Keywords: einvoicing, electronic invoicing, cashflow, credit control procedures, Clydesdale & Yorkshire Banks, Asset Based Finance Association, e-invoicing

Late invoice payments remain growing concern among businesses

Susie West | News | 8 June 2012

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Late payments on invoices are a growing concern for UK businesses, a new survey from Clydesdale & Yorkshire Banks has found.

It questioned over 1,000 business owners in the UK and revealed that one in ten firms would face closure or be forced to scale back their operations if their customers took more than 90 days to pay invoices.

Thankfully, despite the ongoing difficulties in the economy, late payments are becoming less of an issue. According to the banks, the average time businesses took to collect payments has reduced over the last ten months from 52 days to 49.

During this period, £6.2bn worth of invoices have been processed.

But the lack of confidence in the economy is still having an effect on business' belief that their customers will pay invoices on time, while even a payment period of 49 days can be a long time for organisations with cashflow concerns.

"All businesses, particularly SMEs (small and medium-sized enterprises), depend on healthy cashflow to pay staff, buy stock and keep on top of their own invoices and bills," explained Martin Rothera, Head of Invoice Finance at Clydesdale & Yorkshire Banks.

"Poor cashflow management can be one of the most critical issues that businesses face but we believe UK companies have listened to the advice to tighten up their systems and controls."

Indeed, he stressed the importance of encouraging firms to tighten their credit control procedures.

More businesses are looking at invoice financing. Figures from the Asset-Based Finance Association reported that invoice finance lending has increased by 7% year-on-year in the UK and Ireland in an effort to reduce the strain of late payments and bad debts.

SMEs can benefit from measures such as factoring and dynamic discounting to improve their cashflow and ensure that they receive payments early or on time. On a slightly larger scale, e-invoicing is a reliable way of receiving payments instantly.

The survey comes after Business and Enterprise Minister Mark Prisk launched a campaign to reduce late payments and ease up cash flow concerns for SMEs.