Over a million small and medium-sized business have been affected by late payments totalling over £30bn, according to data released by to Bacs Payment Schemes Limited.
This figure means that small firms have seen an increase in money owed of more than £11bn from two years ago, and the number of SMEs reporting that they are experiencing payment delays rose by over 65% from 2008 to 2009.
The report also highlighted how the problem can spiral out of control, with 52% of small firms stating that if they're paid late, they'll pay their invoices later too. A third of small companies reported that they are paying others later this year than in 2008.
Cashflow is the most common reason for overdue payments, with 30% of businesses surveyed citing this as the main excuse given. But 6% of late payers claim they forgot all about it, with the same number relying on the age-old excuse ‘the cheque's in the post'.
"While many businesses which owe money to others do undoubtedly have problems in paying bills quickly, there is a question mark over those who may be ‘playing' the system and delaying payment for as long as they can," said Michael Chambers, managing director of Bacs.
www.ukba.co.uk
Showing posts with label cashflow. Show all posts
Showing posts with label cashflow. Show all posts
Saturday, 24 October 2009
Monday, 19 October 2009
SMEs using own cash to fund their firm
More than half of UK entrepreneurs have revealed that their most likely source of funding for major business projects will have to come from their own money, according to a survey by business advisory firm Deloitte.
The survey highlights the tough lending conditions that small business owners are experiencing at the moment, although recent data has suggested that banks are slowly beginning to increase their lending.
Despite tougher lending conditions entrepreneurs continue to rely on banks as their primary source of funding, with 18% of small business owners listing banks as their main source of funding, followed by 10% that turn to existing shareholders.
Just 12% said external investment from private equity, venture capital and angel investors would be their most likely source of cash over the next year - down from 28% in 2008.
"The survey reveals that current business conditions have created an alarming reliance on working capital at a time when more than a quarter of respondents say they are having to monitor their cash position daily," said Simon Manning of Deloitte.
www.ukba.co.uk
The survey highlights the tough lending conditions that small business owners are experiencing at the moment, although recent data has suggested that banks are slowly beginning to increase their lending.
Despite tougher lending conditions entrepreneurs continue to rely on banks as their primary source of funding, with 18% of small business owners listing banks as their main source of funding, followed by 10% that turn to existing shareholders.
Just 12% said external investment from private equity, venture capital and angel investors would be their most likely source of cash over the next year - down from 28% in 2008.
"The survey reveals that current business conditions have created an alarming reliance on working capital at a time when more than a quarter of respondents say they are having to monitor their cash position daily," said Simon Manning of Deloitte.
www.ukba.co.uk
Sunday, 13 September 2009
SMEs put themselves at risk
According to the new research by the Asset Based Finance Association (ABFA), 56 per cent of SMEs aren't aware of the amount of financial support available from the Government.
SMEs were asked if they were aware of the Enterprise Finance Guarantee Scheme, Working Capital Scheme or the Capital Enterprise Fund, which have all been developed by the Government to provide much needed financial support to the country's small businesses. A massive 56 per cent came back and said that they hadn't heard of any of the schemes.
Kate Sharp, chief executive officer from the ABFA, believes that SMEs are at risk due to a lack of understanding about the Government's financial offerings. She said: "Over the last few years, the Government has stepped up to support UK SME organisations through various schemes. Unfortunately, there is a severe lack of understanding among this group about what financial support is actually out there. If they don't know about the schemes, how can the Government help them?"
The research also highlighted that obtaining credit insurance is also an issue for SMEs. Credit insurance minimises the risk of customers defaulting on payments or them going into administration. Of those interviewed 78.8 per cent said that as much as 20 per cent of their client base had been refused credit insurance over the last six months. More worryingly, 2.6 per cent said that over 81 per cent of their clients had no credit insurance whatsoever.
This means that nearly 100,000 SMEs in Britain are putting their businesses at risk by not ensuring they are fully protected. These firms are denying themselves the opportunity to manage the risk of losing money and reducing their own credit ratings, which will impact on their ability to obtain credit from suppliers.
The time it takes for invoices to be paid is also extending, as average debtor days lengthen. Over 11 per cent of respondents report that it is taking over 70 days for them to get paid compared to just 6.6 per cent last year - that is more than double the normal trading terms.
