Many small and medium sized companies (SMEs) are encountering late payment of debtor ledgers which in today’s financial climate can result in catastrophic repercussions in their own survival.
Recent research has indicated that even the first six months to July as many as 67% of companies have seen an increase in the time it takes their customers to pay outstanding bills.
You may also be encountering some of your larger clients demanding larger terms to pay or they take their business elsewhere, particularly pertinent if you are in a restricted market place.
It has been recorded that privately owned and limited businesses are the types of customers who are taking the longest to pay off their debts with corporates and listed companies not far behind.
Our experience is that many companies are in a catch 22 position, not wanting to pressurise clients to pay as competition in the market place is also great, but if they do not their bankers/borrowers are taking action which can result in administration.
Many directors find this very frustrating, as to extend borrowing results, in many cases, in an increase in interest and the spiral continues to turn.