Small firms need tougher stance to reduce debtor days
Small firms need to take a stricter approach to credit management if the UK is to resolve the problem of late payment, according to Ashley Business Finance.
Ashley’s credit control teams have reduced the average debtor days for its invoice finance clients to just 43. It is urging small firms to follow its lead by giving greater priority to credit control.
Figures from the Asset Based Finance Association (ABFA) show SMEs now wait an average of 72 days for payment – up from 61 days in 2009.
Lisa Mayers, sales manager from Ashley’s, said: “The problem of late payment appears to be getting worse, not better. With attempts at legislation having failed to address the situation, it’s time that small firms themselves started to take a tougher stance.
“We know at first hand how difficult it can be to chase debts and the tactics that some companies use to delay payment, with some of the worst offenders being big household names. However our success in driving down the average debtor days for our clients demonstrates what can be achieved by taking a professional approach to credit control.
“Given the huge sums outstanding, even a small reduction in debtor days could bring billions back into small companies’ coffers which they could then use to generate new jobs and growth.”
The ABFA estimates that British SMEs are owed £67.4bn in unpaid invoices – up by 36% from £49.5bn in 2011. According to the insolvency trade body R3, late payment is a factor in one in three insolvencies, which has a knock-on effect on jobs.