Businesses reveal significant late payment wounds

24/03/2015

British businesses have revealed the far-reaching financial impact of late payment in new research conducted by commercial debt collection agency, Hilton-Baird Collection Services.

With almost a third of the time (31 per cent) British businesses spend on credit control being consumed chasing overdue debt, 30 per cent now classify more than 10 per cent of their debtor book as over 90 days old.

The annual Late Payment Survey, which polled business owners and finance directors on their experiences with getting paid during the past 12 months, found that almost a third (30 per cent) have had to increase borrowing as a direct consequence of late payment, which includes the use of credit cards. Nearly one in five (19 percent) had to delay payments to HM Revenue & Customs, while one in ten were forced to turn away new business.

The survey additionally discovered that the situation is worsening, with the average invoice now being paid 22.5 days beyond agreed credit terms. This signifies the longest delay since the survey began in 2011.

Alex Hilton-Baird, Managing Director of Hilton-Baird Collection Services, said: “It is deeply worrying how much of a financial impact late payment is continuing to have on businesses. It has been well documented how late payment is disturbing cash flow, but the effects run much deeper.

“That the average business now spends almost a third of its credit control resource chasing overdue debt just serves to illustrate how businesses are struggling to win the battle against late payment. The credit control process needs to start even before the order is placed, with robust account opening procedures and terms and conditions of sale, but not enough businesses have the resource to get the basics right, let alone manage the entire process. The older a debt becomes, the trickier it is to recover so even more time and resource has to be invested in securing payment, further increasing the burden.”

Encouragingly, 17 per cent of businesses now outsource all or part of their credit control function. In the last 12 months alone, nine per cent took this step, which marks an annual increase of three per cent.

Sixty-two per cent of businesses spend fewer than 10 hours a week on credit control activities.

Alex Hilton-Baird continued: “It is difficult to stress enough how important it is for businesses to be using the right mix of credit management strategies in order to protect themselves from late payment as much as possible.

“Although it is good to see how much attention this issue is receiving, there is much debate regarding whether the government can, or even should, find the solution. In the meantime, the power to reduce its impact rests with businesses themselves and the actions they take.”

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For further enquiries, please contact Helen Tramaseur or Jamie Weeden at Hilton-Baird Group on 02380 706637 or email helen.tramaseur@hiltonbaird.co.uk / jamie.weeden@hiltonbaird.co.uk

Note to editors:

Hilton-Baird’s latest research was undertaken in January 2015 among 489 businesses across a wide variety of business sectors, providing a representative sample of the UK’s SMEs. The full report can be found here.

Alex Hilton-Baird is Managing Director of Hilton-Baird Collection Services, which is part of the Hilton-Baird Group of companies. Established in 2001, Hilton-Baird Collection Services provides award-winning outsourced debt collection services to the UK’s SME and corporate markets, as well as some of the most respected invoice financiers, leading banks and insolvency practitioners.

Hilton-Baird Collection Services was voted Commercial Debt Collection Agency of the Year in 2008, 2010 and 2011 by Credit Today magazine. In addition, two of our employees have been awarded the Commercial Collector of the Year title, with Team Leader, Charlotte Christie, winning in 2010 and Senior Collections Advisor, Peter Hepburn, winning in 2012. Such awards are testament to the continuous investment Hilton-Baird puts into making its debt collection services the best on the market, with regular training and technological innovation at the core of ensuring a fast, flexible and efficient response to business debt recovery needs.

To find out more about how Hilton-Baird Collection Services can assist, visit https://www.hiltonbairdcollections.co.uk.