Kate Sharp continued: "With the external pressures on SMEs growing daily, it is worrying to see the reduced availability of credit insurance putting extra pressure on these companies at a time when they are already facing many other pressures. Coupled with the fact that debtor days are extending, it is more important than ever that businesses try to protect themselves against unforeseen circumstances."
The research also suggests that unemployment may slide further with 81 per cent of SMEs questioned planning to make as much as 10 per cent of their workforce redundant over the next six months.
Over 2,000 SMEs were interviewed for the research, which was undertaken by Hilton Baird Financial Solutions, and were asked about the current state of their finances, the wider economic troubles and attitudes towards asset based finance.
Source: Asset Based Finance Association
www.ukba.co.uk
SMEs were asked if they were aware of the Enterprise Finance Guarantee Scheme, Working Capital Scheme or the Capital Enterprise Fund, which have all been developed by the Government to provide much needed financial support to the country's small businesses. A massive 56 per cent came back and said that they hadn't heard of any of the schemes.
Kate Sharp, chief executive officer from the ABFA, believes that SMEs are at risk due to a lack of understanding about the Government's financial offerings. She said: "Over the last few years, the Government has stepped up to support UK SME organisations through various schemes. Unfortunately, there is a severe lack of understanding among this group about what financial support is actually out there. If they don't know about the schemes, how can the Government help them?"
The research also highlighted that obtaining credit insurance is also an issue for SMEs. Credit insurance minimises the risk of customers defaulting on payments or them going into administration. Of those interviewed 78.8 per cent said that as much as 20 per cent of their client base had been refused credit insurance over the last six months. More worryingly, 2.6 per cent said that over 81 per cent of their clients had no credit insurance whatsoever.
This means that nearly 100,000 SMEs in Britain are putting their businesses at risk by not ensuring they are fully protected. These firms are denying themselves the opportunity to manage the risk of losing money and reducing their own credit ratings, which will impact on their ability to obtain credit from suppliers.
The time it takes for invoices to be paid is also extending, as average debtor days lengthen. Over 11 per cent of respondents report that it is taking over 70 days for them to get paid compared to just 6.6 per cent last year - that is more than double the normal trading terms.
Kate Sharp continued: "With the external pressures on SMEs growing daily, it is worrying to see the reduced availability of credit insurance putting extra pressure on these companies at a time when they are already facing many other pressures. Coupled with the fact that debtor days are extending, it is more important than ever that businesses try to protect themselves against unforeseen circumstances."
The research also suggests that unemployment may slide further with 81 per cent of SMEs questioned planning to make as much as 10 per cent of their workforce redundant over the next six months.
Over 2,000 SMEs were interviewed for the research, which was undertaken by Hilton Baird Financial Solutions, and were asked about the current state of their finances, the wider economic troubles and attitudes towards asset based finance.
Source: Asset Based Finance Association
www.ukba.co.uk
Thursday, 10 September 2009
FPB asks all UK councils and health trusts how long they take to pay suppliers
The exercise, which involves contacting more than 700 different organisations, got underway today (Friday, 28 August).
It is designed to discover how many local authorities and health trusts are paying their suppliers – which are often small businesses – in a reasonable amount of time.
It comes almost a year after the Government urged councils and the NHS to commit to paying their suppliers within 10 days in an attempt to counteract the effects of the recession.
The move also follows the recent release of data showing that, overall, central government departments are managing to settle the majority of invoices from their suppliers within 10 days. The statistics were recently released by the Department for Business, Innovation and Skills and show, for example, that the Ministry of Defence settled more than 97% of its bills within 10 days during June 2009.
However, the FPB believes its members are much more likely to work for a council or health body, rather than a Whitehall department. As a result, the FPB is hoping to discover exactly how long local authorities and NHS trusts, which number around 470 and 240 respectively, take to pay their suppliers.
The not-for-profit organisation then intends to name and shame those with poor practices, while highlighting the work of those which pay suppliers in good time.
Read more: http://www.fpb.org/news/2240/FPB_asks_all_UK_councils_and_health_trusts_how_long_they_take_to_pay_suppliers.htm
Source: Forum for Private Business
www.ukba.co.uk
It is designed to discover how many local authorities and health trusts are paying their suppliers – which are often small businesses – in a reasonable amount of time.
