If there is one thing that is going to hold back a business’ ability to grow its late payment.
Not being paid on time can be a barrier to growth and feedback I get from the Business Loan Services team is that this is a major bugbear amongst many of our clients.
But as the economy grows there are signs that payment settlement is showing signs of improvement.
A recent survey from Experian the credit reference agency showed that UK businesses paid their overdue bills on average one day faster between April 2014 and March 2015.
The national average of the number of days in which businesses pay beyond terms dropped by just under a whole day to 24.29 days
Perhaps not surprisingly, because they understand the pain late payment can cause, the smallest businesses were the quickest to tackle overdue invoices, as businesses with one or two employees settled bills 20.58 over agreed terms. This was an improvement of just over half a day.
Businesses with three to five employees showed the greatest improvement, paying bills 1.3 days faster at 21.34 days over agreed terms.
What about the UK’s largest business who typically have the finger pointed at them…. how have they performed?
Although those businesses, employing 501 people or more, took the longest to settle bills at 34.18 days over agreed terms in the year to March 2015, they did improved their payment performance by just under one day.
So well done to the big boys… but you still have work to do!
So if you do suffer from late payment what can you do?
Here are some tips from Experian:
Tip Number 1 – Check their status: Is the business you are dealing with real? Search them out on the web and see what you can find. Do they have a strong internet footprint?
Tip Number 2 Do a Credit Check: Carrying out a credit check will reveal their credit status, trading history and how they have paid in the past. All this will help you decide whether they are worthy of you giving them credit terms.
Tip Number 3 Remain Watchful: Nothing ever stays the same; the economy and individual businesses are constantly changing – a profitable business and a previously prompt payer can quickly turn into a business that is on its way down. The trick is to regularly run updated credit checks so you don’t get caught out.
Follow these tips and you will minimise the risk of being left with a long list of late payers.