The trend towards delayed payment of invoices seems to have been made more prevalent since the recession took hold. Certainly we have noticed it. But the fact that so many businesses in the UK have become accepting of this 'late payment culture' is certainly a cause for concern as it is having major implications on the whole business community and economy.
It is sad that it is the smaller businesses that take the strain and in the worst case scenarios have to fold.
In some cases, there will be genuine reasons for late payments which are unavoidable but businesses shouldn't have to accept that this is somehow the 'inevitable' or the 'norm' because there are ways to combat this and keep your credit control in good shape.
Without any current legislation in place, businesses need to have concrete terms and conditions in place and have the courage of their convictions to see them through. All too often businesses are allowed to get away with late payments as small businesses are worried about relationships souring and ruining repeat business.
However business is business and cash flow is, and always will be king.
More than 260 businesses across a number of industry sectors participated in a study recently, by positivecollections.co.uk, the online debt recovery service for businesses and consumers, which found that:
- Small to medium sized businesses are the most likely to suffer from late payers (with 74 per cent stating that they are likely to accept late payment excuses).
- 10 per cent of organisations avoid chasing debts in the first place as they are worried about losing future business or simply feel too uncomfortable about broaching the subject.
- 16.5% of businesses would try to chase debts but avoid legal action as they believe its too expensive