The latest data from Time Finance shows that worryingly 20% of small business owners are dealing with late payment debt as high as £200,000. The research from the alternative finance provider also shows that the problem of late payments is affecting 70% of companies.
This data highlights that the problem of late payment debt is still impacting on businesses, despite the Government’s Prompt Payment Code being introduced. This was established to ensure that, where customers are signed up to the code, small businesses are receiving payment for 95% of their invoices within 30 days.
72% of business owners who responded to the survey commented that they were unsure if the Prompt Payment Code went far enough in stopping the issue of the late payment of commercial debts. The majority of businesses believe that this is due to a lack of enforceability.
Phil Chesham, Head of Invoice Finance at Time Finance, commented: “When the Government announced its reforms to the Prompt Payment Code in January, it was accompanied with a pledge that it would tackle late payment and protect jobs. The steps taken have been too small and are clearly not having the required impact. We’re finding that 69% of small businesses fail to receive payment from their customers within the agreed 30-day payment term and are often left waiting 60, 90 or 120 days. This is unacceptable.
“The potential in that outstanding revenue is enormous; that money could be working capital that a business invests in new people, new equipment, new premises or new markets. Unpaid invoices, in my opinion, equate to missed opportunity.”
Late payment debt impacting on SME recovery
The difficulties businesses are having with late payments is having an effect on their recovery from the pandemic. Research published earlier in the year by Dun & Bradstreet showed that over the past 12 months, 23% of small business owners had used their own savings or assets to cover cashflow because of late payments.
Over half of businesses want the Government to implement financial penalties for businesses that consistently pay late.
Help with late payments
Quickly recovering unpaid invoices is essential for small businesses. Being owed money by another business can have a serious impact on your cashflow and, in some circumstances, can cause companies to go into administration.
At CEA Ltd, we work with businesses of all sizes to swiftly collect late payment debt from your unpaid invoices. Our professional team of debt collectors will work with you to recover all types of commercial debts. We will add on all relevant late payment charges and interest, to ensure you are not out of pocket.
We also operate an outsourced credit control function, enabling you to pass over all your unpaid invoices as soon as they become overdue. This enables you to concentrate on the running of the business and avoid the stress of debt recovery.
For more information, contact our commercial debt recovery team on 0113 532 8350 or email office@cealimited.co.uk.