We have recently written a case study with the help of our customer at London Toughening, a specialist manufacturer of glass products in the South of England.
Financial Controller, Maria Demetriou was hesitant about using invoice discounting as she felt it would be expensive. After 18 months with Close Brothers, Maria has told us that she didn't know how the business managed before. The overdraft facility the business had with their bank was restrictive and was holding the company back from the substantial growth that invoice finance has now allowed. Maria has recognised that the beauty of invoice discounting is that it grows with your business rather than being a static amount that may or may not be sufficient.
Please click here to go to our website and read the full case study.
If you have any questions, or are interested to know how our invoice finance products could help you or your client's business, please get in touch by calling free on 0808 252 0353.
Showing posts with label late payments. Show all posts
Showing posts with label late payments. Show all posts
Thursday, 4 September 2014
Tuesday, 19 August 2014
UK SMEs owed more than £20k in late payments on average
TWO fifths of small businesses in the UK are adversely affected by late payments, a recent survey has revealed.
Of those businesses that have experienced problems due to late payments, over half (58%) said that it impacts on their day-to-day cash flow management, 17% said it has meant they have had to rein in necessary spending and 15% say it threatens their ability to trade.
The figures come from the latest Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of business owners and managers across Great Britain and Ireland.
CEO of Close Brothers Invoice Finance, David Thomson, said: “This increasing debt burden is a worrying situation for small firms. Of the businesses we spoke to that are facing problems due to unpaid invoices, 44% say that they are owed more than £20,000.
“This is constricting their cash flow and the knock-on effect is that it prevents them from being able to pay their suppliers on time, thus creating a vicious cycle.”
Mr Thomson continued: “It’s a situation that needs to be addressed, and alternative funding methods such as invoice and asset finance present a solution.
“Invoice finance works to bridge the gap between raising an invoice and receiving payment. We are actively working with local firms to raise awareness and ensure that they have access to the guidance and funding they need to manage their cash flow and make the most of the assets they have at their disposal.”
The survey also revealed that 17% of firms in the UK spend more than ten hours a month chasing unpaid bills.
“Further to the debt burden, there is the additional cost of time spent chasing up late payments. Time is often a manager’s most precious asset so it is important to make the best use of it. Invoice finance can help mitigate the time spent chasing payments and laborious month-end reconciliations.
“I encourage small businesses, particularly those who are suffering under the pressure of late payments, to reassess the funding they have in place to make sure it’s appropriate to meet their needs,” Mr Thomson added.
For more information and news about Close Brothers Invoice Finance please visit www.closeinvoice.co.uk
Of those businesses that have experienced problems due to late payments, over half (58%) said that it impacts on their day-to-day cash flow management, 17% said it has meant they have had to rein in necessary spending and 15% say it threatens their ability to trade.
The figures come from the latest Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of business owners and managers across Great Britain and Ireland.
CEO of Close Brothers Invoice Finance, David Thomson, said: “This increasing debt burden is a worrying situation for small firms. Of the businesses we spoke to that are facing problems due to unpaid invoices, 44% say that they are owed more than £20,000.
“This is constricting their cash flow and the knock-on effect is that it prevents them from being able to pay their suppliers on time, thus creating a vicious cycle.”
Mr Thomson continued: “It’s a situation that needs to be addressed, and alternative funding methods such as invoice and asset finance present a solution.
“Invoice finance works to bridge the gap between raising an invoice and receiving payment. We are actively working with local firms to raise awareness and ensure that they have access to the guidance and funding they need to manage their cash flow and make the most of the assets they have at their disposal.”
The survey also revealed that 17% of firms in the UK spend more than ten hours a month chasing unpaid bills.
“Further to the debt burden, there is the additional cost of time spent chasing up late payments. Time is often a manager’s most precious asset so it is important to make the best use of it. Invoice finance can help mitigate the time spent chasing payments and laborious month-end reconciliations.
“I encourage small businesses, particularly those who are suffering under the pressure of late payments, to reassess the funding they have in place to make sure it’s appropriate to meet their needs,” Mr Thomson added.
For more information and news about Close Brothers Invoice Finance please visit www.closeinvoice.co.uk
Friday, 15 August 2014
Late payments - a constant thorn in the side of UK SMEs
If there is one challenge that almost all of our customers site as causing them the most stress before they come to us, it is late payments.
There has been a great deal of focus on late payments in the media recently, cited as a major contributor to holding back economic recovery. Research carried out across the industry reveals that large companies in the UK are owed £6.7 billion in unpaid invoices. Suddenly that doesn’t seem like much, however, when compared with the debt of UK SMEs who are owed nearly six times as much at £39.4 billion*.
Many of our customers have chosen factoring as a solution to this problem, where our Credit Team chases any payments. This particularly suits business owners who are not comfortable comfortable, or don't feel they get results, collecting payment themselves.
For those who are comfortable with the payment collection process we recommend invoice discounting.
Whether you use invoice finance or not, these 5 top tips that were put together by our in-house experts – the people who are closest to our customers – should help you to overcome late payments and keep your business moving:
1. Agree scope of work
Clearly state your costs and payment terms on the contract and ensure your client agrees before starting work
Making sure all parties are clear and in agreement before any work goes ahead will make it far easier to chase your customer once payment is due. Proof of their agreement to your terms and conditions will make your case much stronger if they cause delays.
2. Multiple forms of payment
Be open to accepting multiple forms of payment
Not accepting certain payment methods could give your customers reason to delay paying you what you are owed. Being open to multiple forms of reimbursement – ideally including credit cards – leaves your customers no excuses! Take advantage of the fact that everyone with an Internet connection has access to free cloud systems, such as PayPal. For more information, download our free guide on how cloud computing can support your business.
3. Upfront payment
Get an upfront deposit or set up a payment scheme
This involves taking a proportion of the cost before work commences and is an effective, yet reasonable way to set boundaries for your customers. The reduced balance once the work is complete may also have a positive impact on their ability to pay.
4. Terms
Stick to your payment terms
If your clients do not pay within the time limit then it is important that you follow through with your conditions. Make sure your invoices clearly state what will happen when payment is delayed, whether it means charging interest, reporting them to the relevant parties or taking legal action.
5. Prompt Payment Code (PPC)
Sign up to the Prompt Payment Code (PPC)
The Prompt Payment Code was set up by the Department for Business Innovation and Skills and encourages best practice between organisations and their suppliers. The code enables businesses to build stronger relationships with their customers and to be confident that they will be paid. Independent analysis by Experian suggests that current signatories to the Code represent over 60% of total UK supply chain value, so the Code is making a difference**.
*Research by BACS, July 2014 http://www.bacs.co.uk/Bacs/DocumentLibrary/UK_companies_face_a_late_payment_burden_of_%C2%A346.1_billion.pdf
**Matthew Hancock MP, Minister of State for Skills and Enterprise http://www.promptpaymentcode.org.uk/
Subscribe to:
Posts (Atom)