It comes almost a year after the Government urged councils and the NHS to commit to paying their suppliers within 10 days in an attempt to counteract the effects of the recession.
The move also follows the recent release of data showing that, overall, central government departments are managing to settle the majority of invoices from their suppliers within 10 days. The statistics were recently released by the Department for Business, Innovation and Skills and show, for example, that the Ministry of Defence settled more than 97% of its bills within 10 days during June 2009.
However, the FPB believes its members are much more likely to work for a council or health body, rather than a Whitehall department. As a result, the FPB is hoping to discover exactly how long local authorities and NHS trusts, which number around 470 and 240 respectively, take to pay their suppliers.
The not-for-profit organisation then intends to name and shame those with poor practices, while highlighting the work of those which pay suppliers in good time.
Read more: http://www.fpb.org/news/2240/FPB_asks_all_UK_councils_and_health_trusts_how_long_they_take_to_pay_suppliers.htm
Source: Forum for Private Business
www.ukba.co.uk
Tuesday, 18 August 2009
Small businesses find credit scarce and dear
Businesses are finally finding it easier to get credit, though they are having to pay more for it, the Confederation of British Industry has said.
The business group's quarterly report on access to finance shows that while 10 per cent of firms said the availability of credit had worsened over the three months to the end of July, 27 per cent said it had improved.
The positive balance is the first time this year businesses have reported credit availability easing and will be welcomed by economists and policymakers who believe borrowing restrictions continue to be the chief obstacle to recovery.
Nevertheless, the availability of credit remains patchy, with only larger companies reporting that they were finding it easier to borrow. Small and medium sized enterprises reported a continued decline in credit supply.
Moreover, even those firms that are getting access to credit report that it is costing them more to borrow.
Trade credit insurance, which covers businesses' suppliers against non-payment for their goods, also continues to be difficult for many companies to obtain. Some 57 per cent of businesses said that the availability of this cover had worsened over the past three months, with premiums rising and increasing delays in renewals.
Richard Lambert, director-general of the CBI, pictured below, said: "Smaller and medium sized businesses are still facing challenging credit conditions and have fewer funding options open to them than big companies. We hope that over time their credit supply will improve."
Most of the banks that reported trading figures last week conceded that lending to business had declined during the first half of the year, despite huge political pressure.
Source: The Independent
www.ukba.co.uk
The business group's quarterly report on access to finance shows that while 10 per cent of firms said the availability of credit had worsened over the three months to the end of July, 27 per cent said it had improved.
The positive balance is the first time this year businesses have reported credit availability easing and will be welcomed by economists and policymakers who believe borrowing restrictions continue to be the chief obstacle to recovery.
Nevertheless, the availability of credit remains patchy, with only larger companies reporting that they were finding it easier to borrow. Small and medium sized enterprises reported a continued decline in credit supply.
Moreover, even those firms that are getting access to credit report that it is costing them more to borrow.
Trade credit insurance, which covers businesses' suppliers against non-payment for their goods, also continues to be difficult for many companies to obtain. Some 57 per cent of businesses said that the availability of this cover had worsened over the past three months, with premiums rising and increasing delays in renewals.
Richard Lambert, director-general of the CBI, pictured below, said: "Smaller and medium sized businesses are still facing challenging credit conditions and have fewer funding options open to them than big companies. We hope that over time their credit supply will improve."
Most of the banks that reported trading figures last week conceded that lending to business had declined during the first half of the year, despite huge political pressure.
Source: The Independent
www.ukba.co.uk
Monday, 17 August 2009
Tax timebomb could force more small businesses under
A leading insolvency expert has urged small businesses affected by the recession not to "bury their heads in the sand" as another wave of business collapses could be on the horizon, triggered by the inability to settle tax liabilities.
Mace & Jones insolvency unit partner Graeme Jump said while many exposed companies have already succumbed to the pressures of the recession, a new round is inevitable after the summer break. Official figures show that North West insolvencies dropped to 35 in June, compared to an average of 48 per month since the start of the year. The first six months of the year saw 10,242 companies enter into insolvency – up 33.8 per cent on the same period in 2008.
