A survey in the North East of the UK has shown that businesses across the area are suffering from late payment problems, which restrict cash flow and can have dire consequences. Though research has shown that payment times have fallen in the last year, this does not mean that the problem is any less serious for many small businesses.
Late Payment and Cash Flow
During the previous ten months, payment times on invoices have fallen, on average, from 52 to 49 days. Combined figures of overdue payments owed add up to sales of £6.7billion, showing how widespread the problem is.
A survey conducted by Yorkshire Bank has shown that one in ten businesses believe that they would be forced to close their doors or at the very least reduce their operations if customers consistently took more than ninety days to pay their invoices.
Businesses are tightening up credit control procedures to combat this danger, with many feeling the growing pressure of ongoing delayed payment from customers. All businesses depend on healthy cash flow to keep running, but this is especially true for SMEs who don’t have unlimited pools of resources to fall back on in hard times.
Poor cash flow can be one of the most detrimental things for SMEs, making it hard to pay bills, buy stock, pay staff and generally keep the business running and growing. Looking into ways to combat late payment and cash flow issues is therefore essential for any business that’s suffering.
Invoice finance is one answer. This specifically targets the causes of cash flow issues, releasing 90% of the funds tied up in unpaid invoices within 24 hours. Any business who issues invoices for payment within 90 days or less can take advantage of invoice discounting or factoring, making it a flexible and secure way to raise funds.
If your business is suffering from late payment problems, give Select Factoring a call today for invoice finance solutions that can really help.