The advice, which has been created in conjunction with the Institute of Credit Management (ICM), outlines what businesses can expect when they sign up to the Prompt Payment Code.
To read the leaflet go to:
http://www.icm.org.uk/PDFBin/188-075%20BERRpayingontimelft-web.pdf
www.ukba.co.uk
Showing posts with label bad debts. Show all posts
Showing posts with label bad debts. Show all posts
Wednesday, 27 May 2009
Sunday, 24 May 2009
Small companies in the UK are owed £10bn in outstanding payments
The report by Barclays Local Business reveals that on an average day small businesses are left £2,440 out of pocket as a result of suppliers or customers failing to pay up during the standard 30-day invoicing period.
The figure is up £1.7bn on last year and means that small companies have lost out on £5bn over the last twelve months.
"Despite some recent positive economic signs, it's concerning that late payments are on the rise. This is a serious issue for the businesses we talked to with around a third saying it threatens their day-to-day survival," said John Davis, marketing director for Barclays Local Business.
www.ukba.co.uk
The figure is up £1.7bn on last year and means that small companies have lost out on £5bn over the last twelve months.
"Despite some recent positive economic signs, it's concerning that late payments are on the rise. This is a serious issue for the businesses we talked to with around a third saying it threatens their day-to-day survival," said John Davis, marketing director for Barclays Local Business.
www.ukba.co.uk
Sunday, 17 May 2009
Small firms reluctant to chase late payments
Over three-quarters of small firms are reluctant to chase payments through the courts despite knowing about their rights to do so and about rights to charge interest on late payments. That's according to research by Cattles Invoice Finance, which interviewed 300 small business owners. The research also revealed that one of the main reasons given by small firms for not charging interest or taking legal action was the potential damage it could cause to their relationship with clients.
www.ukba.co.uk
www.ukba.co.uk
Saturday, 9 May 2009
Free flights, car hire and hotels for SMEs
British Airways has offered UK Trade & Investment (UKTI) 4,000 international return flights for its UK-based SME customers. The offer aims to help enterprising companies make essential trips to grow their business abroad in these difficult times.
Minister for Trade & Investment Lord Davies of Abersoch said this offer will help small and medium sized companies’ look to new business horizons.
“This exciting initiative has enormous potential. It shows what can happen when big business and Government work together to support British firms and the economy.
“Although the global slowdown has meant increased challenges for businesses, it has also created opportunities internationally for those that want to expand into new markets.
“Exporting companies are more competitive and resilient. Yet many SMEs can find it hard to break into new markets on their own. They overestimate the barriers and underestimate the rewards of exporting to key markets.
“This generous offer by British Airways significantly reduces the costs faced by UK exporters, allowing them to explore their overseas expansion potential."
Other partners include Avis and Accor Hotels.
Read more here: BA flights | Avis/Accor
www.ukba.co.uk
Minister for Trade & Investment Lord Davies of Abersoch said this offer will help small and medium sized companies’ look to new business horizons.
“This exciting initiative has enormous potential. It shows what can happen when big business and Government work together to support British firms and the economy.
“Although the global slowdown has meant increased challenges for businesses, it has also created opportunities internationally for those that want to expand into new markets.
“Exporting companies are more competitive and resilient. Yet many SMEs can find it hard to break into new markets on their own. They overestimate the barriers and underestimate the rewards of exporting to key markets.
“This generous offer by British Airways significantly reduces the costs faced by UK exporters, allowing them to explore their overseas expansion potential."
Other partners include Avis and Accor Hotels.
Read more here: BA flights | Avis/Accor
www.ukba.co.uk
Friday, 27 March 2009
Small businesses are being hit by a steep rise in the cost of credit insurance taken out to cover bad debts
Many are finding they are unable to get cover at all.
Credit insurers have confirmed they are increasing premiums by up to 40% for clients who are renewing their contracts, and in some cases by much more. They are also refusing to provide cover for some operating in high-risk sectors such as retailing and construction and are turning away large numbers of new customers.
Credit insurance covers small firms for bad debts suffered if one of their business customers is unable to pay, usually because it has become insolvent. Without it, firms themselves are forced to take on the risk of customers not paying. If the amount owed is large and not paid, the business could be forced to close.
