This had a knock-on effect on their own ability to pay suppliers with nearly a half saying they delayed payments themselves. Three quarters also said they had to spend extra time chasing invoices, while a third had to increase their borrowing to combat their lowered cashflow.
Over a quarter of businesses’ debtor books have 10% of entries as being over 90 days old, while one in ten companies have written off more than 5% of their turnover in 2013.
A lot of companies found themselves waiting a long time for payments even with agreed credit terms sorted before hand. On average this delay lasted 22 days, a significant amount of time to smaller businesses, even though average credit terms had decreased from 32 days to 30.
This problem has been noted before and is something the disproportionately affects small businesses and the freelancers they hire. Prompt payments are, of course, integral to effective financial planning, something these groups of people have to take very seriously. Even small amounts of disruption can have dire consequences.
There is some good news though as more businesses now use methods to help deal with the issue of late payments. 75% employ regular reminders, while over 50% suspend work or services and credit check new customers. It has also been found that more companies are outsourcing their credit control to external service providers.