Approximately one in six companies have almost gone out of business due to cashflow difficulties caused by debtors paying late, new research by credit agency Graydon and the Forum of Private Business (FPB) has revealed.
The survey of 500 small business owners found that more than half (51%) of respondents said late payments were affecting their ability to trade efficiently, whilst almost a quarter (23%) said late payments were a ‘serious problem’.
65% said that customers extended payments terms without notice or consultation, whilst 14% were having problems with debtors insisting upon discounts for prompt payments which weren’t agreed at the onset.
A domino effect was also noted by the report, as of the 59% who said they pay suppliers late, 77% then said they were paying late because their own customers were also slow to settle invoices.
But many small companies are not helping matters, as only 44% had formal credit control procedures which help to ensure swift settlement of invoices.
Phil Orford, chief executive of the FPB, said of the research, “We need to do two important things – first, communicate to business owners exactly what they can do proactively to minimise late payment.”
“Second, we need to persuade large corporations to embrace paying their suppliers on time and in full, avoiding the temptation to impose damaging, retrospective changes to terms and conditions, so that prompt, proper payment washes down the supply chain” he concluded.
Invoice finance for cashflow assistance
Do the above problems sound familiar? Could your business’ cashflow be a lot healthier if debtors paid quicker?
With a factoring facility, we provide you with cash upfront for your invoices, whilst also providing your business with a credit control team to help chase payments and ensure debtors settle invoices quickly.
Why not browse our website to find out a little more about how invoice finance could be the ideal solution for your business.