Small businesses ‘expect late payment problems to get worse’
Nearly a third of small businesses expect the problem of late payment and cash flow to get worse, according to a survey conducted by Lloyds Bank.
The survey reveals that late payment of invoices remains the main cause of cash flow problems facing UK firms. One in five businesses admit it’s causing them difficulties, and nearly one in three expect that more customers will request deferred payment terms over the next six months.
Donald Kerr, Managing Director at Lloyds Bank Global Transaction Banking, said: “While the number of businesses suffering cash flow problems has fallen from a peak of 35% in 2013, it remains stubbornly high.
“Cash flow is the lifeblood of any business but for too many businesses, late payments continue to be a significant problem. Where businesses do expect cash flow to be an issue, they need to take action to manage issues like late payment so that it doesn’t hamper their opportunities to grow.
“Specialist types of lending such as invoice finance can alleviate these pressures by allowing businesses to borrow against the value of their invoices helping them to avoid payment delays and improve cash flow.
“Thorough credit checks on customers and setting out clear payment terms at the outset of any relationship will also help.”
Late payment is more than just an inconvenience for many firms. It can threaten their survival. Numerous otherwise viable enterprises have gone out of business because of cash flow problems.
With the stakes so high, it’s important that firms monitor their credit control carefully and take early action to recover debts.
Often a letter from a solicitor is enough to secure payment of overdue invoices. In more stubborn cases, the law offers several other options, up to and including court action.
Please contact Thomas Nolan if you would like help with credit control and recovering debt.