Late payments are a serious constraint on companies of all sizes around the world. CTMfile has covered this problematic topic from many different angles recently but despite industry reports highlighting the problem and initiatives to encourage prompt payments, not much seems to change. The problem could even be getting worse. New research has found that a large majority – 94 per cent – of medium-sized companies say late payments are causing them cash flow problems. The report by Ultimate Finance and BDRC Continental found that four out of five small- to medium-sized enterprises (SMEs) say that late payments are an issue for them and can amount to as much as £25,000-£30,000.
These figures are really worrying and a missed payment of up to £30,000 could of course have a serious knock-on effect for an SME, including an impact on the company's ability to pay its own suppliers, its ability to pay employee wages or overheads and bills.
Ultimate Finance, which provides financing for UK businesses, says the problem of late payments isn't limited to the SME sector but affects bigger companies too. But the firm's Anthony Persse also criticises some of the industry initiatives to promote reporting of late payments, saying that this creates an 'us and them' situation, rather than acknowledging that not paying on time is a problem that affects all companies.
CTMfile has written about the legislation, voluntary codes and payment reporting initiatives that are being tried to encourage on-time business payments:
- Reducing late payments is a joint effort that can benefit all
- Could you be a supply chain bully? Ask yourself these questions
- Why regulation and codes will fail to achieve prompt payments
- Late payments increase in US, Canada, Brazil and Mexico
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