Late payments are one of the most challenging issues affecting small businesses and self-employed people. And according to new data from cloud-based credit management platform, Know-it, the impact of the pandemic is exacerbating issue, with new data reporting almost half (48%) of organisations in the UK have seen late payments increase substantially since the start of the crisis.
Late payments remain an ever-present challenge for business owners, damaging cash flow, hampering growth, stunting investment and risking business solvency. For many organisations, survival will be down to maintaining a regular cash flow but data from Know-it suggests this is being significantly hindered by late payments.
Data taken across Know-its customers has revealed 59% of organisations are seeing more excuses from customers than ever before when it comes to overdue invoices. Concerningly, participants polled also revealed over half of business (55%) would do business again with a late paying customer.
According to Lynne Darcey-Quigley, organisations forced to continually engage with late payers, shows the predicament facing business owners, and is an issue unlikely to change as we move past the crisis.
“Unfortunately, the data highlights an ever-present challenge when it comes to late payments. SMEs for example, are the most vulnerable and impacted from the crisis, and have been subject to delayed or frozen payments from policymakers and big corporations who saw it not a priority for their operations.
“Despite the government outlining a route out of lockdown, many organisations on the receiving end of late payments will struggle to survive after the crisis. As we have seen from the data, businesses are left with little choice but to carry on and work with businesses deemed bad payers, often to their own detriment. To avoid organisations continuing in this vicious cycle it’s imperative business leaders are made aware of the tools and resources available to them, which can improve cash flow.”
Lynne Darcey Quigley, highlights the role technology can play in addressing late payments, “We believe there is an opening for technology to help SMEs streamline their credit control processes so they can credit check and monitor, chase for payment and collect overdue unpaid invoices, all from one place.
“By using technology to automate the credit control process, small business owners, who do not necessarily have the resources available to continuously check-it, chase-it and collect-it, can remove the headache of manual processing, saving time, reducing debtor days and increasing cash flow. Doing so, will free up a huge amount of time and resources for business owners to focus on other mission critical operations.
“Although much of the onus will also be on larger companies to improve their payment practices, there is room for technology to make a huge difference for SMEs and ensure payments are made on time.