Manufacturing firms endure longest wait for payments

Manufacturers can benefit from invoice finance facilities, such as factoring and invoice discounting, to prevent cashflow gaps caused by late payments

UK manufacturing businesses endure the longest waits out of any industry sector to get paid, according to a new survey by trade credit insurer Atradius.

However, cashflow problems related to late payments can be eased by invoice finance facilities such as factoring and invoice discounting, which work to release cash tied up in unpaid invoices quickly and simply.  

'Cashflow issues could impact stability'

During Q1 of 2012, manufacturers endure a wait of 32.4 days to be paid, whilst those in the financial sector had the shortest wait on average at 19.3 days.

However many manufacturers are happy to offer long payment terms, especially to B2B customers to help establish long-term trade relationships.

Alun Sweeney, director of Atradius UK and Ireland, said of the findings: “The worry is that although these techniques may sustain business in the short term, cashflow issues could well impact their stability in the long run.”

Manufacturers were also most likely to incentivise customers to settle invoices promptly, but such tools can prove problematic as non-payments may not be compensated.

Alan felt manufacturers should approach such methods with caution: “Tools like early payment discounts are used as easily-achievable ways of increasing timely payments and recouping costs, but they are not risk-free and can easily lead businesses into financial difficulties.”

“With customers’ own cashflows being squeezed, along with challenging trading conditions, these tools aren’t able to safely guarantee payments or compensation in the event of payment defaults”, he concluded.

Invoice finance can remove cashflow gaps

If your owner-managed business is looking for a specific funding solution tailored to your requirements, have you considered invoice finance?

If you're not sure about how invoice finance works, why not browse our website to find out more about how our facilities work, including invoice factoring and invoice discounting, or contact our team of experts today for friendly advice!

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Comments

My manufacturing firm (we

My manufacturing firm (we specialise in manufacturing metal components used in lamposts) are seeing a small boom and it's thanks to lenders like SBF and their factoring that enables us to compete when banks just wont lend small businesses like ours.

Waiting for invoices to be

Waiting for invoices to be paid are terrible for a small co like ours. I honestly dont see why more co's dont use finance like factoring. Perfect for co's like ours that wait 90 days to be paid!

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