New research, conducted among 300 business owners and managers for Bibby Financial Services, shows that 35% of businesses are finding customers are taking longer to pay invoices than 12 months ago – a worrying statistic considering the economy has officially returned to growth, albeit by a tiny amount.
Some sectors are suffering more than others, with 47% of manufacturing and construction firms saying that customers are taking longer to pay than a year ago, compared to 36% of firms in business services.
Twenty per cent of companies say they are chasing invoices three times or more, and a staggering 48,000 businesses have had to follow up invoices more than 11 times.
Edward Rimmer, Bibby Financial Services’ UK chief executive, commented: “The UK business community has got to stem the tide. We cannot keep stalling payment and expect it to have no consequence. Across this nation, businesses are fighting for survival with sustaining a healthy cash flow one of the biggest challenges. We need to support one another and do everything possible not to succumb to the easy route of late payment as it can become a vicious circle which halts the purchasing cycle and, ultimately, can disrupt the supply chain, not to mention the impact on the goodwill and trust of other customers and suppliers.
“There are some easy solutions to dealing with late payment and free up cash flow. Companies must ensure they are in control of their finances and then look at all the cash flow options available. If they cannot afford to install an internal or external credit control department then they could consider factoring, which takes away the hard work of chasing late payment and allows directors to focus on other aspects of managing their businesses.”