Late payment culture risks “spiraling out of control”.

04/04/2019.

Analysts have warned that a widespread increase in late payments across British business is at risk of “spiraling out of control” with potentially ruinous knock-on effects for the economy. The bad faith business practice, which has become prevalent in recent years, has been blamed by many for contributing to the 20% upswing in corporate insolvencies over the past three years.

According to newly published data, more than 115,000 UK businesses waited an average of 57 days for payment last year, with more than 1,000 of these falling insolvent as a result. Of businesses that entered insolvency due to late payment in 2018, 34% had waited in excess of 57 days for payment, with 15% having been forced to go as long as 87 days without due pay. The practice has been linked to damaging effects on business productivity, growth and financial stability, with businesses left struggling to cope with an average unanticipated dent of £6,142.

Increase in debtor delays causing insolvencies

Research indicates that companies in the support services sector are most likely to be affected by late payments, with nearly 35,000 businesses reporting late payments and 260 subsequently folding last year. Those in the construction and retail sectors are also significantly affected – with the former seeing an average of a 61 day wait for payment and suffering 146 insolvencies last year.

In a concerning trend, late payments appear to be increasing in both severity and quantity across business. The utilities sector saw a 102% in the number of late payments reported from 2011-2018, rising from 912 to 1,838 annual reports. Over the same period, increases in the length of debtor days were seen in the telecommunications and IT sector (9%), as well as for travel and tourism companies (5%), media businesses (5%), and retailers (5%).

SMEs particularly at risk

In total, it is estimated that late payments to UK businesses amount to £2.5bn a year, placing financial strain on companies’ cashflows, reducing their competitive ability and adding to the annual rate of corporate insolvencies. Whilst both large companies and SMEs encounter late payment practices as a systemic issue in trade, smaller businesses are particularly affected as they are less able to absorb the losses of unpaid debts, facing a greater risk of falling into insolvency as a result. An estimated 50,000 small businesses collapse each year due to issues caused by late payments, with these failures leading to a wider impact on the health of the overall national economy.

Analysts describe the upswing in late payment practices as “worrying,” with Begbies Traynor partner Ken Pattullo urging that the situation “must be addressed if we are to help businesses, and the UK economy, grow.” In order to avoid falling victim to late payments and becoming overwhelmed by short-term cash flow problems, companies are advised to implement a strong credit management system. A robust debt recovery process in particular is essential in helping to ensure that companies are able to pursue late payments as swiftly and effectively as possible and avoid bigger problems later on.

Do you have a problem with late payments?

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.

We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

Companies in trouble usually have very bad bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.

If you supply to businesses on credit help us help you identify the risks.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

Do you realise you may have hidden capital tied up in your business?

No need to run to banks of other finance providers

Do you realise you may have a hidden source of capital within your business waiting to be activated?

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.

That compensation could be the cash injection your business needed.

Could your clients be interested?

If you are an accountant who has come to this page after seeing the link, do you have clients who could benefit from this?

Readers of Accountancy Age who have clients in need of a cash injection for their business could suggest this as an answer.  Have your clients sold on credit to other businesses? If so so we could help them calculate and recover the compensation they are due on late payments.

Are you clients thinking about retiring, closing their business down or going into insolvency? If so this could be an excellent way to maximise the return they get for their years invested in the business. If your clients collected the compensation they are due on late payments then they could create a nice nest egg from the business or find the finds to rescue it from insolvency.

How can CPA help?

CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hardwork. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.

The Credit Protection Association plc (established 1914) has spent 3 years researching the accounting, technical and legal implications of Late Payment Legislation and our staff and retained solicitors probably have as much working knowledge of this legislation as could be found anywhere.

We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.

Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.

CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.

The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit.  You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.

We do the work, you receive the cash.

If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.

We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.

We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

CPA is passionate about late payment

The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.

We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.

If you were regularly paid late we can help. Those former customers used you to boost their own cash-flow, regularly paying you late.

As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.

Under little used legislation, you are entitled to compensation for those late payments.

Now you can boost your own cash-flow.

CPA can help unearth the those hidden treasures.

We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.

Yes, CPA can help you boost your business cashflow.

Don’t let your bankers control you,  contact CPA today.

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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