Shaun Purrington, regional director at Atradius, one of the biggest credit insurers in Britain, said: “It is fair to say that compared with six months or one year ago small businesses will find it more difficult to get credit insurance. I’m afraid that the appetite of credit insurers to write new policies has declined.
“Companies that come to us and ask for cover on firms [they wish to trade with] that are clearly in financial difficulties, or that are operating in very difficult sectors, will find it nearly impossible to get cover.”.....read more.
Source: TimesOnLine
www.ukba.co.uk
Credit insurers have confirmed they are increasing premiums by up to 40% for clients who are renewing their contracts, and in some cases by much more. They are also refusing to provide cover for some operating in high-risk sectors such as retailing and construction and are turning away large numbers of new customers.
Credit insurance covers small firms for bad debts suffered if one of their business customers is unable to pay, usually because it has become insolvent. Without it, firms themselves are forced to take on the risk of customers not paying. If the amount owed is large and not paid, the business could be forced to close.
Shaun Purrington, regional director at Atradius, one of the biggest credit insurers in Britain, said: “It is fair to say that compared with six months or one year ago small businesses will find it more difficult to get credit insurance. I’m afraid that the appetite of credit insurers to write new policies has declined.
“Companies that come to us and ask for cover on firms [they wish to trade with] that are clearly in financial difficulties, or that are operating in very difficult sectors, will find it nearly impossible to get cover.”.....read more.
Source: TimesOnLine
www.ukba.co.uk
Thursday, 19 March 2009
SME debtors increase by 40%
Overdue payments to small and medium-sized businesses in the UK increased by over 40% last year, taking the total that small companies are owed to over £25bn, according to research by Bacs Payment Schemes Limited.
The number of SMEs owed money across the UK increased from 51% in 2007 to 57% in 2008, and the national average of outstanding payments owed to small firms increased to £38,000 - up £8,000 from 2007.
Small businesses in the Midlands have been hit the hardest in the UK, with the average company in this region claiming overdue invoices amounting to just under £70,000.
"Late payment and bad debt are the scourge of business owners. Often, they are major factors behind businesses being forced to close," said Phil McCabe, spokesman for the Forum of Private Business.
"The amount of money owed to small firms has soared over the past year as big businesses seek to create credit lines for themselves by squeezing their suppliers. In addition, despite the Government's pledge to pay its suppliers within 10 days, public organisations continue to be among the worst culprits."
www.ukba.co.uk
The number of SMEs owed money across the UK increased from 51% in 2007 to 57% in 2008, and the national average of outstanding payments owed to small firms increased to £38,000 - up £8,000 from 2007.
Small businesses in the Midlands have been hit the hardest in the UK, with the average company in this region claiming overdue invoices amounting to just under £70,000.
"Late payment and bad debt are the scourge of business owners. Often, they are major factors behind businesses being forced to close," said Phil McCabe, spokesman for the Forum of Private Business.
"The amount of money owed to small firms has soared over the past year as big businesses seek to create credit lines for themselves by squeezing their suppliers. In addition, despite the Government's pledge to pay its suppliers within 10 days, public organisations continue to be among the worst culprits."
www.ukba.co.uk
Saturday, 14 February 2009
Survive the Downturn - Manage Risk and Uncertainty
Extract from ICAEW report: 8 Ways To Survive The Downturn
Find out how identifying and managing risks to your business can help you survive the downturn.
Business risks have changed dramatically as companies of all sizes find themselves caught in supply chains facing global market volatility and uncertainty over the availability of finance.
Undertake a rigorous and honest appraisal
Now is the time to undertake a rigorous and honest appraisal of the risks facing your business and ensure your risk management systems and controls are up to scratch.
* What are the main risks facing your business now and in the future? How have these changed?
* What is the impact of these risks on your plans to grow and finance the business?
* Is your business sensitive to currency fluctuations?
* What is the impact of loss of turnover? Is the business showing signs of under-performance?
* If borrowing becomes more difficult or more expensive, how will this affect your finances?