“There has been a slight drop in insolvencies but this masks deep problems,” he said. “A number of vulnerable businesses have been slashing costs by redundancies, operational cuts, and grabbing the Government’s offer of delaying payments for such taxes as PAYE, VAT, and Corporation Tax. That six months tax-holiday already amounts to billions in delayed payments, and will soon expire, leaving many businesses exposed to urgent demands from the taxman.”
Seek insolvency advice as soon as possible
www.ukba.co.uk
Mace & Jones insolvency unit partner Graeme Jump said while many exposed companies have already succumbed to the pressures of the recession, a new round is inevitable after the summer break. Official figures show that North West insolvencies dropped to 35 in June, compared to an average of 48 per month since the start of the year. The first six months of the year saw 10,242 companies enter into insolvency – up 33.8 per cent on the same period in 2008.
“There has been a slight drop in insolvencies but this masks deep problems,” he said. “A number of vulnerable businesses have been slashing costs by redundancies, operational cuts, and grabbing the Government’s offer of delaying payments for such taxes as PAYE, VAT, and Corporation Tax. That six months tax-holiday already amounts to billions in delayed payments, and will soon expire, leaving many businesses exposed to urgent demands from the taxman.”
Seek insolvency advice as soon as possible
www.ukba.co.uk
Sunday, 16 August 2009
Treasury wants banks to increase loans to small businesses
In an attempt to persuade UK banks to lend more money to small businesses, the CEOs of major UK banks were summoned to a meeting with Alistair Darling and Treasury officials.
It's clear the Government is distinctly unhappy with the way banks are acting at present. It feels the banks have reneged on an agreement, reached as part of their rescue deal, that they would continue to lend to small businesses at a certain level.
"Money and insurance provided by the Government should ensure banks lend at the level they agreed to", said a Government spokesperson.
But when the Government agreed to save RBS and Lloyds Banking Group with an injection of £37 billion of taxpayers' money and insurance guarantees of some £600 billion, it seems they failed to stipulate the level of interest the banks charge for loans to small businesses.
So despite the Bank of England base rate being at a record low of just 0.5%, and LIBOR under 1.0%, when banks do agree to lend to small businesses they are typically charging interest rates of between 6% and 8%.
Some banks are also accused of turning small businesses away from loans under the Enterprise Finance Guarantee scheme, forcing them into other, more expensive loans that are more profitable for the banks.
After meeting the bank bosses Alistair Darling told reporters, "While in some areas there have been improvements, in others there is an awful lot more to do. I think in relation to small and medium-sized enterprises, we need to be satisfied that the lending agreements entered into are honoured and that every single business gets a fair deal,"
In response to the meeting, Shadow Chief Secretary to the Treasury, Philip Hammond has called on the Government to “stop talking and start acting” in order to get banks lending to businesses again.
“After all the fuss and fanfare around today’s meeting, the outcome will not make one jot of difference to struggling businesses up and down the country”, he added.
www.ukba.co.uk
It's clear the Government is distinctly unhappy with the way banks are acting at present. It feels the banks have reneged on an agreement, reached as part of their rescue deal, that they would continue to lend to small businesses at a certain level.
"Money and insurance provided by the Government should ensure banks lend at the level they agreed to", said a Government spokesperson.
But when the Government agreed to save RBS and Lloyds Banking Group with an injection of £37 billion of taxpayers' money and insurance guarantees of some £600 billion, it seems they failed to stipulate the level of interest the banks charge for loans to small businesses.
So despite the Bank of England base rate being at a record low of just 0.5%, and LIBOR under 1.0%, when banks do agree to lend to small businesses they are typically charging interest rates of between 6% and 8%.
Some banks are also accused of turning small businesses away from loans under the Enterprise Finance Guarantee scheme, forcing them into other, more expensive loans that are more profitable for the banks.
After meeting the bank bosses Alistair Darling told reporters, "While in some areas there have been improvements, in others there is an awful lot more to do. I think in relation to small and medium-sized enterprises, we need to be satisfied that the lending agreements entered into are honoured and that every single business gets a fair deal,"
In response to the meeting, Shadow Chief Secretary to the Treasury, Philip Hammond has called on the Government to “stop talking and start acting” in order to get banks lending to businesses again.
