UK: SMEs wait 21 days to be paid


SMEs Stand Tall Against Late Payers.




January saw Hilton-Baird Collection Services run its annual Late Payment Survey to gauge how UK businesses are faring with one of the most serious threats on cash flows currently.

The survey questioned more than 300 business owners and finance directors on their experiences with late payment, the impact it is having on their businesses and what methods they are using to safeguard themselves against the problem.

- Businesses adopt firmer stance against late paying customers
- Late payment leads to redundancies amongst UK firms

The full results are available on the website, but here’s a snapshot of the key statistics:
- Businesses had to wait an average of 21 days beyond agreed credit terms to be paid by their customers in 2012
- 48% had to pay suppliers later as a direct result of late payment
- The most common excuse for late payment was that customers were waiting to be paid by their own customers
- 13% wrote off more than 5% of their turnover as uncollectable
- 69% support Business Minister Michael Fallon’s proposals to name and shame late payers
- Privately owned / limited companies remain the worst offenders
- Only 14% outsource all or part of their credit control function to specialist debt collection agencies
- 60% of those that do say the primary benefit of outsourcing is that it facilitates the collection of aged or overdue debt

More than half of British businesses are being left with no alternative but to suspend work and services in order to protect their cash flows against the continued threat of late payment, research shows.

This hard-line tactic, used by 54 per cent of businesses during 2012 according to Hilton-Baird Collection Services' Late Payment Survey, is representative of the no-nonsense approach that many are adopting against late paying customers.

This figure is seven per cent higher on an annual basis and one of several credit management strategies that rose in popularity over the same period, including:
- New customer credit checks (used by 48 per cent)
- Writing to debtors, including solicitor involvement (47 per cent)
- Suspending customer credit facilities (45 per cent)
- Small Claims Courts and County Court Judgments (31 per cent)

The commercial debt collection agency's annual survey also found that six per cent of the businesses surveyed had to make at least one employee redundant last year as a direct consequence of late payment.

One in 20 respondents were also forced to reduce staff working hours and shifts due to their customers' failure to pay on time, as official statistics from the Office for National Statistics suggest the UK's unemployment rate increased to 7.9 per cent in the three months to the end of February 2013.

Managing Director of Hilton-Baird Collection Services, Alex Hilton-Baird, believes late payment is therefore having deeper ramifications than many realise: "It is a major concern that people are losing their jobs as a direct result of the cash flow implications of late payment. This country needs people in work for the economy to move forward, but too many employers are finding it increasingly tough to sustain their existing payroll.

"It is encouraging, however, that a firmer stance is being taken by businesses to safeguard their cash flows from late payment. The decision to suspend work is not an easy one given the temptations to chase turnover in light of the shortage in demand that so many sectors are experiencing currently, but businesses aren't shying away from making tough decisions. This bold approach could prove key to their survival."

Hilton-Baird's latest research was undertaken among 319 businesses across a wide variety of business sectors, providinga representative sample of the UK's SMEs. The research was conducted in January 2013, with the results providing a snapshot of businesses' experiences with late payment and the steps they are taking to safeguard their cash flows against the challenge.

Alex Hilton-Baird is Managing Director of Hilton-Baird Collection Services, which is part of the Hilton-Baird Group of companies. Established in 2001, Hilton-Baird Collection Services provides award-winning outsourced debt collection services to the UK's SME and corporate markets, as well as some of the most respected invoice financiers, leading banks and insolvency practitioners.

Hilton-Baird Collection Services was voted Commercial Debt Collection Agency of the Year in 2008, 2010 and 2011 by Credit Today magazine. In addition, two of our employees have been awarded the Commercial Collector of the Year title, with Team Leader, Charlotte Christie, winning in 2010 and Senior Collections Advisor, Peter Hepburn, winning in 2012. Such awards are testament to the continuous investment Hilton-Baird puts into making its debt collection services the best on the market, with regular training and technological innovation at the core of ensuring a fast, flexible and efficient response to business debt recovery needs.

To find out more about how Hilton-Baird Collection Services can assist, visit www.hiltonbaird.co.uk/cs

Mardi 23 Avril 2013
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