BIB Survey highlights need for credit insurance to safeguard businesses

Figures released last week (18 August 2010) show that late payment by customers is considered by firms as the principal cause of cash flow difficulties.

The biannual Business in Britain survey, carried out by Lloyds TSB Commercial, questioned more than 2,300 UK businesses and, out of the 716 who stated they suffered from cash flow problems, 64 per cent cited late payments as the biggest issue.

This figure is a marginal decrease of only one per cent compared to last year’s figure of 65 per cent, showing that late payments continue to be a major concern for companies during the recession.
The survey questioned businesses of all sizes, from SMEs with a turnover of less than £1 million to large corporates with a turnover of £40 million plus. Results show that large firms are equally affected by late payments.

Firms in the construction and transport industries are most likely to suffer from late payments (79 and 82 per cent respectively) whilst businesses in the hotel, catering and leisure industries fared comparatively well with just 29 per cent blaming late payment for restricting cash flow, according to the study.

Martin Walmsley, Head of Debtor Insurance at Lloyds TSB Commercial Finance, said: “The research shows that, despite the recovering economy, late payments are still very much a worry for business of all sizes, spanning many sectors.
“Late or non payments of invoices can have a devastating effect on a business’ cash flow and it is vital that management examine the threats and look at ways to protect their working capital going forward.

“Debtor Insurance, Lloyds TSB Commercial Finance’s credit insurance policy, is ideal for businesses worried about late payments, as it safeguards invoices against behind schedule payments and insolvent debtors.”