Small businesses remain concerned about the UK’s culture of late payments, according to a leading banking and finance survey.
Data collected by the Forum of Private Business reveals nearly a quarter of small business (23%) saw a rise in the number of delayed payments received from clients in the past year. As well as this, 29% reported that these hold-ups were extending further beyond the agreed deadline than ever before, while 19% had to deal with both of these problems.
In contrast, just 3% indicated that they were seeing fewer delays, and a mere 8% have seen late payments resolved more quickly than the previous year.
Businesses want action despite improving economy
At the height of the recession, these kinds of delays would have pushed many SMEs to the brink of financial crisis. However, the steadying economy has meant that the number of businesses seriously affected by these late payments has remained steady over the past 12 months.
Forum of Private Business Chief Executive Phil Orford MBE said that cash flow improvements have left more companies able to support themselves through these problems.
Nevertheless, business owners are still adamant that the government must do more to tackle this issue and impose sanctions on late payers:
· 39% would like the practice of prompt payments to be better promoted
· 37% would rather pay VAT on money once it has entered their account, rather than from the date on an invoice
· 36% want late payers to be banned from dealing with government contacts
Mr Orford added that smaller companies were forced to spend around 130 hours per year chasing up late payments, and that consequently a third were still having to borrow money in order to keep above water.
There is currently around £30 billion in the UK that remains tied up in late business payments, and the government is reportedly contemplating forcing companies to submit details of their payment practices in order to turn the spotlight on serial offenders.
How should this affect your recruitment choices?
When recruiting new staff to your credit control team, you should consider whether or not the candidates you speak to will be able to deal with late-paying clients.
These issues need to be approached sensitively in order to ensure you receive the money you are owed, whilst maintaining a good relationship with the client to encourage repeat business. As such, it is vital that your new credit controller or accounts receivable team member possesses first-rate interpersonal skills.
Speak to Portfolio Credit Control today for more advice on how to find the best credit control staff for your organisation.