Today, the British Chambers of Commerce (BCC) released the results of a survey of more than 5,000 businesses, which found that 94% of firms have been paid late, with one in four reporting over 40% of their payments were received late.
Payment terms and methods
While the terms for payment differ widely between businesses, from upfront payment to 90 days+, 70% of businesses prefer one-month (28-30 days) payment terms. However, few businesses (13%) offer discounts for early payment.
Methods of payment also differ from business to business, but 85% of businesses are paid using BACs, and 95% of businesses prefer to be paid this way. However, over two-thirds of businesses (69%) say they are typically paid by cheque. Only a fifth (20%) of businesses would like to be paid by cheque.
The BCC recommends the following measures:
- introduce a kitemark scheme to promote prompt payments: By building on ding on the Prompt Payment Code, the Department for Business, Innovation and Skills should create a standard that could be used by businesses acknowledged and regularly assessed as prompt payers.
- encourage payments in preferred payment methods: businesses could consider offering concessions to those customers using their preferred method.
- the Payments Council should reassess the case for phasing out the cheque by 2018. While many businesses still use this method of payment, it can have negative effects on other businesses' cashflow. However, any changes should only happen if businesses are not financially disadvantaged by the extra fees that can come with additional forms of payment such as internet banking transfers.
- electronic invoicing should be used by all public sector organisations: If e-invoicing were introduced across all areas of the public sector, businesses could benefit from invoice discounting platforms, and improve cash flow.
The BCC have forgotten about the little people and associations who convinced the government that the cheque is, at the moment, irreplaceable. This is not necessary to improve B2B payment practices.
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