* How will you maintain the confidence of your key stakeholders – investors, shareholders, customers and staff?
* Have your or your suppliers’ credit ratings been affected?
* Can your business meet its pension fund obligations?
* Are you exposed to any bad debts?
Maintain the confidence of your key stakeholders
It’s important at this time to maintain the confidence of your key stakeholders, whether they are major customers, suppliers, the banks, audit committees or shareholders.
Managing information during this period will be critical to maintain confidence and avoid nasty surprises – remember the internet can undo good news in seconds.
Be aware that shareholders’ expectations may have changed or may change during a period of uncertainty. They will want to know that you have challenged your assumptions, have confidence in your forecasts and have plans in place to respond and adapt quickly to unexpected changes in the market.
Audit committees and shareholders will want to be confident that you have financial and risk management systems in place to manage through the recession.
Source ICAEW - full report can be downloaded by clicking here.
Find out how identifying and managing risks to your business can help you survive the downturn.
Business risks have changed dramatically as companies of all sizes find themselves caught in supply chains facing global market volatility and uncertainty over the availability of finance.
Undertake a rigorous and honest appraisal
Now is the time to undertake a rigorous and honest appraisal of the risks facing your business and ensure your risk management systems and controls are up to scratch.
* What are the main risks facing your business now and in the future? How have these changed?
* What is the impact of these risks on your plans to grow and finance the business?
* Is your business sensitive to currency fluctuations?
* What is the impact of loss of turnover? Is the business showing signs of under-performance?
* If borrowing becomes more difficult or more expensive, how will this affect your finances?
* How will you maintain the confidence of your key stakeholders – investors, shareholders, customers and staff?
* Have your or your suppliers’ credit ratings been affected?
* Can your business meet its pension fund obligations?
* Are you exposed to any bad debts?
Maintain the confidence of your key stakeholders
It’s important at this time to maintain the confidence of your key stakeholders, whether they are major customers, suppliers, the banks, audit committees or shareholders.
Managing information during this period will be critical to maintain confidence and avoid nasty surprises – remember the internet can undo good news in seconds.
Be aware that shareholders’ expectations may have changed or may change during a period of uncertainty. They will want to know that you have challenged your assumptions, have confidence in your forecasts and have plans in place to respond and adapt quickly to unexpected changes in the market.
Audit committees and shareholders will want to be confident that you have financial and risk management systems in place to manage through the recession.
Source ICAEW - full report can be downloaded by clicking here.
Sunday, 1 February 2009
Dealing with bad debts
On average small and medium sized businesses write off £14,000 in bad debts each year, according to the Credit Management Research Centre. If they have a 5% profit margin that means they need additional sales of £280,000 just to make up for this loss.
Think about how a bad debt could impact on your business. How much extra turnover would you need to cover this loss? And would your businesses be able to survive?
Prevention is best
• Know your customer – a simple check with Companies House can confirm they are who they say they are and enable you to check their accounts.
• Check they are a good risk – by checking with a credit reference agency, by asking for bank and trade references and by searching the Registry of County Court Judgments to reveal if those running the business are in financial difficulties.
• Set clear credit limits for every customer – to limit potential losses.
• Consider credit insurance – it will cover the debts owed to you.
Watch out for warning signs
• Mistakes on cheques – they forget to sign, words or figures differ, or cheques are wrongly dated. These may be genuine errors or may be a means of buying extra time.
• Constant queries – about the product or service or about the invoice. Again these could be delay tactics.
• Excuses – like the cheque is in the post.
• Rumours – staff often pick up on these first.
• Trading at their credit limit – if a customer is continually trading up to the limit or asking to exceed it, it should ring alarm bells. However, it may be that they are buying more from you and so need an increased limit.
When faced with a late payment that could become a potential bad debt
• If it’s won’t pay, is it worth the fight? If you are going to get nothing back, don’t waste your time or money.
• If there is a chance they will pay, consider court action – but send a solicitor’s letter first. In around half of cases this works. You can use an online service to send a solicitor’s letter ‘before action’ for as little as £5.If that does not do the trick then you can start proceedings. For debts over £750, you can issue a statutory demand. Alternatively try the Small Claims Track (for debts up to £5,000) or the fast-track procedure in the County Court (for claims up to £15,000). The Small Claims limit in Scotland is £3,000.
