Late payments are a notorious bone of contention within the world of startups and SMEs. They can cause cash flow issues, and in some cases pursuing credit control can be another unwanted cost.
The good news, according to new research from commercial data and business insights company Dun & Bradstreet, is that this could be set to change for the better.
The late payment trend is changing
It appears to be the case that more UK businesses are being paid on time these days. The report by Dun & Bradstreet revealed that in Q4 of 2018, in the three months up to December, 36% of payments were made within the agreed terms. This shows a step in the right direction when compared with September’s 31%.
Is it changing enough?
This really is only a small tiptoe in the right direction, and late payments are still a huge stumbling block across all sectors for SMEs.
In fact, Dun & Bradstreet discovered that at any one time towards the end of 2018, UK SMEs were owed a whopping average of £80,000. You won’t need us to tell you that this can be crippling, and potentially fatal for a small enterprise.
With figures like that, it’s worth wondering what can damage control tactics can be put into place to bolster your business as the late payment landscape slowly evolves.
Be diligent about your background checks
Before you decide to go into business with any client, customer, partner, or supplier, make sure you do a thorough background check on them.
Gathering as much information as you can about them, including credit health and references where possible, will help you to limit risk from the very beginning.
Use legal allies to your advantage
A solicitor’s letter is a relatively low cost, and will typically provide enough of a serious threat to hurry late payments along.
Sometimes all it takes is a reminder that breaching payment agreements has all sorts of legal ramifications, to get things sorted.
Investigate invoice financing where applicable
If you’re dealing with large amounts of outstanding money, invoice financing through the bank might be something to think about.
The bank will pay 90% of the money owed upfront to you and then chase the debtor themselves, applying the force of legal action when necessary.
Work with an accounting professional
With late payments still such a problem for SMEs in the UK at the moment, it’s essential that you keep your eye on the ball to ensure you’re on top of outgoing and incoming cash.
If you don’t have the time to dedicate to this, it might be time to think about enlisting the help of somebody who makes it’s their mission to keep you on track financially.
If you’re finding finance management to be a real challenge, or feel that you might be one of the UK SMEs struggling at the hands of late payments, we might be able to help you.
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