“After all the fuss and fanfare around today’s meeting, the outcome will not make one jot of difference to struggling businesses up and down the country”, he added.
www.ukba.co.uk
Monday, 10 August 2009
Call for businesses to pay fair
The Minister urged businesses to sign up to the Prompt Payment Code, which aims to encourage better payment performance between businesses. Regional Minister for the South East, Jonathan Shaw, will also write to local councils, public sector bodies and business groups in the region to encourage them to sign up to the code.
Over 750 companies in the South East failed during 2008 because of late payment and the region’s companies will pay over £33m in unnecessary interest charges because of overdue payments this year.
Visiting Seevent Plastics - one of over 350 companies that have already committed to the code - Rosie Winterton, Minister for Regional Economic Development said:
“Prompt payment remains the biggest financial challenge faced by firms and in many cases late payment is the difference between life and death for a business.
“We are taking this issue seriously, that’s why all government departments have signed up to the Code and are going a step further by paying nine out of ten invoices within ten days. We’re also providing advice and support - 80,000 Managing Cashflow guides have been downloaded since last November.
“I want to see more companies acting responsibly and paying their invoices promptly and without changing their agreed contractual terms.
“Seevent are a great example of good business – they manage their own cash flow and ensure they pay suppliers on time. That’s why I’m here in Lancing to encourage more companies to follow their example and sign up to the Prompt Payment Code”
Ken Fisher, Managing Director of Seevent said:
“”We at Seevent believe that the payment of invoices on time is a major part of the contract between supplier and customer. The customer rightly complains if his goods are late in arriving and therefore should honour his part of the contract by paying on time. At Seevent we pride ourselves on our payment record”
Pam Alexander, Chief Executive of the South East England Development Agency said:
"SEEDA is working in close partnership with the Government on the Prompt Payment Code. This issue has been a high priority for the South East Economic Delivery Council and all partners are committed to addressing it - both for public sector contracts and in working with major corporates through the business membership organisations on the Council.
“SEEDA backs the Prompt Payment Code and we have worked very hard to ensure we pay our own suppliers as quickly as possible to keep cash flow moving during the recession. We are currently paying 96% of uncontested invoices within 8 days, so our money is in supplier bank accounts within 10 days."
Organisations in both the public and private sector can sign up to the Prompt Payment Code by visiting www.promptpaymentcode.org.uk
www.ukba.co.uk
Over 750 companies in the South East failed during 2008 because of late payment and the region’s companies will pay over £33m in unnecessary interest charges because of overdue payments this year.
Visiting Seevent Plastics - one of over 350 companies that have already committed to the code - Rosie Winterton, Minister for Regional Economic Development said:
“Prompt payment remains the biggest financial challenge faced by firms and in many cases late payment is the difference between life and death for a business.
“We are taking this issue seriously, that’s why all government departments have signed up to the Code and are going a step further by paying nine out of ten invoices within ten days. We’re also providing advice and support - 80,000 Managing Cashflow guides have been downloaded since last November.
“I want to see more companies acting responsibly and paying their invoices promptly and without changing their agreed contractual terms.
“Seevent are a great example of good business – they manage their own cash flow and ensure they pay suppliers on time. That’s why I’m here in Lancing to encourage more companies to follow their example and sign up to the Prompt Payment Code”
Ken Fisher, Managing Director of Seevent said:
“”We at Seevent believe that the payment of invoices on time is a major part of the contract between supplier and customer. The customer rightly complains if his goods are late in arriving and therefore should honour his part of the contract by paying on time. At Seevent we pride ourselves on our payment record”
Pam Alexander, Chief Executive of the South East England Development Agency said:
"SEEDA is working in close partnership with the Government on the Prompt Payment Code. This issue has been a high priority for the South East Economic Delivery Council and all partners are committed to addressing it - both for public sector contracts and in working with major corporates through the business membership organisations on the Council.
“SEEDA backs the Prompt Payment Code and we have worked very hard to ensure we pay our own suppliers as quickly as possible to keep cash flow moving during the recession. We are currently paying 96% of uncontested invoices within 8 days, so our money is in supplier bank accounts within 10 days."
