The Late Payment Cycle

Despite the Late Payment legislation UK businesses are taking the longest time on record to pay their bills.

Businesses are currently taking over two months to settle their debts according to the credit checking company Experian. This is an increase of two days in the last year.

As usual the larger companies are taking longest with an average of 82 days and smaller companies now averaging over 61 days. However it is usually the smaller companies who are most likely have cashflow problems.

The industries who have increase their payment days most are:
Electricity,
Property,
Pharmaceuticals,
Beers, Wine and Spirits,
Oil and Gas have all increased by over five days.

The longer a company takes to pay the their invoices could be an early warning indicator to cashflow problems. If you are running a business then you need to monitor the speed at which your customers pay their bills, because while the invoice is unpaid the money is at risk.

Remember a sale is not a sale until the invoice is PAID.

If the invoice is not paid then the money is at risk and could be lost.

Therefore businesses should press harder to be paid on time with in the terms of the agreement. Companies are all under pressure to hold onto cash for as long as possible.
This can lead to a battle of wills between the credit controller of the supplier and the purchaser ledger manager of the customer.

The figures indicate that the late payment culture is getting worse.
This can lead to a battle of wills between the credit controller of the supplier and the purchaser ledger manager of the customer.

Businesses should not be acting as an unpaid bank for their customers.


www.ukba.co.uk