The Analysis News & Opinions
‘Late payment is a problem for larger companies too’
Late payments remain a major challenge for medium-sized companies, with 94% of firms employing more than 50 people reporting that the issue is causing cashflow problems for them. Research from Ultimate Finance found
that, overall, 81% of SMEs consider that late payments are an issue for them; 51% of SMEs believe their business would run smoother if they had fewer late payments; and 82% of SMEs have up to £25,000 in late payments. This figure rises for medium- sized companies which have an average of more than £30,000 in late payments. Late payments are an increasingly public
issue, with the main political parties vowing to stamp out the problem with legislation such as late payment reporting.
Anthony Persse, director of strategy at
Ultimate Finance, said: “We know that late payments can have a huge impact on small businesses. It is without a doubt, one of the biggest challenges faced by UK companies. However, there is a deep misconception that it is an exclusively small business issue which is simply untrue.
“This is leading to rules such as late
payment reporting, which creates an ‘us and them’ situation, when we should be seeking a workable long-term solution. This is not just a case of the bigger boys picking on the smaller guys; cashflow and supply-chain management affects every organisation, and should be tackled together.”
DSO boost for business confidence
Manufacturing continues as the principle driving force behind business confidence in the UK, according to the latest results from the UK’s Credit Managers’ Index (CMI), the quarterly barometer from the Chartered Institute of Credit Management (CICM). The 1.3-point rise experienced in manufacturing sees the index close at 64.0, an all-time CMI high. The result also represents a year-on-year rise and the second successive quarter that the sector has improved. Analysts believe that this reflects the
positive effect that currency fluctuations are having on the UK’s exporting market since the Brexit referendum. The CMI’s headline figure also closed
up 0.9 points to finish at 60.1. This was primarily the result of a 0.8-point increase in the services sector, which closed at 58.3. The uplift follows first-quarter decreases
and shows the economy in stronger health according to several key indicators such as GDP growth, predominantly in the services sector, which rose 0.5%. Construction and production were the two other indicators
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that slowed down, with decreases of 0.9% and 0.4% respectively. The headline figure has, however,
now climbed to 60.1, broadly in line with the FTSE All Share market – the eighth time (and third successive quarterly result) in the CMI’s history that is above this threshold. More positive news came from the
unfavourable factors with six out of seven showing signs of improvement: days sales outstanding was 4.2 points higher (65.7); Insolvencies closed 5.1 points better off
www.CCRMagazine.co.uk
(55.9); accounts referred to third parties climbed by 5.1 points to 57.1. Philip King, chief executive of the CICM,
said: “Despite Brexit negotiations continuing and no immediate outcome in sight, credit professionals are noticing a resilient economy across most sectors. “That is not to say that this upturn will be
necessarily long lasting – there are many potential pitfalls along the way as confidence remains fragile, and the situation could easily take a turn for the worse at any stage. Caution is the watch word.”
September 2017
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