A new study by the Association of Consultancy and Engineering (ACE) has indicated that SMEs have had to wait longer to be paid in 2012. The organisation represents the views of consulting and engineering businesses across the UK. Its benchmarking study of the consultancy and engineering sectors indicated that small firms have to wait 90 days for payments in 2012, in comparison to 78 days last year. Dr Nelson Ogunshakin, chief executive of ACE, said of the survey results: “These figures show there is a long way to go to ensure clients pay promptly for the work our industry does, even at a time when financial constraints have hit small companies hard.”
How to keep cash flowing over Christmas
With Christmas holidays fast approaching, many small businesses may find that cashflow can come to a standstill during a stop-start period of trading, especially with the impact of late payments continuing to hit hard. Here are SBF’s top tips for managing cashflow over the next few weeks:
- Talk to your suppliers and debtors
It may seem a simple idea, but effective communication with your suppliers and debtors can prove very beneficial to facilitating cashflow. Could you pay off an invoice early and benefit from a payment discount, or maybe you can extend your payment terms on a short term basis to cater for the festive season. Although you may not get much change out of large firms (e.g. utility companies), you may be surprised at how something such as a polite request may be received.
- Keep regular processes going
Although it may be a struggle to ensure processes remain regular during the festive period, try and keep good credit control habits going as much as possible. If you haven’t either the staffing levels or the time over Christmas to do this, ensure all invoices are ready to be submitted first thing after holidays and staff are informed of which accounts need to be chased when business starts up again in January.
- Consider your business lending needs
If, no matter what you do, Christmas is always a lean time of year for your business and industry, then why not have a think about what external funding methods you could utilise in the New Year. Invoice finance options, such as invoice factoring and invoice discounting, are specifically designed around inconsistent cashflow. Why not give one of our team of experts a call today on 0845 602 9354 to see just how invoice finance could help free your cashflow.