Posted on 13.11.2013, by Rob Warlow
One of the main reasons why businesses turn to banks for help is to bridge the gap between paying suppliers and receiving payments on invoices they have issued. However, late payment and overdue invoices can often put pressure on businesses when it comes to keeping within agree overdraft limits.
In the latest of its quarterly Late Payment Index surveys Experian, the credit reference agency, highlights the problems of dealing with large businesses when it comes to payment. According to Experian the UK’s largest businesses are paying their overdue bills on average 15 days later than smaller companies.
The latest survey reveals that larger companies (more then 501 employees) pay 35 days beyond agreed terms whereas small companies pay 20 days over terms. The fact that both large and small firms pay over and above terms is bad enough but at least smaller firms (who probably better appreciate the pain of late payment), make more of an effort.
Comparing previous results, the spectre of late payment is again creeping up on businesses. Larger business are now taking on average three days longer to settle invoices compared to the same period last year. Smaller firms are more or less paying up within the same timescale.
So pick wisely as to whom you do business with!
Poor cashflow is one of the main reasons for business failure so it’s up to you to ensure you have a clear credit collection process in place to avoid getting caught in a cash crunch.