Published on November 28th, 2013 | by Jolie F0
Late Payments Causing Problems For UK Businesses
Running a business is never easy and one issue that many bosses struggle with is late payments. Tardy transactions of this kind can have a devastating impact on companies’ finances, causing them to suffer cash flow problems and, in some cases, rendering them unable to operate.
It is no surprise then that many entrepreneurs use special business document templates to help them recover outstanding payments from debtors.
Being able to turn to the relevant business contract template when setting payment terms or chasing money owed can be a relief to busy managers, who typically have lots of other issues to worry about too.
Highlighting the extent of the late payment problem among UK enterprises, credit insurance provider Coface recently suggested that such tardiness is now a greater threat to British firms than insolvent customers.
According to the organisation, companies ought to tighten their credit management procedures in a bid to address this risk.
Coface revealed that over the first nine months of 2013, late payment overtook insolvency as the major reason for UK claims notifications. To the end of September 2013, the insurer received claims notifications from almost 590 of its UK credit insurance customers.
Of these, 60 per cent were made because of a customer’s protracted default, while 40 per cent occurred in the wake of customer insolvency.
In contrast, during the same period in 2012, 33 per cent of notifications were the result of late payments, while 67 per cent were caused by insolvencies.
Commenting on the figures, director of information, claims and collections at Coface UK Andrew Share said: “Our findings reflect the national trend in that the number of company insolvencies in England and Wales, which although rising by 10.5 per cent in quarter two, continues to decline since its peak in 2009 and in quarter three was two per cent lower than quarter three in 2012.
“However, the level is still much higher than at the start of the financial crisis in 2008 and the current situation for companies remains fragile.”
He added: “Low interest rates and favourable credit conditions mean that businesses are able to survive, although many are just treading water unable to grow or invest. In this context it’s not actually surprising that the percentage of claim notifications made to Coface UK due to late payment has almost doubled.”
According to Mr Share, some firms are holding onto their cash for as long as possible, despite the negative impact this is having on their suppliers.
Entering into agreements to supply goods or services to individuals or organisations is always associated with a certain level of risk. However, when bosses ensure that they use the best possible business contracts, they can help to minimise their exposure.
By heading online, managers can access these resources quickly, simply and inexpensively.
As well as potentially helping to safeguard their finances, these document templates can also enhance bosses’ peace of mind. Given the high levels of stress often associated with running a company, this extra reassurance can prove to be extremely valuable.
Anna Longdin is a freelance blogger who contributes regularly to a wide range of business sites, including Simply-Docs.