Late payment problems have become a widespread issue for many SMEs. This can put the extra squeeze on cash flow, with unpaid invoices holding much of the working capital with little hope of quick payment. However, despite an unimpressive start to the year, there is a ray of hope. The payment time for many small businesses has fallen between Q4 of 2011 and Q1 of 2012 – combining this with alternative finance options that can release the funds tied up in unpaid invoices means that small businesses might have a life line.
Export payment times have fallen 3 days down to 60 days, whereas domestic payment times fell a day from 61 to 60 days between Q4 to Q1. Year on year, they fell 64 down to 60 days. This shows that though the improvements are still marginal, with businesses waiting at least two months for payment, improvements are being shown.
In an otherwise downbeat economic environment, this is a welcome bit of positive news. This is especially true for those businesses caught up in supply chains where large companies can afford to keep the smaller ones hanging on for payment. Many SMEs have been taken under by these types of unpaid debts, which is especially unfortunate as many have had healthy order books.
Exports have been hailed as one saviour for SMEs, and late payments again can be a problem here. It’s an obstacle that’s made worse by different time zones, language barriers and a dearth of local knowledge. In order to make use of the export opportunities that exist in current climates, it’s necessary for businesses to brave all these barriers – and a drop in payment times is a welcome relief.
If your business is struggling with late payment issues, then why not consider invoice finance? Through factoring or invoice discounting, you can release the funds tied up in unpaid invoices without taking on new debt. Rather than wait for 60 days, you can get the capital within 24hours. For any business which is left hanging on for payment, this could be a flexible, affordable and secure finance solution.