05-08-2007
Majority of businesses frustrated with late paying customers
32% of businesses say that late payments are the most frustrating problem they have to deal with, according to new research by UK Business Forums.
Dan Martin, chairman of UK Business Forums, said: “Despite achieving much success, it is clear from our research that the UK’s entrepreneurs face a host of problems with running their small business.
“Getting payment on time is particularly vital to small firms operating on a tight budget and although efforts have been made to tighten late payment legislation, entrepreneurs are still suffering.
“Research from the Federation of Small Businesses* shows that large companies are the main culprits when it comes to late payment and typically take up to 64 days to settle an invoice. With small firms making up the majority of UK businesses, they are the main victims. It’s time the late payers paid up.”
Other findings from the research showed that other problems for businesses included sourcing appropriate, affordable finance solutions, and dealing with red tape and administration.
Quotes from businesses taking part in the research:
“If I go into virtually any retail premises, I have to pay for the goods there and then, but when I do work for a retail outfit, they want a 30 day invoice! If I ask for payment on completion, I get a bemused look. Why is it ok for them to request immediate payment, but I can't?”
“I think that if I push too hard one of two things might happen. Firstly, I might lose future business if I become a pain in the rear end or secondly, it gives the impression that I am struggling by chasing every pound.”
“Late payment is always a problem especially for someone just starting out like myself. I get caught in a Catch 22 situation - whilst they know there is a bill lying overdue, they don't rush to pay it assuming correctly that I am not going to chase it for a while as I don't want to risk annoying a potentially large customer.”
“If you can afford to "lose" clients by being pushy, then I think you should. Maybe go through your client base and rate them as A - good B - fair and C - awful. You'll probably find that your A clients comprise about 20% of your order book. Give them terms, say 30 days. B clients get 15 days and C clients have to pay cash on delivery. You may lose a bunch of your C clients - but do you really want them?”
If your business is plagued by late paying customers, and you need to improve your cash flow quickly, Factoring could be the right solution.
Compare factoring quotes online and then speak to one of our invoice finance team to find out more about how factoring can help your business to grow.