The results of a survey published recently show that more businesses than ever are calling for credit from suppliers in an effort to manage cashflow. The research conducted by PKF Accountants and business advisers surveyed more than 100 AIM listed businesses, which revealed that businesses of all sizes were facing increased financial pressure as a result of increased customer credit demands and concerns over clients ability to repay.
According to PKF Accountants, 75 percent of respondents received requests for longer credit terms in the last 12 months. Less than 15 percent of companies received prompt payment, with more than half having to wait longer than 15 days after the agreed payment date for payment. Of the businesses surveyed, 80 percent spend more time chasing unpaid debts than they did last year, with half believing that they will have to invest more time chasing payment in 2012.
The survey indicates that the move towards longer periods waiting for payment and increased time spent chasing debt was leading a significant number of businesses to financial jeopardy. Although an increased number of companies are experiencing difficulties, almost three quarters of respondents have two or less staff to manage credit. More than half have no policy for credit management in place. The results show that there is an increased demand for credit when suppliers can least afford it. The head of financial management and planning at PKF, Dennis Horner said:
“Although not entirely unexpected given the challenging economic environment that we find ourselves in, these findings should nonetheless act as a wake up call to businesses: tighten up your credit control now- or you may face serious consequences later.”
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