Organisations in both the public and private sector can sign up to the Prompt Payment Code by visiting www.promptpaymentcode.org.uk
www.ukba.co.uk
Wednesday, 24 June 2009
Small businesses running costs continue to fall
Small businesses across the UK are continuing to experience unprecedented levels of deflation resulting in rapidly declining operating costs. The cost of running a small business has fallen to -1.4 per cent deflation over Q1 2009, according to the latest Business Inflation Guide (BIG) from MORE TH>N BUSINESS.The sharp decline marks the second consecutive quarter of sustained deflation for the small business community. In Q4 2008 costs plunged to -2.9 per cent deflation. Declining labour, advertising, vehicle and raw material costs have all contributed to the continuing falls in Q1 2009, however MORE TH>N BUSINESS warns profit margins still remain under huge stress due to low demand for products and services.
Read more: http://newsroom.morethan.com/small-businesses-running-costs-continue-to-fall_649
Source: More Than
www.ukba.co.uk
Read more: http://newsroom.morethan.com/small-businesses-running-costs-continue-to-fall_649
Source: More Than
www.ukba.co.uk
Wednesday, 3 June 2009
Late payment remains the big problem but turnover expectations improve
The latest British Chambers of Commerce (BCC) Monthly Business Survey published today, reveals the extent of the problem businesses face with late payment and confirms their recruitment intentions over the summer months.
The results from 430 companies across the UK show that half of businesses (50.6%) feel payment times are taking longer, emphasising the continued pressure on cash flow. Worryingly for job seekers and new graduates, just 30 per cent of businesses are planning to recruit over the next 3 months.
Other key findings in the survey include:
:: A month on from the Chancellor’s Budget, respondents were asked to award the measures a mark out of 10. Over one-third of respondents awarded the lowest mark of 1, with the average score only slightly better at 2.6.
:: In a sign of increasing business confidence, company turnover expectations for the next 3 months have all improved. 30% of firms now expect turnover to improve by 0-25%, which is up from 22% in January’s monthly survey.
:: 30.9 per cent of firms will attempt to recruit in the next 3 months while 69.1 per cent will not.
:: One in ten businesses are spending over 20 hours every week complying with employment law.
Commenting, David Frost, Director General of the British Chambers of Commerce (BCC) said:
“These results show just how tough cash flow conditions are, with half of businesses hamstrung by increasingly late payments. The knock-on effect is that under a third of employers are planning to recruit over the next three months.
“More needs to be done to improve company cash flow and prevent the steady rise in unemployment. It is clear from this poll that the help on offer in the Budget fell short of many businesses’ expectations. Announcing a moratorium on new employment law and scrapping the planned rise in national insurance would certainly send a signal that the government is serious about supporting jobs.”
Source: British Chamber of Commerce
www.ukba.co.uk
The results from 430 companies across the UK show that half of businesses (50.6%) feel payment times are taking longer, emphasising the continued pressure on cash flow. Worryingly for job seekers and new graduates, just 30 per cent of businesses are planning to recruit over the next 3 months.
Other key findings in the survey include:
:: A month on from the Chancellor’s Budget, respondents were asked to award the measures a mark out of 10. Over one-third of respondents awarded the lowest mark of 1, with the average score only slightly better at 2.6.
:: In a sign of increasing business confidence, company turnover expectations for the next 3 months have all improved. 30% of firms now expect turnover to improve by 0-25%, which is up from 22% in January’s monthly survey.
:: 30.9 per cent of firms will attempt to recruit in the next 3 months while 69.1 per cent will not.
:: One in ten businesses are spending over 20 hours every week complying with employment law.
Commenting, David Frost, Director General of the British Chambers of Commerce (BCC) said:
“These results show just how tough cash flow conditions are, with half of businesses hamstrung by increasingly late payments. The knock-on effect is that under a third of employers are planning to recruit over the next three months.
“More needs to be done to improve company cash flow and prevent the steady rise in unemployment. It is clear from this poll that the help on offer in the Budget fell short of many businesses’ expectations. Announcing a moratorium on new employment law and scrapping the planned rise in national insurance would certainly send a signal that the government is serious about supporting jobs.”
