Late payments ‘go viral’
Late payments 'go viral'. Debt collection agency leicester
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Late payments to SMEs are ‘going viral’ – but not in the social media sense – according to research published by payment processors Bacs.

Rather, modestly sized organisations, which may not have the resources to easily absorb cash flow shocks, are having to put off paying their bills until they receive overdue payment on their invoices.

 

The result is a chain reaction – a supply chain reaction – that means a single instance of late or non-payment can have repercussions that echo down to the smallest independent contractors and suppliers.

 

Bacs found that a quarter of companies of all sizes have been forced to pay their suppliers late, due to untimely payment by their own customers.

 

More than a fifth (21%) are shouldering the burden themselves, by dipping into business banking overdrafts in order to bridge the (hopefully) temporary gap before receiving payment.

 

But with 76% of all firms saying late payments are delayed by at least a month beyond agreed terms, that means many of those opting to use an overdraft to fill the interim period are likely to face sizeable interest costs and other bank charges for using the facility.

 

Mike Hutchinson of Bacs said: “Despite the positive signs emerging about the financial state of the nation as a whole, and the fact that we are thankfully moving out of recession, SMEs – which everyone agrees are the drivers of a successful economy – are being held back because of the increasing pressures of late payments.”

 

This is clearly of particular concern when it has knock-on ramifications for their suppliers, allowing a single unpaid invoice to lead to the accrual of additional debts by organisations and individuals throughout the supply chain.

 

Source

 

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