Unpaid Invoices
According to NatWest, one in five companies is owed between
£50,000 and £100,000 in unpaid invoices. Perhaps even more worryingly, the
figures from BACS suggest that it is the larger corporations who are most
responsible for this shortfall, owing SMEs around £24billion per year in late
payments, leaving most SMEs thousands of pounds in the red due to unpaid
invoices. In addition, the BACS study goes on to reveal that around 33% of
larger businesses are late in settling their accounts, often as late as 52
days. The impact on the economy is also highlighted through the revelation that
around 158million man hours are lost each year in chasing overdue accounts.
As if these figures weren’t startling enough, cashflow problems
prevent businesses from thriving and expanding and, ultimately, prevent them
from employing other people. There is far more to unpaid debt than just an
outstanding invoice. The consequences are far reaching, effecting every aspect
of British business.
Prevention is better than Cure
In the long term, prevention is better than cure. Businesses would
be well-advised to implement incentives for their customers to pay on time,
such as fast-payment discounts or additional charges in the event of late
payment. However, there will always be instances where other means are required. The government are currently discussing the option to fast-track the EU’s Late Payments Directive. But until then there are free services, such as ComparetheDCA, through which companies of any size can find the DCAs that are best suited to their case. This is particularly useful for SMEs who want to balance their books before becoming another economic statistic.