Source: British Chamber of Commerce
www.ukba.co.uk
Tuesday, 2 June 2009
Not All Smes Are Equal When It Comes To Risk Management
Companies with between 100 and 250 employees 20% more likely to have ageing debt
than their smaller cousins
Smaller businesses are far more effective at managing risk, according to research released today from Close Invoice Finance, part of the FTSE 250 merchant banking group Close Brothers Group plc.
As part of its regular Small Business Finance barometer, Close Invoice Finance asked a series of questions on risk management to over 500 owners of SMEs of varying sizes. The survey found that three in five smaller SMEs (with between 1 and 50 employees) have less than 10% of debt on their books for longer than 60 days (termed ‘ageing debt’).
In comparison, two in five larger SMEs (with between 100 and 249 employees) have this low level of ageing debt. The majority of larger SMEs admitted they hold ageing debt contributing between 11% and 50% of their debt book.
David Thomson, Chief Executive Officer of Close Invoice Finance said “This study proves that smaller SMEs have been more successful than their larger cousins at successfully managing exposure to the risk of bad debt. In such poor market conditions, it is imperative that factors such as cash flow supervision are managed closely.”
He continued: “Cash flow management tools can give companies complete peace of mind and provide protection against the impact of issues such as late payment and even bad debt.”
Close Invoice Finance is known for responding quickly to meet the changing needs of clients. As more and more businesses are impacted by late payment and bad debt, Close recently upgraded its award winning invoice discounting product, IDeal™, to include bad debt protection cover. IDeal™ now offers clients all the benefits of the real-time exchange of payment, plus the extra peace of mind of that comes with knowing they are fully covered should any of their customers fail to meet payment terms.
www.ukba.co.uk
than their smaller cousins
Smaller businesses are far more effective at managing risk, according to research released today from Close Invoice Finance, part of the FTSE 250 merchant banking group Close Brothers Group plc.
As part of its regular Small Business Finance barometer, Close Invoice Finance asked a series of questions on risk management to over 500 owners of SMEs of varying sizes. The survey found that three in five smaller SMEs (with between 1 and 50 employees) have less than 10% of debt on their books for longer than 60 days (termed ‘ageing debt’).
In comparison, two in five larger SMEs (with between 100 and 249 employees) have this low level of ageing debt. The majority of larger SMEs admitted they hold ageing debt contributing between 11% and 50% of their debt book.
David Thomson, Chief Executive Officer of Close Invoice Finance said “This study proves that smaller SMEs have been more successful than their larger cousins at successfully managing exposure to the risk of bad debt. In such poor market conditions, it is imperative that factors such as cash flow supervision are managed closely.”
He continued: “Cash flow management tools can give companies complete peace of mind and provide protection against the impact of issues such as late payment and even bad debt.”
Close Invoice Finance is known for responding quickly to meet the changing needs of clients. As more and more businesses are impacted by late payment and bad debt, Close recently upgraded its award winning invoice discounting product, IDeal™, to include bad debt protection cover. IDeal™ now offers clients all the benefits of the real-time exchange of payment, plus the extra peace of mind of that comes with knowing they are fully covered should any of their customers fail to meet payment terms.
www.ukba.co.uk
Sunday, 31 May 2009
Only 27% of small and medium-sized companies in the UK are credit checking new customers
Unpaid invoices and a lack of cash flow are two of the main problems experienced by small businesses at the moment, with some firms only one large fulfilled but unpaid invoice away from collapse.
"It is never a good idea to take chances with new customers, but it is more important than ever when times are hard to ensure that you are trading with legitimate businesses," said Doug Crawford, group managing director at Cattles.
"SMEs should take every opportunity to minimise the risks they face in the current environment, including introducing a policy to credit check every new customer as standard."
Source: Cattles Invoice Finance.
www.ukba.co.uk
"It is never a good idea to take chances with new customers, but it is more important than ever when times are hard to ensure that you are trading with legitimate businesses," said Doug Crawford, group managing director at Cattles.
"SMEs should take every opportunity to minimise the risks they face in the current environment, including introducing a policy to credit check every new customer as standard."
