LATE PAYMENT
NEW START // ISSUE 6 // 41
CASH-FLOW IS KING
AS TESCO, THE UK’S LARGEST RETAILER, DOUBLES ITS PAYMENT TERMS TO 60 DAYS, BUSINESS LEADERS HAVE WARNED THAT EXTENDED PAYMENT TERMS COULD BE A STEP TOO FAR FOR SMALL COMPANIES.
In the UK, small companies are currently owed £8.3bn and this looks set to increase. Over half of SMEs report that the problem of late payments is getting worse with almost three quarters saying the problem is so bad, that it’s having a very serious effect on their business.
David Matthewson of Bibby Financial Services, a leading global provider of cash flow solutions for SMEs, said: ‘Small firms have always been vulnerable to late payments from large customers – unfortunately it is a fact of business life. However, as the credit crunch continues to bite, driving down revenue and squeezing margins, many small firms could well be staring bankruptcy in the face. A regular and consistent cash flow is essential to the smooth day-to-day running of a business - particularly a smaller one. The vast majority of small firms simply cannot afford to wait on money they are owed without a severe impact on their bottom line.
‘There are no two ways about it - 2009 is going to be a tough year for all UK firms regardless of
size or industry sector. Those owners and managers that resolve to successfully manage to reduce the impact of late payment on their business by working smarter and adopting thorough credit control procedures are the ones that will ultimately survive and come out of the downturn stronger than ever before.’
TOP TIPS FOR TOP CASH-FLOW
Always credit check customers Get your terms and conditions right Reconsider payment terms for repeat offenders
Stay on top of payments Invest time to safeguard cash flow Keep close to your customers Keep the cash flowing into your business Protect your business from bad debts Be polite but firm Understand your rights
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