Friday, 29 June 2012 09:22

A Long Summer of Payment Chasing for SMEs

A failure to follow the 'golden rules' of credit control is leaving many SMEs facing a significant burden of payment chasing this summer, says RBS Invoice Finance.

The bank's specialist team has compiled figures showing that small firms are currently receiving payments an average of 30 days beyond the agreed deadline.

Managers are spending 130 working hours - equivalent to around three weeks - each year chasing overdue payments, too.

As well as being frustrating and time-consuming, this can also have knock-on effects by reducing the available cash to the business, leading its cashflow to look much less healthy than it might if payments were made more promptly.

With a turbulent economy taking hold of businesses nationwide at the moment, RBS Invoice Finance director of strategy Mark Qualter stresses that companies should not be afraid to seek assistance to help significantly improve their day-to-day financial circumstances.

Time & Tide

The old adage says that "time and tide wait for no man", and business leaders who are caught in a wave of late payments might feel that phrase is particularly pertinent.

However, the RBS Invoice Finance figures show that more efficient cash collections, and an elimination of unnecessary payment chasing, could actually add three working weeks to companies' time each year.

In small to medium-sized firms, where time is at a premium among overworked managers, this could be crucial in allowing the company to develop and progress.

Content continues below

Cash-Strapped Newcastle SMEs Turn to Pawn (Brokers)

SMEs in the north-east are stop-gapping their cash flow problems by turning to pawnbrokers, according to a report in local news publication The Journal. With bank lending hard to come by and many…

Another ‘Cowboy’ Debt Collection Company Liquidated

As a fully licensed debt collection company that has been incorporated since 1984, we have a long history in providing advice on how to choose an ethical and trustworthy debt collection partner. But…

Local Authority Late Payments Continue

Local authority late payments are almost as much of a problem now as when, in 2008, the government first introduced a ten-day target for settling its invoices in the regions, reports the Forum of…

Local Authority Late Payment Postcode Lottery

Many businesses that work with local authorities are facing a 'postcode lottery' to determine whether their accounts are settled on time, or whether they must deal with late payments from their…

Mr Qualter says:

"By reducing the need to chase up payments, SMEs could free up to three extra weeks every year - time that can be spent concentrating on business development, marketing or improving customer relations.

"Whether SMEs choose to use invoice finance or another approach to manage their cashflow, all businesses will need to take a structured approach to credit control and management."

The Golden Rules

To give SMEs somewhere to start from, the bank has compiled a list of Golden Rules for credit management, which highlight some of the main issues such as:

  • adopt a worst-case scenario approach to cashflow projections, to ensure you are prepared for any eventuality;
  • use incentives such as discounts to encourage and reward prompt payment;
  • be prompt and professional in any investigations of unpaid invoices;

Companies can use many different techniques to keep on top of the invoicing process, from earlier use of debt collection agencies, to improving internal credit control procedures and regularly reviewing customer credit limits.

Simply being clear and consistent in your payment collections is a good place to start. But remember that "a sale is only a sale when the money is in the bank".

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

Image "Temperature Gauge on Kettle" by EpicBeer on Flickr is licensed under CC BY 2.0

8:00 - 20:00

8:00 - 20:00

Our Opening Hours Mon. - Fri.

+44 (0) 1772 454505

+44 (0) 1772 454505

Got questions? Call us today. No hard sell, guaranteeed. 

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.