Source: Cattles Invoice Finance.
www.ukba.co.uk
Wednesday, 27 May 2009
The Department for Business, Enterprise and Regulatory Reform (BERR) has published a leaflet for businesses detailing the importance of paying on time
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
To read the leaflet go to:
http://www.icm.org.uk/PDFBin/188-075%20BERRpayingontimelft-web.pdf
www.ukba.co.uk
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, 25 April 2009
As many as 1.2m UK businesses are being affected by late payments, according to Tenon Recovery.
The mid-tier firm surveyed more than 1200 business owners and senior managers in compiling the research which shows three in five businesses are affected, and its now urging businesses to adopt a responsible attitude towards payments.
35% of businesses surveyed estimate that late payments cost them in excess of £10,000 a year both in terms of bank charges and the administrative costs of chasing payments.
Tenon estimates the average amount owed in late payments to have risen by a third in 2008, taking the average amount owed by UK companies to around £40,000.
Carl Jackson, national head of Tenon Recovery, said managing cashflow is fundamental to a business' survival in the current economic climate and late payments forms part of this.
'More than ever, businesses must adopt a responsible attitude towards late payments to avoid the domino effect of business collapses that late payments can cause. This means not only making payments on time to avoid causing problems, but having clear payment terms, credit control procedures and chasing slow-paying customers,' he said.
www.ukba.co.uk
35% of businesses surveyed estimate that late payments cost them in excess of £10,000 a year both in terms of bank charges and the administrative costs of chasing payments.
Tenon estimates the average amount owed in late payments to have risen by a third in 2008, taking the average amount owed by UK companies to around £40,000.
Carl Jackson, national head of Tenon Recovery, said managing cashflow is fundamental to a business' survival in the current economic climate and late payments forms part of this.
'More than ever, businesses must adopt a responsible attitude towards late payments to avoid the domino effect of business collapses that late payments can cause. This means not only making payments on time to avoid causing problems, but having clear payment terms, credit control procedures and chasing slow-paying customers,' he said.
www.ukba.co.uk
Saturday, 18 April 2009
Cash-strapped small businesses are losing out on the chance to defer a potential £7.7bn of tax payments due to poor finance skills
....and a failure to seek out professional advice. New research for the AAT, the leading professional education and membership body for accounting staff, found that an unnecessarily complex tax regime and a lack of finance training is compounding the impact of the recession, at a time when this sector - considered the ‘backbone’ of the economy – needs to make every penny count.
Common mistakes which cost firms cash include incurring fines for late filing of accounts; failing to claim Business Rate Relief and ignorance of opportunities such as the ‘Time to Pay’ scheme, which allows those companies unable to pay their tax bill to spread payments.
Business rates are a major cost to SMEs per annum and rate relief could be worth up to £1200 per firm. Despite this, over £400m of Business Rates Relief goes unclaimed each year, in large part because firms are not aware of the opportunity. The scheme, introduced in 1990, closed on 1st April, further impacting on small businesses.
Read the full article here: http://www.aat.org.uk/about/content/item19416/
www.ukba.co.uk
Common mistakes which cost firms cash include incurring fines for late filing of accounts; failing to claim Business Rate Relief and ignorance of opportunities such as the ‘Time to Pay’ scheme, which allows those companies unable to pay their tax bill to spread payments.
Business rates are a major cost to SMEs per annum and rate relief could be worth up to £1200 per firm. Despite this, over £400m of Business Rates Relief goes unclaimed each year, in large part because firms are not aware of the opportunity. The scheme, introduced in 1990, closed on 1st April, further impacting on small businesses.
Read the full article here: http://www.aat.org.uk/about/content/item19416/
www.ukba.co.uk
Monday, 30 March 2009
Improve your profitability
Now more than ever, maintaining profitability is the goal of all businesses.
But with the day-to-day demands of running your company, it can be easier said than done. Knowing your business better, cutting costs, increasing efficiency and making your staff more productive all play a part.
Click here to see more on a video.
Click here to download a free trial of Microsoft's and find out more about how IT can save you money.
Source: Microsoft
www.ukba.co.uk
But with the day-to-day demands of running your company, it can be easier said than done. Knowing your business better, cutting costs, increasing efficiency and making your staff more productive all play a part.
Click here to see more on a video.
Click here to download a free trial of Microsoft's and find out more about how IT can save you money.
Source: Microsoft
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
Saturday, 21 March 2009
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
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
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