| Late payments and unpaid invoices
are losing UK businesses £20bn a year. And
in the worst cases, unpaid invoices are threatening
the survival of small firms, which are vulnerable
to variations in cash flow and often rely on a limited
number of customers.
Research from credit reference agency MasterWatch
has found that almost half of UK invoices are
overdue and 2 per cent are never paid at all.
With an average 18-day and rising payment delay
in the UK, our survey shows that payment delays
are a pressing problem for many UK businesses.
“Many companies fear the risks posed by
late payment as this affects cash flow and the
availability of working capital,” said a
Paul Latham, Sales Director at MasterWatch
The research found that the late payments are
often a deliberate decision by debtors to use
their creditors as a source of free finance. Legislation
has been not yet been successful in eliminating
the problem.
The risk of financial penalties for late payments
has also failed to deter many debtors, according
to the report. It recommends that UK enforcement
procedures be reworked to enhance the speed, efficiency
and effectiveness of invoice payments.
Businesses are dissatisfied with the current
legal situation, says MasterWatch. Of those surveyed,
30 per cent of businesses believe further legislation
is needed to enforce late payments. More than
60 per cent of respondents believe that current
enforcement proceedings take too long.
“MasterWatchs, credit management systems
are an essential part of the process and many
businesses could make significant savings with
small improvements to their procedures. In fact,
with an overall 10 per cent improvement in lost
payments, the UK business community as a whole
could potentially save £2bn a year,”
said MasterWatchs Paul Latham.
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