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New research, conducted among 300 business owners and managers for Bibby
Financial Services, shows that 35% of businesses are finding customers are
taking longer to pay invoices than 12 months ago.
Some sectors are suffering more than others, with 47% of manufacturing and
construction firms saying that customers are taking longer to pay than a year
ago, compared to 36% of firms in business services.
Twenty per cent of companies say they are chasing invoices three times or more,
and a staggering 48,000 businesses have had to follow up invoices more than 11
times.
The research research comes just a week after the Budget, in which Alistair
Darling pledged that the Government will pay 80% of its invoices from small
business within five days.
This is a reduction from 10 days and a steep but welcome target as, according to
Bacs, SMEs are currently owed 30.4billion.
Edward Rimmer, Bibby Financial Services UK chief executive, commented: "The UK
business community has got to stem the tide.
"We cannot keep stalling payment and expect it to have no consequence.
"Across this nation, businesses are fighting for survival with sustaining a
healthy cash flow one of the biggest challenges.
"We need to support one another and do everything possible not to succumb to the
easy route of late payment as it can become a vicious circle which halts the
purchasing cycle and, ultimately, can disrupt the supply chain, not to mention
the impact on the goodwill and trust of other customers and suppliers.
"The Chancellors pledge to pay 80% of public sector invoices within five days is
a worthy goal but it must become a reality.
"Many local authorities are a long way off this target, not to mention the fact
that this pledge does not encompass the private sector.
"If Alistair Darling really wants a lasting legacy, he should urge the private
sector to participate in an invoice amnesty, pay all outstanding invoices and
then adopt a new prompt payment culture.
"There are some easy solutions to dealing with late payment and free up cash
flow.
"Companies must ensure they are in control of their finances and then look at
all the cash flow options available.
"If they cannot afford to install an internal or external credit control
department then they could consider factoring, which takes away the hard work of
chasing late payment and allows directors to focus on other aspects of managing
their businesses.
Source: Credit
Control Journal
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