Three major problems caused by late payments

A great proportion of B2B businesses will have had some experience with late payments from their customers. Though it is common for businesses within these sectors to have longer credit terms, it can generate a number of problems for business owners.


  1. Inability to progress

Wanting to progress and develop a business, but constantly chasing outstanding payments, can create a stalemate for many businesses. It may be impossible to invest in new areas of the business such as taking on new staff, moving premises or launching new services, if they are waiting to receive money owed to them by their customers. This constraint is prominent in businesses that rely solely on moving from one contract to the next. At Skipton Business Finance, we have worked with many businesses who were struggling to develop because they were held back by late payments. When they could get immediate access to this money, they were able to invest in machinery, expand into bigger premises and even launch new product ranges.


  1. Unhappy suppliers

Maintaining positive relationships with suppliers is just as imperative to businesses as the relationships with their customers. If organisations are frequently unable to pay their suppliers on time, it has the potential to damage the future relationship with them and they may see a less harmonious partnership going forward. Alternatively, if suppliers are consistently paid late, they may decide to take their business elsewhere and if there is a disrupted supply chain, business owners could find themselves in a very difficult position. Not only could they find themselves with cut off suppliers, but this can ultimately lead to failing to produce their promised service and therefore the potential for losing customers.


  1. Disrupted business harmony

If late payments are having detrimental effects on the productivity of a business, it can lead to a disrupted workforce and in turn less productive staff. There is no doubt that being paid late and having to endlessly chase customers for payment, can cause tension within the business. Add to that not being able to pay staff on time and businesses could find themselves with an unhappy workforce.

Not only can it cause disruptions internally, but externally too. As mentioned above, timely payments can be crucial to maintaining good working relationships with suppliers. Problems can also arise when customers feel they are being constantly chased for payments too. They may also be victim to payment issues from their own customers and need more time to complete the transaction. Being able to allow their customers extended time to pay can vastly improve their relationship with them.


These problems can ultimately lead to a great deal of stress, particularly for business owners who have to manage the consequences. There are many options available to businesses who are looking to tackle these late payment problems. Of course, the most suitable financial solution depends on each and every business. Invoice Finance is a popular choice for B2B businesses who are prone to dealing with late payments. It allows businesses to gain access to working capital straight away, based on outstanding invoices to customers. It helps to eliminate the tension that late payments can have on businesses and instead allow them to focus on the future of the business and making that next sale.

 

Enquire today and banish those late payment concerns.

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