Photo Caption: Harri Lloyd Davies, Partner at Bevan & Buckland
Whether you are a large corporation, small to medium sized enterprise or sole trader, chasing late payments is one of those tedious tasks that just has to be done to maintain cash flow, but a recent survey has revealed that small businesses in particular are spending more time than ever on debt collection.
Accounting software specialist Xero surveyed a multitude of businesses from across the UK, and found that they were spending up to 10% of their working day chasing late payments. As a specialist in financial management, leading accountancy practice Bevan & Buckland offers essential advice to make late payments a thing of the past.
“Alongside London businesses, companies based in Wales spend the most time chasing payments, a whopping 12% to be exact, which translates to 1.3 days per month, but there are various ways that you can improve debt collection and as a result reduce the time you spend chasing payments dramatically,” said Harri Lloyd Davies, Partner at Bevan & Buckland.
In addition to Wales being one of the worst offenders for spending much of their working day on debt collection, the research found that late payments were more common in certain industry sectors. HR businesses spend up to 26% of their day debt collecting, with the IT and manufacturing industries following with 16% and 15% respectively.
“The UK is going through something of a late payment epidemic at the minute but you don’t have to accept it! Choosing the right customers through credit referencing is a great place to begin, whilst implementing a debt collection policy that states the terms in which the payment must be received and utilising payment plans are important. Creating a company culture that gets all staff involved in the invoicing and collection processes will also provide the support you need to handle late payments, and making sure there is clear communication with staff who are responsible for debt collection will help them be more effective.” added Harri.
“Using a debt collection agency is of course the last resort, but this will allow your in-house team to spend their time more productively on other areas of your business. You will find that enlisting an accounting and business finance specialist like ourselves to fine tune your financial planning provisions is a great way to improve debt collection and in turn ease any resulting cash flow difficulties.”