British Chamber of Commerce tells businesses to move to e-invoicing
The British Chamber of Commerce (BCC) last week revealed the results of a survey of 5,343 businesses that revealed, amongst other findings, 94% respondents have been paid late in the past, and a quarter of those respondents experienced delays in over 40% of their payments received.
For the past few years, many businesses have experienced cash flow problems through the supply chain. The report, entitled ‘The Prompt Payment Report’, was commissioned to asses why and to what extent late payments were affecting business growth in the UK.
The results provide a new level of cross-sector visibility as to the causes of supply chain stagnation. 62% of respondents said that private sector businesses are more likely to make late payments than SMEs or the public sector, though the public sector is harder to engage with when they do.
Another significant result from the survey demonstrates that BAS (Banker’s Automated Clearance Services) and cheque are the most common form of payment, with 85% and 69% of respondents respectively saying they use it. However, only 20% of those who said they have been paid by cheque say this is their preferred method.
One key recommendation from the BCC following the survey is that businesses should make better use of e-invoicing, not only to maximise on the cost and efficiency savings, but also to benefit from discounting platforms.
Other BCC’s recommendations include:
- Introduce kitemark schemes to promote prompt payments. By building 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 methods. For example, businesses could consider offering concessions to those customers using their preferred methods. Cheques can have a negative effect on businesses’ cash flow so the Payments Council should reassess the case for phasing it out by 2018.
- The government can improve access to finance with the creation of a British Business Bank. Cashflow problems experienced by businesses are exacerbated by the difficulty some have in accessing finance. The establishment of a British Business Bank would help many new and fast-growing companies become the UK's future champions.
While there are things the government can do to help alleviate the cash-flow difficulties therefore, the major effort needs to come from businesses themselves. John Longworth, Director General of the BCC, commented, “Businesses must also work together with the government to ensure late payments become less endemic across the supply chain. Measures such as a kitemark for prompt payers, alongside moves to encourage local government to use e-invoicing, could mean fewer businesses struggling with cashflow problems”.