North East businesses of all sizes should be leading the way in making 2017 ‘the year of prompt payment’.
That’s the view of Neil Harrold, regional chair of insolvency trade body R3, after a new report revealed that more than three fifths (61%) of invoices issued by small and medium-sized businesses in the UK remained unsettled at the end of their agreed payment period.
The report, released by Amicus Commercial Finance, also found that that one in six (16%) SME invoices remains unpaid after 90 days, and that almost half (7%) of these were still not settled after six months.
And with 70% of the firms surveyed saying they relied on their invoices being settled in a timely fashion to avoid cashflow problems, Neil Harrold is looking to the North East business community to make late payment practices a thing of the past.
Recent research by R3 found that late payment for goods or services was a primary or major cause of almost a quarter (23%) of UK corporate insolvencies in the preceding twelve months.
Neil Harrold, who is a partner with Hay & Kilner Solicitors, says: “A great deal of emphasis has been placed in the last few years on tackling the long-term problem of late payment, and there’s been some progress made, but as our and other research plainly shows, there’s still some distance to go before the goal of making it a thing of the past has been achieved.
“A business can have a great product and great staff, but if it doesn’t get paid for what it sells, or if it is over-reliant on one customer who takes unfair advantage of the situation, things can go wrong very quickly.
“Our members work on business insolvencies where late payment has been a contributory factor every single day, and the unnecessary damage that these unacceptable practices are doing to the regional and national economies are very significant.”
Previous research by R3 found that 6% of UK businesses – equivalent to 113,000 companies – were creditors in an insolvency during 2015.
Neil Harrold continues: “If payment terms are agreed with suppliers, then customers have no legitimate reason not to stick to them, let alone still to not have paid what they owe weeks or even months after the initial deadline, and technology now makes it easier than ever before for businesses to pay what’s due without delay or fuss.
“When a company is not paid up front, it is essentially acting as a lender, but without the protections a secured lender enjoys, so it’s vitally important to keep track of invoices and when they’re due to be settled, so you can act quickly if this doesn’t happen on time.
“The North East business community has always worked in a pragmatic and proactive way, and at a time when there’s more than enough economic uncertainty around to deal with, there’s every opportunity for regional firms to lead the way in fully adopting prompt payment practices that prevent unnecessary problems for businesses.”