For more information go to Business Debtline at www.bdl.org.uk or call 0800 197 6026.
If the worst happens: talk to your bank if you need additional funding and tell HMRC – you may be able to reclaim the VAT on bad debts.
The other side of the coin
Cashflow does not just involve getting money into the business. The other side of the coin is paying money out.When the economy takes a downturn suppliers may want to protect their financial position by:
• Reducing the amount of trade credit they will advance you
• Asking for payment more quickly
• Asking for stage payments or even cash on delivery
• To ensure that you are not being squeezed on both sides you need to manage this side of the cashflow equation and remain a low risk for your suppliers.
• Make sure you know when you are expected to pay – not all suppliers have clear terms and conditions.
• Pay on time – and if you can’t do so, contact your suppliers to explain why.
Protect your credit rating – don’t wait until the start of court proceedings to pay.
• Once your credit rating is damaged, you may find it hard to get any credit at all.
• Try to negotiate longer payment terms if you are finding your customers are taking longer to pay you – if not, see if you can get a discount for prompt payment.
[Extract from Trading Through The Economic Downturn - published by NatWest - full Guide available by clicking here]
http://www.ukba.co.uk
Think about how a bad debt could impact on your business. How much extra turnover would you need to cover this loss? And would your businesses be able to survive?
Prevention is best
• Know your customer – a simple check with Companies House can confirm they are who they say they are and enable you to check their accounts.
• Check they are a good risk – by checking with a credit reference agency, by asking for bank and trade references and by searching the Registry of County Court Judgments to reveal if those running the business are in financial difficulties.
• Set clear credit limits for every customer – to limit potential losses.
• Consider credit insurance – it will cover the debts owed to you.
Watch out for warning signs
• Mistakes on cheques – they forget to sign, words or figures differ, or cheques are wrongly dated. These may be genuine errors or may be a means of buying extra time.
• Constant queries – about the product or service or about the invoice. Again these could be delay tactics.
• Excuses – like the cheque is in the post.
• Rumours – staff often pick up on these first.
• Trading at their credit limit – if a customer is continually trading up to the limit or asking to exceed it, it should ring alarm bells. However, it may be that they are buying more from you and so need an increased limit.
When faced with a late payment that could become a potential bad debt
• If it’s won’t pay, is it worth the fight? If you are going to get nothing back, don’t waste your time or money.
• If there is a chance they will pay, consider court action – but send a solicitor’s letter first. In around half of cases this works. You can use an online service to send a solicitor’s letter ‘before action’ for as little as £5.If that does not do the trick then you can start proceedings. For debts over £750, you can issue a statutory demand. Alternatively try the Small Claims Track (for debts up to £5,000) or the fast-track procedure in the County Court (for claims up to £15,000). The Small Claims limit in Scotland is £3,000.
For more information go to Business Debtline at www.bdl.org.uk or call 0800 197 6026.
If the worst happens: talk to your bank if you need additional funding and tell HMRC – you may be able to reclaim the VAT on bad debts.
The other side of the coin
Cashflow does not just involve getting money into the business. The other side of the coin is paying money out.When the economy takes a downturn suppliers may want to protect their financial position by:
• Reducing the amount of trade credit they will advance you
• Asking for payment more quickly
• Asking for stage payments or even cash on delivery
• To ensure that you are not being squeezed on both sides you need to manage this side of the cashflow equation and remain a low risk for your suppliers.
• Make sure you know when you are expected to pay – not all suppliers have clear terms and conditions.
• Pay on time – and if you can’t do so, contact your suppliers to explain why.
Protect your credit rating – don’t wait until the start of court proceedings to pay.
• Once your credit rating is damaged, you may find it hard to get any credit at all.
• Try to negotiate longer payment terms if you are finding your customers are taking longer to pay you – if not, see if you can get a discount for prompt payment.
[Extract from Trading Through The Economic Downturn - published by NatWest - full Guide available by clicking here]
http://www.ukba.co.uk
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