Late payments remain a problem for businesses of all sizes
Late payments continue to put pressure on the majority of companies’ cash flow, with firms paying bills an average of 25.2 days late, research from Experian has revealed.
The statistics, which represent UK businesses payment times in the first quarter of 2011, shows that although the time taken to pay invoices has marginally reduced (from 25.7 days in Q4 2010), late payments still affect companies of all sizes.
Large firms (with 500 employees or more) take the longest to pay bills - 34 days, but many SMEs also fail to pay their invoices on time, with the average payment time just under 20 days overdue.
Late payments have a dramatic effect on cash flow and can hinder businesses’ growth strategies. Lloyds TSB Commercial Finance advises companies of all sizes to keep a close eye on accounts and ensure overdue bills are promptly chased.
Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance, said: “The saying ‘what goes around comes around’ is particularly appropriate in this instance and management teams should endeavour to pay all invoices on time.
“Prompt payment cultivates good business relationships and protects credit history, which is especially vital for SMEs looking to win new contracts or secure funding.
“If your business is suffering from customers paying bills late it is worth considering employing a credit insurance policy such as Lloyds TSB Commercial Finance’s debtor insurance, which can safeguard your company against the risks associated with late payment and debtor failure.”