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 debtors. Show all posts
Showing posts with label debtors. Show all posts
Saturday, 24 October 2009
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, 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
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
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
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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