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Late payments have gotten worse for UK’s SMEs

At the beginning of 2021, the UK government noted that firms across Britain were owed £23.4 billion worth of late invoices, and this was affecting their cash flow and chances of surviving.

It turns out that the situation could be even worse than the official figures indicate. A study released in July 2021 by cloud-based credit management platform Knowit finds that about £50 billion worth of invoices were unpaid to SMEs in the UK — a figure that is more than 50% higher than the official numbers.

Knowit’s research further shows that SMEs are unable to pay salaries on time and are relying heavily on invoice financing to infuse money into their businesses, which may hinder their ability to raise capital in the future.

Recent research by Intuit, a global technology platform, also indicates that on average at least £21,356 of invoices was owed to SMEs due to late payments in the month of September 2021 alone.

For many SMEs, long payment terms or late settlement means they need to find other ways to get working capital into their business. Not all of them succeed — about 50,000 SMEs shut every year due to late payments. So putting in processes for effective cash flow management is a matter of prioritising the survival of a business.

How should businesses go about doing this?

At RIABU, we have developed a concept called the Virtuous Revenue Cycle (VRC) which is focused on continuous improvement in service culture, findings ways to delight customers by anticipating and responding to their every need, and ensuring that you get paid on time. The VRC includes understanding mutual expectations through written credit policy, proactive customer service, and engaging the whole team to identify and resolve unmet customer expectations and assure timely payment. We believe that by taking an active and pre-emptive approach towards managing cash flow, SMEs can greatly improve their odds of surviving and thriving.

Get more tips on effective cash flow management from our book, Let the Cash Flow. To find out more about how RIABU helps small businesses get paid on time, visit RIABU.com

Topics

  • Business enterprise, General

Categories

  • cash flow
  • late payments
  • mark laudi
  • cfo
  • sme
  • invoice
  • riabu
  • simon littlewood
  • risk
  • business owners

Contacts

Mark Laudi

Press contact Managing Partner (+65) 6223 2249

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