Small businesses still suffering at the hands of bad debts
Jun 22 2011
Small firms hope to stamp more invoices
Late payments are continuing to cause serious problems for small businesses, research finds.
Monthly research of more than 1,000 small and medium-sized enterprises (SMEs) by business management software company Sage finds that more than a third (36 per cent) of small business owners say late payments have become a more serious problem during the last six months.
A similar proportion (30 per cent) say their cash flow situation has worsened in the same period.
A recent report by Bacs claimed Britain’s small businesses are owed in excess of £24 billion in outstanding debt, with entrepreneurs waiting an average of 39.2 days beyond their agreed terms for payment.
According to Sage’s research, 35 per cent of SMEs believe large businesses are the worst culprits when it comes to delaying payment, however only 10 per cent of SMEs said they would charge interest on outstanding debts if a firm failed to pay them on time.
Michael Barber, marketing manager for Sage One says, ‘One of the key lessons that many small businesses have taken from the recession is the importance of healthy cash flow. But as the results of our research show, tracking and chasing late payment remains a major issue for many SMEs who have seen their situation deteriorate in the past six months.’
Comment by Chris Tao
Wednesday 22nd June 2011With the credit crunch, there are also new innovative ways to fund businesses, especially SMEs. I’ve just read about a company called Marketinvoice yesterday on the Telegraph which basically lets SMEs sell their invoices to multiple buyers that basically bid for the highest advance rates with the lowest discounting fees – is it any good?
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Comment by David Gleadhill
Friday 24th June 2011Perhaps another survey on why large businesses are so bad at paying on time is required. Do they know they are paying suppliers late? Do they value their supplier relationships enough to improve their payment performance to help their suppliers stay in business? or is it simply a matter of large businesses having inefficient finance departments who simply don't appreciate the importance of timely payments? My experience is that if managers of large businesses knew that their finance departments were so inefficient they would do something about it to ensure they maintain their supply chain.
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Comment by Ben Lobel
Friday 24th June 2011David, the businesses I talk to have often given the impression that large companies are somewhat flippant about payment terms. Many realise that the smaller business often simply cannot afford to lose them as a customer. I suppose it is easy for larger operators when they have the luxury of this dependant relationship.
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