Newly released data from Time Finance has revealed some startling findings. The data shows that an astonishing 70% of SME’s and Small businesses are suffering from late payments from their customers. Time finance, a finance provider found that late payment debt was sometimes as high as £200,000 for 1 in 5 small business owners.
The findings come despite the Government introducing a Prompt Payment Code. This was introduced to ensure small businesses receive payment for 95% of their invoices within 30 days from customers who are signed up to the code. 72% of business owners told Time Finance they were unsure Prompt Payment Code goes far enough to tackle the late payment culture and of the 16% who said it wouldn’t go far enough, almost two thirds put this down to a lack of enforceability.
Phil Chesham, Head of Invoice Finance at Time Finance, commented: “We have always known that the UK’s late payment culture is a huge threat to businesses, but our survey has shed light on the true scale of the issue, and it appears to be getting worse.
“When the Government announced its reforms to the Prompt Payment Code in January, it was accompanied with a pledge that it would tackle late payment and protect jobs. The steps taken have been too small and are clearly not having the required impact. We’re finding that 69% of small businesses fail to receive payment from their customers within the agreed 30-day payment term and are often left waiting 60, 90 or 120 days. This is unacceptable.
“The potential in that outstanding revenue is enormous; that money could be working capital that a business invests in new people, new equipment, new premises or new markets. Unpaid invoices, in my opinion, equate to missed opportunity.”
Time Finance’s Invoice Finance solutions can potentially release up to 90% of the funds tied up in unpaid invoices. Their options range between £10,000 and £2.5million, businesses are no longer held back from late payments.. Their optional credit control service can take the strain away from chasing payments and protect customer relationships.
Phil continued: “UK businesses require solutions that relieve pressure on their cash flow, protect them from potential closure and enable them to invest for the future. What we see in our invoice finance team is that our clients need to have measures in place to mitigate late payment and unlock working capital so that they can reinvest back into the business. Spending time chasing late payment can have wider implications for a business, so our optional credit control service removes this strain, giving business owners the headroom to grow.”
Business Debt Collection Expert Tony Smith from best4debtcollection.co.uk said “It is ongoing issue and many Companies fail to act putting their own Small Business at risk.”
“Small Business Debt Collection is something that needs to be taken seriously as an effective way to combat late payment.”
“We have found that sometimes Small Business owners are hesitant to take action for fear of losing the customer long term. We always point out that no business wants a customer that doesn’t pay”
Professional Debt Collection Agencies in the UK are widely viewed as being instrumental in helping the countries economy recover post covid. Not all debt collection agencies are the same and it is advisable to do your research and get tips on choosing a debt collection agency.
Small Business owners should only consider using a Professional Company that is accredited and has a solid reputation built up over a number of years.