Smaller businesses in the UK are facing a total bill of £2.16 billion to chase overdue payments, according to Bacs Payment Schemes Limited.
In spite of a dramatic drop in the overall late payment debt, with new figures showing that UK small to medium size enterprises are owed £14.2 billion in contrast with five years ago when the total was double that, at £30.2 billion, late payments are still costing SME’s a lot more than they should.
Out of the 1.7 million SMEs in the UK, almost 640,000 say they have to wait beyond agreed terms for payments. 39% of companies are spending up to four hours a week chasing late payers, while 12 per cent of SMEs employ someone specifically to pursue outstanding invoices.
Almost one in five SMEs affected by overdue settlement admit that being owed between £20,000 and £50,000 would be enough to drive them into bankruptcy, with seven per cent of businesses saying they are already in that danger zone.
Of those facing late payments, some 16 per cent struggle to pay their staff on time, while 28 per cent of company directors reduce their own salaries in order to keep essential working capital inside their businesses. And nearly a third say that overdue invoice settlement forces them to pay their own suppliers late. A quarter rely on bank overdrafts to make essential payments, and 15 per cent find it difficult to pay business bills like energy, rates, and rent when they’re due.
A significant issue for SMEs is the amount of time they are being kept waiting beyond their previously agreed payment terms. Almost a third of companies face delays of at least a month beyond their terms and nearly 20 per cent are having to wait more than 60 days before being paid.
This is why keeping a tight grip on your credit control is vital.
To thrive, your organisation needs better control of overdue balances and approaching credit limits. So it’s essential to arm your business with the necessary tools to effectively and efficiently perform credit management and avoid receiving late payments.
Our Credit Management Addition for Dynamics NAV helps to remove some of the manual tasks from your Credit Control team, by automatically putting sales orders on hold if a customer has overdue balances or a particular sales order would put them over their agreed credit limit.
Get great visibility of outstanding balances by account. Assign your customers to specific individuals in your team to measure and track the performance of these accounts. Individual dashboard help your credit controllers to keep on top of outstanding balances and daily tasks. Visibility by account means you can easily identify the biggest outstanding balances and also ensure you don’t miss the smallest balances either and Views of what’s due for payment in the next x days, means a proactive approach to credit and prevents customers regularly exceeding their payment terms.
We know ourselves that ensuring you get paid on time is getting harder, so our Dynamics Addition also helps your team keep on top of chasing debt. Follow up calls/to-do’s can be automatically diarised to remind your users when to chase payments that haven’t been paid when promised, aiding your busy team with better time management and more efficient processes.
Make life simpler with Credit Management and don’t let poor cash flow kill your business.