Late payment is strangling the cash flow of small businesses

Print Email Tweet This!Save to Favorites
Recommend on Google+

We had a good day for customer cheques and BACS payment today.  However, a new report from Barclays suggests that we are lucky.  Small businesses are being submerged under the increasing burden amounts owed by trade debtors.

It is always interesting to read the press releases from the major banks and accounting firms.  They often produce some useful research for business teachers.

Take this example from last Friday - issued by Barclays.

According to Barclay’s research, small and medium sized businesses (“SMEs”) in the UK will be owed approximately £8.3 billion on February 29 due to suppliers or customers failing to pay on time.

Nearly six in ten (59 per cent) SMEs experience problems with late payment, with a third of this number (33 per cent) admitting that customers or suppliers failing to pay on time threatened the day-to-day survival of their business.

The report goes on to explain that:

On average, at any given point during the year, SMEs are owed more than £2,000 from suppliers or customers who have failed to pay during the standard 30 day invoicing period. Entrepreneurs typically have to wait nearly a fortnight (12.3 days) after the invoice due date before they get paid.

This report certainly struck home with me.  I remember looking at our sales statistics last week and was pleasantly surprised to see a high growth in revenues (we’re almost 65% up for the half year to-date).  However, the cash balance wasn’t up so much.  Ok, so our operating costs are higher (payroll, marketing, rent), but this didn’t explain it all.  I discovered the answer in trade debtors (amounts owed by our customers) which had risen significantly. We had delivered the sales growth, but it had not yet translated into cash!

So we’ve refocused our efforts on chasing some late payers over the next couple of weeks, joining the many thousands of SMEs in the UK who are trying to tackle the problem of late payment.

blog comments powered by Disqus

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!

*  Your Email Address:
*  Preferred Format:	HTMLText
Full Name:
*  Country:	-- Please choose your country --United KingdomAlgeriaArgentinaAustraliaAustriaAzerbaijanBahamasBahrainBangladeshBelgiumBermudaBosniaBotswanaBrazilBruneiBulgariaCambodiaCameroonCanadaChinaCyprusCzech republicEgyptEstoniaEthiopiaFijiFranceGeorgiaGermanyGhanaGreeceHong KongHungaryIndiaIndonesiaIranIrelandIsraelItalyIvory CoastJapanJordanKenyaKuwaitLebanonLiberiaLithuaniaMalawiMalaysiaMaldivesMaltaMauritiusMexicoNepalNetherlandsNew ZealandNigeriaNorwayOmanPakistanPapua New GuineaPhillipinesPolandPortugalQatarRomaniaRussiaSaudi ArabiaSierra LeoneSingaporeSlovakiaSloveniaSouth KoreaSpainSri LankaSwedenSwitzerlandTanzaniaThailandTunisiaUgandaUkraineUnited Arab EmiratesUnited StatesUruguayVietnamWest IndiesZambiaZimbabwe
Job / Position:
Postcode:
School / College:
Town / City:
AS/A2 Applied Business Board:	-- Please choose an option --AQAEdexcelOCRNot offered
AS/A2 Business Studies Board:	-- Please choose an option --AQAOCREdexcelCambridge Pre-UIBSQAWJECOtherDon't offer AS/A2 Business
BTEC First:	Offered Not Offered
BTEC National in Business:	Offered Not offered
GCSE Applied Business Board:	-- Please choose an option --AQAEdexcelOCRCCEAWJECDont Offer GCSE Applied Business
GCSE Business Board:	-- Please choose an option --AQAOCREdexcelIGCSEICAA/CCEAWJECSQAOtherDon't offer GCSE Business
*  Enter the security code shown:

Popular Topic Tags

recession, demand, prices, price, unemployment, profit, economics, costs, investment, inflation, supply, employment, trade, competition, gdp, risk, china, debt, euro, entrepreneur, capacity, production, downturn, innovation, tutor2u, revision, pay, exports, manufacturing, confidence, profits, food, incentives, banks, strategy, globalisation, aqa, expectations, oil, csr, usa, startup, retailers, housing, productivity, sterling, supermarkets, google, economies of scale, mortgage, takeover, cash flow, advertising, quiz, leadership, property, buss4, tesco, economic growth, video, efficiency, enterprise, motivation, stakeholders, apple, deflation, corporate social responsibility, ebea, market share, airlines, pricing, taxation, slowdown, bank of england, acquisition, merger, market failure, borrowing, competitiveness, sustainability, product life cycle, interest rates, credit crunch, budget deficit, aqa business studies, facebook, twitter, aqa business, bbc, nelson thornes, philip allan updates, starbucks, philip allan, monopoly, diversification, recruitment, organic growth, stocks, training, oligopoly, starter activity, shareholders, uk economy, poverty, emerging markets, dollar, government failure, retailing, management, suppliers, buss1, marketing mix, tim harford, cpi, branding, opportunity cost, breakeven, government spending, hodder education, vat, product, customer service, eu, losses, wages, evaluation, india, external growth, wealth, environment, edexcel, location, promotion, technology, information failure, business studies revision, sources of finance, franchise, aqa gce business, elasticity, regulation, spare capacity, welfare, jobs, economic cycle, marketing, zondle, strategic direction, british airways,
View all tags for the Business Blog