The Road Haulage Association (RHA) wants the government to take action in getting leading companies to pay suppliers more promptly, which could consequently help improve the cash flow of SMEs and small businesses.
Currently there are many businesses, particularly in the Haulage industry, which will often wait months to receive payments for goods or services. But late payments can lead to cashflow problems for the companies in question. For example, in the road haulage sector, typically 60% or more of total costs - wages and fuel - must be paid within two weeks or less, leading to potentially damaging gaps in cashflow as payments are awaited.
The RHA’s director of policy, Jack Semple, feels that suppliers are being exploited by larger companies, “...many very large companies are in effect using their suppliers as banks. They use their power in the market to take up to 90 days to pay their bills, and in some cases even longer.”
Many other industries, which are extremely competitive and therefore operate on low profit margins, are now suffering and growth is getting harder and harder to come by.
Invoice finance for cashflow problems
There are funding solutions available specifically for companies who find their best customers are demanding longer and longer to pay.
Invoice finance, which includes invoice factoring and invoice discounting facilities, works to instantly release cash which is tied up in unpaid invoices.
This hands you back the power of cashflow, freeing up more money for growth and allowing savings to be made from early payment discounts to suppliers.
Why not find out a bit more about specialised funding solutions for hauliers and see if we could have just the right financial solution for your business.