call? We can free up a lot of staff time and remove a lot of stress, allowing you to focus on growing your business.
We would be happy to talk through your requirements and see how we can help. You can contact us via the website where staff are waiting to talk, or phone us directly on 0800 953 3631, we look forward to hearing from you.